The Directors have pleasure in presenting the 7th Operational Annual Report of the Company along with the Audited Financial Statements of the Company for the year ended 31st March 2017.
FINANCIAL RESULTS (RS, in Lakhs)
Operating Profit (PBIDT)
Less: Interest (Net)
Gross Profit (PBDT)
Profit before Taxation
Less: Provision for Taxation
MAT Credit entitlement
Deferred Tax Liability/(Asset)
Income Tax for earlier years
Profit after Taxation
Add: Balance brought forward from previous year
Proposed Dividend on Equity Shares (Incl.Tax)
Balance Carried Forward
During the year, Kalindee Rail Nirman (Engineers) Limited (Kalindee), a subsidiary of the Company, merged with the Company in terms of the Scheme of Amalgamation duly approved by the Shareholders and the Hon''''ble High Courts of Calcutta and Delhi vide their orders dated 26th February 2016 and 19th December 2016 respectively, effective date being 1st April 2014. The results are accordingly after incorporating the financial results of Kalindee for 2014-15, 2015-16 and 2016-17. The financial reporting includes a new segment i.e. Rail EPC.
The Ministry of Corporate Affairs (MCA) notified the Companies (Indian Accounting Standard) Rules 2015 enabling implementation of Ind AS. Pursuant to this notification, your Company and its subsidiaries, associates and joint ventures have adopted Ind AS with effect from 1st April 2016. Accordingly, the standalone and consolidated financial statements for the year ended 31st March 2017, and 31st March 2016 including transition date balance sheet as at 1st April 2015 have been prepared in accordance with Ind AS. The effect of transition to Ind AS has been given in detail in Financial Statement section.
During the year under review, your Company''''s overall performance was impacted due to general sluggishness in the economy and inadequate order at un-remunerative prices released by the Railways.
The Gross Turnover for the year stood at INR 12,841.37 mn, net of the value of free-supply inputs (including steel and components) of over INR 1,326.62 mn, provided to your Company by the Indian Railways and other clients for some large value contracts.
The Gross Profit for the year (PBDT) and Profit Before Tax (PBT) were INR 581.74 mn and INR 420.15 mn respectively. The Net Profit was INR 335.73 mn, after providing net tax liability of INR 84.41 mn for the year, created in the Profit and Loss Account in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India.
Your Directors recommend payment of a dividend of 25% for the year ended 31st March 2017.
THE MANAGEMENT DISCUSSION AND ANALYSIS
Your Company, post-merger of Kalindee and majority acquisition of Bright Power Projects (India) Pvt. Ltd. has emerged as a strong ''''Total Rail Solution'''' Company and had been successful in insulating its working of the Company from the extreme vagaries of erratic wagon procurement policy of the Indian Railways.
Fortunately, the Railways is now fully focused on improvement of its vast but ageing infrastructure and has committed to invest more than INR 80,00,000 mn capital expenditure to ramp up the infrastructure which presently is highly congested as around 16% network is handling more than 60% of the entire traffic with capacity utilization of 150 to 160%. Railways’ plan to de-congesting the route by heavily investing in doubling and tripling the tracks and its speedy electrification along and push for completion of DFC Projects shall augur well for the Rail EPC, Rolling Stock and other Heavy Engineering Divisions of your Company. The Railway has also planned to retrofit and refurbish its 40,000 old coaches which has opened up newer business opportunities for your Company. The expansion of metro network all over India is emerging news for its Rail EPC business. The infrastructure created by your Company over the years shall start bringing the fruit with large opportunities being thrown open in Rail Sector.
HEAVY ENGINEERING DIVISION
A. Rolling Stock
a. Freight Car
The planned wagon procurement by Indian Railways for FY 2016-17, for which tender for 12,277 wagons was floated, was looked upon to provide succor to the order starved wagon industry. Though your Company has emerged as the lowest bidder for certain wagons in the tender for 12,277 wagons, and the Railways chose to re-tender a part quantity of 2500 of wagon where the Company was L1, it managed to get order for a meagre quantity of 1338 wagons, with price though marginally better than theprevious order, is still uneconomical. Railways however, failed to maintain continuity of free steel supply resulting in low production during the year. Against the re-tendered quantity, the Company did not fetch any order as the other parties quoted a lower price.
During the year, your Company had executed a total order for 2092 wagons, valued at INR 5,166 mn, including Non-IR Wagons. This included the Prestigious Defense Wagon Order which was executed partly in 2015-16 and the balance in 2016-17, within the scheduled delivery time. The Company had also developed a proto type of milk tank wagon which is of complicated design.
During the year under review, your Company bagged another prestigious order valued INR 436 mn (ex-works) for LPG Tank wagon from a leading Oil Marketing company.
On the Export front, your Company bagged orders worth INR 445 mn from Africa and South East Asia.
The feasibility of Loading and Unloading of Fly Ash in BTAP Wagon was examined during the year, followed by a successful field trial jointly with NTPC and the Cement Industry. This is likely to open up markets for movement of Fly Ash through Railways.
Feasibility of transporting LCVs and HCVs in Car Carrying Wagon (converted) was demonstrated to our Valued Customers licensed under AFTO, Reputed Truck Manufacturers and RDSO. Work on further modifications in the design is underway to enhance the reliability.
The Modified Coil Carrying Wagon developed by your Company has been cleared by RDSO for commercial use and enquiries for the same have started coming from logistic companies and steel manufacturers.
The development of proto type of RDSO''''s New Design of Parcel Van for IR is nearing completion.
Your Directors are pleased to report that the development order received from a Railway Coach Factory, for manufacture of Under Frames for AC-3 Tier Coaches has been completed successfully. The Coach factory had since erected the coaches on it and successfully rolled them out. This development is in line with the Railways policy to outsource major sub-assemblies and will be providing a new area of manufacture to your Company for which it is geared up.
c. Locomotive Components / Assemblies
Your Company has diversified into manufacture of Electric Locomotive Shells and Sub-Assemblies and is successfully supplying Complete Shell Assemblies and other Loco Shell and under carriage components to Locomotive plants in India. These are now under regular production.
Your Company also has developmental orders in hand for manufacture of Under frame Assembly for Twin Cab Goods Diesel Locomotive and Under frame Assembly for Twin Cab Passenger Diesel Locomotive. Both the Under frames are presently under development.
Your Company has received an order from Alstom for manufacture of E-Loco car body shells for 480 Dual Locomotives to be manufactured at Madhepura, spread over a period of 7 years, with a total order value of approx INR 5000 mn.
The Company is well poised and equipped to support Alstom in this prestigious project for the fabrication of new generation locomotives for heavy haulage, high speed movement of freight on DFC and other routes of Indian Railways.
This will establish your Company as a premier supplier of Assemblies and Sub-Assemblies for modern locomotives in the forthcoming years.
B. Hydro Mechanical Eqpt.
The execution of contracts under Hydro Mechanical Division of your Company has suffered adversely due to continued political agitation in north east India and prevailing conditions due to after effect of earthquake in certain sites in Nepal.
Fortunately, these bottlenecks are getting eased and progress at sites is now picking up and will go into full swing during the current financial year. With a strong order book of more than INR 3800 mn and a number of new projects announced by the Government in the Hydro Power segment, where your Company has the strong credentials, the future for the division looks promising.
C. Bridges & other Steel Structures
Your Company, during the year, had completed fabrication and erection of a major bridge (9 x 102.4 meters span) weighing 7800T, at Bhairab in Bangladesh. This is the longest Railway Bridge ever constructed in Bangladesh since partition of the Country at the end of the British Rule in 1947. During this year, your Company had also executed an order for the Bridge girders for Titas Bridge in Bangladesh.
Presently the division is executing an order for Sri Lanka.
The division, post execution of the above orders, has earned valuable credentials in the field of construction and erection of Steel Bridges for Railways and, being eligible, has also participated in certain large value tenders in India and abroad.
STEEL FOUNDRY DIVISION
In spite of the decline in off-take of Wagons in 2016-17 owing to lack of Railway demand for Rolling Stock, the overall performance of the Foundry division has been satisfactory. The production and dispatch during the year were 16444 MT & 17207 MT against 17353 MT and 17433 MT respectively in the previous year. The turnover of the Foundry stood at INR 2037 mn. The Foundry continues to retain its status as the leading supplier of Railway Castings, both in bogie & coupler, with a market share of around 31%.
On the export front, your Directors are pleased to inform that the Foundry had achieved the highest ever export turnover of INR 450 mn compared to INR 286 mn during the previous year. After successful development and stabilization of one type of bogie castings for North American market, the Foundry has now developed another type of bogie castings for the North American market which was successfully tested and passed at AAR laboratory in USA. With the achievement of this milestone, the Foundry is now exporting both types of castings of bogies to North America. Apart from these designs, the Foundry has also developed bogie casting for South America which has also successfully completed AAR testing. Presently a new design bogie casting developed by the Foundry for South East Asian market has been shipped for testing to AAR in USA. Thus, the Foundry has gained credentials for development of multiple designs of bogies for export markets and widened its base to generate more business.
Your Directors are also glad to inform that the Foundry has further developed 35 new products for use in mining industry globally. The field trial results of the products are satisfactory and the Foundry is geared up to grow in the field of export of industrial castings for mining applications.
During the year, the Foundry has also received an approval from RDSO for manufacture and supply of all 4 types of Cast Manganese Steel Crossings to the Indian Railways. Orders for these Crossings received from Zonal Railways are being executed regularly.
RAIL EPC DIVISION
Kalindee Rail Nirman (Engineers) Limited (Kalindee) was merged with the Company by the orders of the Hon''''ble High Courts at Calcutta and Delhi dated 26th February 2016 and 19th December 2016 respectively, the effective date being 1st April 2014. Post approval of the Hon''''ble High Courts at Calcutta and Delhi and the filing of necessary forms with the Registrar of Companies, Kalindee now stands fully merged with the Company. It is now known as Rail EPC Division of the Company with the trade name of ''''Kalindee Rail Nirman'''' and is actively engaged in Rail EPC contracts of national and international importance, including the projects of Dedicated Freight Corridor.
The Division is focusing on the upcoming metro projects in Ahmadabad, Nagpur and Mumbai and also exploring opportunities in neighboring countries as well as in the Middle East and African countries. The Division is served by a high-tech State of Art ERP programme run on SAP backbone linked with all work sites online.
It has forayed into high-tech projects, both in Rail EPC and Metro, and has built up a team of experienced professionals to navigate the unit into a new era of growth and opportunities with the added technical and financial strength of the combined entity.
i. Bright Power Projects (India) Pvt. Ltd
During the year, Bright Power, a pioneer in the field of overhead Electrification of Railway system, had achieved a turnover of INR 1,775 mn with an EBITDA of INR 215 mn. Bright Power has now expanded with projects of Rail Electrification in 14 States.
Bright Power has received its maiden order for substations and Electrification in Metro Segment from Nagpur Metro. This will establish your Company''''s presence in Metros too.
The Government is giving a major push to Rail Electrification and setting up Metros in urban locations since the last two years. The requirement of Electrification works had doubled year on year. This will help Bright Power in acquiring higher volumes in coming years. Bright Power is well poised in Rail EPC contract and their contribution to the consolidated profit is relatively significant.
ii. Texmaco Hi-tech Private Limited
The working for this year continued to be quite challenging due to the need to develop newer markets and products, post exit of the JV partner UGL, Australia. The plant was set up especially to meet the export demand of Australia, which due to changed market scenarios, dried up.
Texmaco Hi-tech, since, through the process of consolidation has been successful in developing newer markets and products both for domestic and export, and is well on a revival path.
The orders have now started flowing from global companies like GE Transportation & Alstom Transportation and renowned indigenous customers including the Indian Railways.
It is hoped that the capacity available in the unit will be gainfully utilised for high precision components, such as, bogies, cab structures, booms, etc., for locomotives, coaches and material handling equipment with substantial demand potential from the year 2018-19, when execution of bulk orders after completion of product development cycle will start.
Texmaco Hi-tech during the year has not contributed to the overall performance of the Company.
iii. Belur Engineering Private Limited
During the year, the Company has incorporated a wholly owned subsidiary namely Belur Engineering Private Limited, primarily to supplement the Heavy Engineering business of the Company. Belur Engineering has acquired approximately 5 acres of industrial land at Sodepur to assist your Company in expanding its footprint in the new segments of Heavy Engineering i.e., Bridges and Heavy Engineering Structures.
Belur Engineering was incorporated on 20th February 2017 and hence, no significant contribution was made to the overall performance of the Company.
i. Touax Texmaco Railcar Leasing Private Limited
Railway is working hard on regaining its market share of freight traffic and with a major freight rebate scheme being introduced for large shippers, a positive development is expected. The establishment of the Rail Development Authority for rationalization of passenger tariff and cargo freight rates is also expected to have a large impact. Freight and Haulage charges are expected to be rationalized to reflect actual market conditions and not political subsidization. The Railway Board has a target to set up an additional 55 PFT (Private Freight Terminals) this year. Adding positively to these measures will be the introduction of GST, with which the easing up of logistics operations by eliminating multiple check points will have a positive bearing on the Wagon leasing business of JV Company.
Besides the macro-economic thrust as described above, the micro-economic factors are already turning positive compared to those of the previous years. There is already an increase in the export-import volumes at all the major ports. All hitherto stabled rakes are back into circulation with statistics indicating that no private wagons are idle and whatever IR stock is idling, it is due to the operational imbalances and not for want of traffic. Hence, there is a renewed interest from the industry for introduction of fresh rolling stock.
The JV company has turned profitable and has reported a modest profit during the year. The JV company has also tied up with leading banks for financing the leasing activity.
The JV company is gradually strengthening its position in the market and in few years will also become a significant contributor to the overall performance of the Company.
ii. Wabtec Texmaco Rail Private Limited
Wabtec Texmaco Rail Private Limited, Texmaco''''s JV Company with Wabtec Corporation, USA, completed its first full year of operations in December 2016. The JV company sales in financial year 2016-17, mainly comprising of Draft Gears and Composition Brake Blocks, were approx. INR 470 mn. The JV company won orders for Draft Gears from all major Wagon manufacturers during the year and enjoyed about 65% market share by selling around 9,500 units. The JV company supplied Composition Brake Blocks to Sri Lanka Railways and Bangladesh Railway during the year and initiated actions for approval & subsequent supply of Composition Brake Blocks to the Indian Railways. The JV company has successfully tested its prototype Bogie Mounted Brake System (BMBS) during the year and has planned field trials of its BMBS units with the Indian Railways by September 2017. The JV company new facility is under construction on Texmaco Southern land, Belgharia, and the JV plans to relocate to the new facility by March 2018.
The JV company is gradually strengthening its position in the market and in few years will also become a significant contributor to the overall performance of the Company.
During the year, your Company has shown a significant improvement in its overall export performance which stood at INR 502 mn compared to INR 488 mn in previous financial year. The Company made further breakthrough in North American market by developing newer types of castings for American Rail Road.
Your Company further bagged orders for 50 wagons from South Asian countries.
The Company has successfully executed a major contract for supply of Railway Bridge to Bangladesh through IRCON-AFCON.
In Rail EPC front, the execution of Bangladesh contract is nearing completion and the Company is well poised to secure new businesses in neighboring countries for Rail EPC. The execution of Hydro Mechanical orders in Nepal suffered during the year due to natural calamity. However, the execution picked up towards the end of the year and major execution of the order is executed in the current year.
R & D ACTIVITIES A. Steel Foundry Division
The R & D Centre of the Company is a registered and recognized Centre under the Ministry of Scientific Research & Cultural Affairs and is engaged in carrying out new research work for the development of its various products & processes. It has helped the Company to develop new products, improve products life through process innovations, develop light & efficient designs for higher and faster transportation of goods & specialized cargos. This has enabled your Company in saving precious energy and resources and improving cost effectiveness.
a) New Product Development:
(1) 6 coil bogie castings for North American market by developing unique metallurgical and process improvement enabling the Company to develop export market to USA. The developed castings have passed the stringent static and dynamic fatigue testing to which it was subjected to at AAR Lab.
(2) Bogie Castings for Thailand Railways.
(3) Yokes for the North American market. Our product has been tested and approved by Cardwell.
(4) Indigenous Development of High Capacity Draft Gears for the Indian Railways against importation.
(5) High Axle Load Low Weight 25 Ton Bogie Castings have been developed for the Indian Railways.
b) New Process Development:
(1) Two new grades SS-2500 & SS-5000 with improved wear resistance properties for ground excavating application.
(2) A new etchant to identify the grain boundaries in a tempered martensitic microstructure.
Apart from the above, the Steel Foundry Division has also undertaken the following projects.
(1) Development of process on tempering time on the weld repaired castings of grade B to ensure improved strength.
(2) Root cause analysis and process innovation to eliminate cold lap in Blue Tooth Pointer castings.
(3) Root cause analysis and process innovation to eliminate the match plate failures.
(4) Analysis of temperature distribution in normalizing furnace and its impact on microstructure and lug fracture of components and developing new process to improve the microstructure characteristics of castings.
(5) Analysis of abnormal failures in operations across several grades and components.
(6) Undertaken Research analysis on feasibility of reclaiming No-Bake sand through thermal treatment for re-use in the Foundry.
The findings from these projects has helped to develop new manufacturing processes to improve product quality.
c) The R & D department of Steel Foundry Division has also initiated collaborative projects with reputed academic institutions like the Indian Institute of Engineering Science & Technology (IIEST), National Institute of Foundry & Forge Technology (NIFFT) and Amity University with the aim of developing new products & processes and improving the quality and life cycle of the products.
The results of one such collaborative project "Effect of astonishing temperature, soaking time and tempering temperature on Charpy Impact Toughness of Gr-E steels" with NIFFT, Ranchi, has been accepted for presentation at 19th International Conference on Material Strength and Metallurgical Engineering (ICMSME) to be held at London on 18-19th December 2017.
B. Heavy Engineering Division
1. Rolling Stock
A new design double deck Auto Car Carrying Wagon ''''BDDAC'''', with substantially superior capabilities over the existing product, is being developed under the Technical guidance & support of a renowned European firm. The development required a number of new concepts which has been tried out successfully. The wagon will now undergo an extensive field trial under the aegis of RDSO, a Research wing of Railways prior to its final acceptance for use in Indian Railways network.
Your Company has also undertaken development of a new design Double Deck Container Carrying Flat Wagon (Bogie Flat Container Wagon) with technical support of a renowned international company.
2. Hydro-mechanical Eqpt.
The Hydro-mechanical division has, after extensive research, developed for the first time a new design for Penstock bifurcation, having crescent girder construction with varied contours for heavy sections of thickness up to 150mm. The design has been accomplished with a detailed Finite Element Analysis (FEA) study which was thereafter, approved by the European consultants. These Penstock bifurcations are to be installed at the inlet of turbines of hydro power plants and are subjected to extreme conditions of hydro-dynamic loading. The criticality starts from selection of raw materials to the complex process of manufacturing and testing. Appropriate processes for fabrication were established including necessary Non-Destructive & Hydraulic Testing.
The IT department has implemented progressive measures through advance firewall to protect the IT network of the organization from external threats and dedicated to maintain a secured environment to prevent data loss. All the manufacturing units, corporate and administrative offices are integrated through secured online connectivity with high bandwidth.
All divisions of the Company are maintaining ERP applications to track regular business operations of the organization, like Procurement, Inventory, Production, Sales and Finance, with its own in-house team.
Human Relations (HR) aims on improving the Company''''s bottom line through its knowledge of how human capital affects organizational success. It participates in corporate decision-making, underlining current staffing assessments and projections for future workforce needs, based on business demand, and engaging in promoting awareness on Health, Safety and Environment.
The pragmatic policies on Human Relations / Employee relations has helped the organization to achieve high performance and building up the morale and satisfaction levels throughout the workforce by creating bond, harmony and unity with a sense of brotherhood all across the organization.
The Human Resource Development has been the priority of the organization and constant efforts through re-skilling, up-skilling & multi-skilling are being made through structured programmes of skill building to make the workforce future ready and have a competitive edge. The management has also initiated training and development programmes for young aspiring leaders to take up greater challenges.
OPPORTUNITIES & THREATS
The traditional comfort of assured wagon orders from the Indian Railways continues to elude this year also. The margins have been under pressure and may continue as such in short term due to excess capacity in the wagon industry and poor demand from the Railways.
With the recent successes in certain state elections, the Central Government is expected to kick start a number of economic reforms including the GST, which would invariably lead to an economic resurgence, thereby leading to improved logistics need which shall also have a positive impact on the requirement of wagons, a major product for the Company.
In order to de-risk the business, Kalindee has been merged into your Company and the Rail EPC front is showing a lot of promise. This is due to the fact that the Government, in keeping with its objective of upgrading Railway infrastructure, has a large expansion of Rail infrastructure in the pipeline.
Kalindee has managed to get some prestigious orders in this field and is in contention for certain major projects, local and abroad.
The overseas market, especially the neighboring countries, is also seeing an upsurge in Railway Infrastructure projects.
Your Company is now working with some major multinationals for large Indian Railways orders of Locomotives which shall in due course transform the total work culture and outlook of the Company.
With the Governments'''' focus on robust Railway infrastructure, the demand for wagons shall also pick up in near future.
CORPORATE SOCIAL RESPONSIBILITY
Your Company is committed towards betterment of the socially and economically deprived and it continues to take initiatives and meaningful actions in the areas of Education, Health, Environment and Women Empowerment.
Your Company is actively engaged in providing community service to the local people and promote their quality of life through several welfare activities by the Texmaco Neighborhood Welfare Society (TNWS). The Company has contributed in setting up a Wellness Hub that includes "Texmaco Arogyam Physio Centre", a State-of-the-Art Gym, and "Yoga Fitness Centre", surrounded by green environs at its premises, managed by TNWS. With a view towards Conservation of Environment, the Company has taken up another drive of upgrading the existing ECO Park and planted around 1000 trees. To promote Sports amongst youth in the local area, a playground has been developed with Floodlights. All these initiatives towards a sustained social responsibility distinguish the Company from others in the business sector.
The Company places utmost importance to CSR activities and have initiated a series of CSR programmes especially on healthcare, education and general well-being of society at large. It however, could not spend the requisite amount as prescribed under Section 135 of the Companies Act, 2013 towards CSR activities as the projects undertaken by the Company were in the process of being stabilized. The Company had spent INR 23.62 lakhs out of INR 29.74 lakhs towards CSR expenditure. The Annual Report on CSR activities is enclosed as Annexure A.
Your Company has started a sustainability initiative with the aim of going green and minimising the impact on environment. Your Company has already started sending Annual Report, Notices, etc., through e-mails to the Shareholders, whose e-mail IDs are registered with their Depository Participants. In case Shareholder wishes to receive a printed copy, they may please send a request to the Company, after which a printed copy of the Annual Report will be sent. Members are requested to support this initiative by registering / updating their e-mail IDs for receiving Annual Report, Notices, etc., through e-mail.
PARTICULARS OF EMPLOYEES
The number of employees as at 31st March 2017 was 1919. In terms of the provisions of Section 197(12) of the Companies Act, 2013 (Act) read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is provided as Annexure B.
The disclosures pertaining to the remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are enclosed as Annexure C.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information as required under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014, is enclosed as Annexure D.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Meetings of the Board
During the year under review, six Board Meetings were held on 30th May 2016, 25th July 2016, 3rd September 2016, 27th October 2016, 30th January 2017 and 14th February 2017.
Change in Directors and Key Managerial Personnel
During the year, Mr V. K. Sharma, Executive Director (Retd.), RBI, was appointed as an Additional Independent Director w.e.f. 29th June 2016 and his appointment was approved as Independent Director of the Company by the Shareholders at the Annual General Meeting held on 26th September 2016. Mr A. K. Vijay, retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting. The Board has recommended his re-appointment.
The Company has formulated a Policy for performance evaluation of Independent Directors, Board Committees and other Directors, by fixing certain criteria, which was approved by the Nomination and Remuneration Committee and adopted by the Board. The criteria for the evaluation include their functioning as Members of Board or Committees of the Directors. A structured questionnaire, evolved through discussions within the Board, has been used for this purpose. Further on the basis of recommendations of the Nomination and Remuneration Committee and the performance review by Independent Directors, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors.
Appointment of Directors and Remuneration Policy
The Nomination and Remuneration Committee has approved the criteria to determine the appropriate characteristics, skills and experience for the Board as a whole and its individual members with the objective of having a Board of eminent qualified professionals, entrepreneurs with diverse backgrounds and experience in business, governance, education and public service.
Based on the recommendations of the Nomination and Remuneration Committee, the Board has approved the Remuneration Policy for Directors, Key Managerial Personnel and other employees of the Company.
The policy ensures equity, fairness and consistency in rewarding the employees on the basis of performance against set of objectives. A copy of the policy is enclosed as Annexure E.
Declaration by Independent Directors
All Independent Directors of your Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
AUDIT COMMITTEE AND AUDITORS Composition of Audit Committee
The composition of the Audit Committee is provided in the Report on Corporate Governance as attached to the Directors'''' Report.
Messrs K. N. Gutgutia & Co., Chartered Accountants, the present Statutory Auditors of the Company, who have been distinguished Auditors for few decades, are retiring in compliance with the Section 139 of the Companies Act, 2013 at the conclusion of the forthcoming Annual General Meeting. The Company acknowledges the valuable services rendered by Messrs K. N. Gutgutia & Co.
The Board of Directors of the Company on due consideration is proposing to appoint Messrs L. B. Jha & Co., Chartered Accountants, a reputed practicing firm as Statutory Auditors for a period of 5 years from the conclusion of the forthcoming Annual General Meeting.
Messrs L. B. Jha & Co., has consented the proposed appointment and confirmed that their appointment, if made, would be within the limits mentioned under Section 141(3)(g) of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014. The Audit Committee and the Board of Directors recommend the appointment of Messrs L. B. Jha & Co., Chartered Accountants as Statutory Auditors of the Company.
Your Company has appointed Messrs DGM & Associates, Cost Accountants, for conducting the Cost Audit for FY''''18 in terms of the provisions of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014 issued by the Ministry of Corporate Affairs.
Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company has appointed Messrs S. R. & Associates, Company Secretaries, as Secretarial Auditor, to conduct the Secretarial Audit of the Company for the FY''''2016-17.
The Secretarial Audit Report is enclosed as Annexure F.
Whistle Blower Policy
The details on the Whistle Blower Policy are provided in the Report on Corporate Governance as attached to the Directors'''' Report.
INTERNAL FINANCIAL CONTROLS AND RISK MANAGEMENT
The Company has a proper and adequate system of internal controls. This ensures that all transactions are authorized, recorded and reported correctly, and assets are safeguarded and protected against loss from unauthorized use or disposition. In addition, there are operational and fraud risk controls, covering the entire spectrum of internal financial controls. The system is commensurate with the size and the nature of operations of the Company.
The Audit Committee regularly reviews the internal control system to ensure that it remains effective and aligned with the business requirements.
The Risk Management Policy adopted by the Company has in its scope, the establishment of a process for risk assessment, identification of risks both internal and external, and a detailed process for evaluation and treatment of risks and is reviewed periodically by the Audit Committee. The objectives pertaining to Risk Management is to monitor and review the risk management plan of the Company including identification therein of elements of risks, if any, and such other related functions.
(a) There has been no change in the nature of business of the Company during the year under review.
(b) There are no significant and material orders passed by the Regulators/ Courts that would impact the going concern status of the Company and its future operations.
(c) There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of Financial year and the date of this Report.
(d) Share Capital & ESOP
During the year, your Company has allotted 2,18,875 Equity Shares of H1 each to eligible Employees pursuant to exercise of Options under the Texmaco Employee Stock Option Scheme 2014.
The Company, pursuant to the Scheme of Amalgamation between the Company and Kalindee Rail Nirman (Engineers) Limited (''''Kalindee'''') and their respective shareholders and creditors (''''Scheme''''), has allotted 89,12,395 Equity Shares of Hi/- each to the Equity Shareholders of Kalindee i.e. 106 Equity Shares of H1/- each of the Company against every 100 Equity Shares of the Kalindee of H10/- each held by them in Kalindee as on Record Date i.e. 10th February 2017, post approval of the Scheme by the Hon''''ble High Courts at Calcutta and Delhi. Such shares rank pari passu with the existing shares of your Company. Consequent to the above allotments, the paid up capital of the Company has increased to 21,94,14,993 Equity Shares of H1/- each, as on 31st March 2017.
Disclosures with respect to the Stock Options, as required under Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014 are available in the Notes to the Financial Statements and can also be accessed on the Company''''s website www.texmaco.in.
During the year, the Company has not accepted any Deposits under the Companies Act, 2013.
(f) Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment which meets at regular intervals. No complaints pertaining to sexual harassment were received during FY 2016-17.
Extract of Annual Return
The extract of Annual Return in Form no. MGT 9 as on the financial year ended 31st March 2017 is enclosed as Annexure G.
Dividend Distribution Policy
The Dividend Distribution Policy of the Company is attached as a separate Annexure H forming a part of this Report.
Related Party Transactions
All related party transactions during the financial year were entered in the ordinary course of business and on arm''''s length basis. All related party transactions are reported to and approved by the Audit Committee and Board of Directors. There were no materially significant related party transactions made by the Company with the Promoters, Directors, Key Managerial Personnel which may have a potential conflict of interest with the Company at large and as such disclosure in Form AOC-2 is not required.
The Company has also formulated a policy on dealing with Related Party transactions and the same is disclosed on the Company''''s website. The web link for accessing such policy is http://texmaco.in/webfiles/texmaco/file/RELATED%20 PARTY%20TRANSACTION%2QPOLICY.PDF.
Particulars of Loans, Guarantees and Investments
The details of Loans, Corporate Guarantees and Investments made during the year under the provisions of Section 186 of the Companies Act, 2013 have been disclosed in the Note nos. 1.04, 1.14, 1.36, 1.03 and 1.09 respectively to the Financial Statements of the Company.
A separate report on Corporate Governance pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached as Annexure I and forms a part of this Report.
Business Responsibility Report
A separate report on Business Responsibility pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached as Annexure J and forms a part of this Report.
DIRECTORS'''' RESPONSIBILITY STATEMENT U/S 134(5) OF THE COMPANIES ACT, 2013
Your Directors state:
(a) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) that such accounting policies are applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c) that proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) that the annual accounts of the Company have been prepared on a going concern basis;
(e) that the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) that the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
For and on behalf of the Board
Place: Kolkata S. K. Poddar
Dated: 22nd May 2017 Chairman