Texmaco

The Directors have pleasure in presenting the Sixty Eighth Annual
 Report of the Company along with the Audited Accounts of the Company
 for the year ended 31st March, 2008.
 
 FINANCIAL RESULTS
 
                                                       Rs. in Lakhs 
                                          2007-2008       2006-2007
 
 Operating Profit (PBIDT)                  11864.02         5238.85
 
 Less: Interest                              905.87          402.22
 
 Gross Profit (PBDT)                       10958.15         4836.63
 
 Less: Depreciation                          886.03          523.09
 
 Profit before Taxation                    10072.12         4313.54 
 
 Provision for Taxation:
 
 Current Tax                                3067.43         1290.00
 
 Fringe Benefit Tax                           28.46           33.00
 
 Deferred Tax Liability/(Asset)                3.21           68.20
 
 Profit after Taxation                      6973.02         2922.34
 
 Less : Extraordinary items:
 
 VRS (Engg. Divn.)                            63.95           74.73
 
 Net Profit / Loss                          6909.07         2847.61
 
 Add: Balance brought forward 
 from previous year                         1798.20          408.81
 
 Appropriations                             8707.27         3256.42
 
 Proposed Dividend on 
 Equity Shares (Incl.Tax)             ( 75%) 950.06    (40%) 483.22
 
 Proposed Dividend on
 Pref. Shares (Incl. Tax)                (6%) 12.83           -
 
 General Reserve                            4000.00          975.00
 
 Balance Carried Forward                    3744.38         1798.20
 
                                            8707.27         3256.42
 
 Dividend
 
 The Directors have pleasure in recommending the payment of dividend of
 75% (Rs.7.50 per share) for the year ended March 31, 2008 having regard
 to the commendable performance of the Company.
 
 The year under review has been an excellent year of growth and
 prosperity for the Company. The Gross Turnover at Rs.937.18 crore was
 higher by 97% compared to Rs.476.13 crore in the previous year. It does
 not include the value of free-supply inputs including steel and
 components of over Rs.205 crore provided to the Company by Indian
 Railways and other clients for some large value contracts. The compound
 annual growth of the Companys turnover has been more than 48% over
 last 5 years.
 
 The Gross Profit for the year (PBDT) increased by 127% to Rs. 1 09.58
 crore against Rs.48.37 crore, and profit before tax (PBT) by 133% to
 Rs.100.72 crore against Rs.43.14 crore in the previous year. The Net
 Profit at Rs.69.09 crore was higher by 143% compared to Rs.28.48 crore
 in the previous year, after providing enhanced Tax liability of
 Rs.30.99 crore against Rs.l 3.91 crore only in the previous year. The
 Deferred Tax Liability for the year has been created in the Profit and
 Loss Account in accordance with the Accounting Standard 22 Accounting
 for taxes on Income, issued by the Institute of Chartered Accountants
 of India.
 
 Consequent to the merger of Shree Export House Limited, Neora Hydro
 Limited and Evershine Merchants Pvt. Limited in terms of an order
 passed by the Honble High Court, Kolkata, effective from 1st August,
 2007, the Share Capital of the Company stands enhanced from Rs.l
 ,032.58 lacs to Rs.1 ,107.83 lacs. The aforesaid results for the year
 have taken into account the said merger.
 
 THE MANAGEMENT DISCUSSION AND ANALYSIS
 
 The Management had taken a series of measures to encash the
 unprecedented opportunities thrown up by reforms in the Rail Sector,
 where it enjoys undisputed leadership over the years. These have
 started yielding result as reflected in the spectacular performance of
 the company during the year. The management has further intensified its
 efforts to build the Companys engineering strength and competitive
 ability to make a thrust in the area of hi-tech, new design and
 commodity specific wagons. Efforts are underway to fill the market
 niche in its other core competence areas through continuous development
 of infrastructure and forging new alliances with renowned
 multi-national corporations.
 
 The Management notes with concern the current inflationary spiral in
 the wake of oil price surge to over $ 1 20/bl, credit squeeze,
 world-wide food shortage, steep escalation in the cost of basic
 minerals, steel etc. It is vigilant on all fronts and adopting a
 prudent course to safeguard its working from the economic uncertainties
 as best as possible.
 
 HEAVY ENGINEERING DIVISION
 
 ROLLING STOCK
 
 The Rolling Stock Division of the Company excelled in turning out the
 best-ever performance during the year, contributing handsomely to the
 operating results. There was a record turn-out of 4129 wagons (VUs)
 during the year as against 2843 wagons in the previous year, an
 increase of around 45% comprising deliveries to both Indian Railways
 and private operators. Precognition of its outstanding performance in
 the industry, the company was awarded the highest-ever order by the
 Railway Board for 2539 wagons against 2007-08 RSR Besides, the Railways
 placed additional orders on the company for 692 nos. comprising special
 wagons, optional quantity & certain wagons transferred from
 non-performers in the industry.  Significantly, there is a progressive
 switch-over from conventional to special purpose wagons being procured
 by Railways.  During the year, the company delivered 325 nos. Stainless
 Steel BOXNLW wagon to Indian Railways.
 
 There has been a steady flow of orders to the Company under Public
 Private Partnership (PPP) scheme of the Indian Railways.  Altogether,
 the total orders booked by the Company during the year were for 6814
 wagons, valued approx. Rs.1100 crore including 3583 wagons valued
 Rs.775 crore from private parties. (It bears mention that the value of
 the Railway orders is exclusive of steel, wheelsets & bearings, which
 are supplied free of cost by Indian Railways). The Company delivered a
 series of Container Freight Rakes as also wagons for bulk
 transportation of alumina, food grains, caustic soda, etc. to private
 parties during the year.
 
 Recently, Indian Railways have floated a tender for procurement of
 14412 wagons against 2008-09 RSP, which is due to be opened on May
 29/08. The Company hopes to get a substantial share thereof based on
 its performance in keeping with the tender conditions.
 
 According to the current projections, IR traffic is expected to grow
 from 794 mn tons in FY 2008 to 1100 mn tons by the end of the current
 5-Year Plan in 2012 . In the budget for FY 2008-09, there is a clear
 charter of Indian Railways to increase capacity for its bread and
 butter freight business. The budget envisages investment of about
 Rs.750 bn over the next 7 years to augment capacity on a Dedicated
 Freight Corridor linking Delhi, Mumbai, Chennai and Kolkata, and the
 lines to and from the major ports. Coal accounts for 40% of freight
 revenues of Indian Railways, other major contributors being iron ore,
 steel, cement, container traffic, and foreign trade movement to and
 from gateway ports. The traffic in these sectors is slated to double by
 201 1-12. Hence, there would be a pressing need for adding capacity for
 freight. Your company expects to play a pivotal role in the Indian
 Railways new visionary moves.
 
 With a view to encouraging investment in modernizing and upgrading the
 designs, the Railways have announced a new policy for simplifying the
 process of certification and acceptance of new wagons to the builders
 own designs, whilst protecting intellectual property rights of the
 suppliers. It is coupled with Wagon Leasing Policy and the Liberalized
 Wagon Investment Scheme to attract investment in special purpose, high
 capacity wagons. Accordingly, the company has geared to move fast
 forward in this direction, and as reported earlier it has already
 signed a Memorandum of Agreement with United Group Ltd., Australias
 largest end-to-end rail technology solutions provider.
 
 Coaches & Loco Components
 
 The Company is also embarking on the manufacture of EMUs and Loco
 Shells. The Railway Board has placed a trial order on the Company for
 manufacture and supply of one EMU rake valued at Rs.6.7 crore. The
 planning for manufacture thereof is under way. Further, the Company has
 received a developmental order from Chittaranjan Locomotive Works (CLW)
 valued at Rs.3.8 crore for fabrication of 8 nos. body shells for WAG-9
 electric locomotives. The preparatory work thereon has been taken up.
 
 HYDRO MECHANICAL EQUIPMENT & STRUCTURALS
 
 The turnover for the year at Rs.60 crore was marginally higher than
 that of the previous year. It would have been appreciably higher but
 for the constraints in execution, especially due to non-availability of
 working fronts from the civil contractors of the customers. The project
 work was generally affected owing to various geological, environmental,
 and re-habilitation problems faced by the Project Authorities.  It is
 expected that there would be a substantial increase in turnover in the
 current year.
 
 During the year, the Division bagged an order valued approx. Rs.42
 crore for Loharinag Pala H.E. Project (600 MW) of NTPC in Uttaranchal,
 which is the first project the Company would be executing for NTPC in
 hydel sector.
 
 The year marked completion of the supply of hydro-mechanical equipment
 and successful commissioning of 51 0 MW Teesta Stage-V H.E. Project in
 Sikkim. The Project Authority, NHPC Limited, has formally acknowledged
 the Companys performance under Challenging Circumstances and
 conveyed compliments & congratulations to the Companys team. The work
 on Sewa Stage-ll H.E. Project (120 MW), J & K, is nearing completion,
 while that on Teesta Low Dam H.E. Project (132 MW), West Bengal, is
 progressing satisfactorily. In the prestigious Subansiri Lower H.E.
 Project (2000 MW), Arunachal Pradesh, the progress is on schedule.
 
 Since power continues to be a major constraint in achieving double
 digit growth of our economy, the Government of India is according high
 priority for development of hydel power in the 11th & 12th 5-year
 plans. NHPC, which is a nodal organization of the Government of India
 for fulfilling the target, has announced its plan to become a 1 0,000
 MW firm by the end of the 11th Plan from its current capacity of about
 5,000 MW. Your Company is ideally placed to participate in this high
 growth sector.
 
 The division is also exploring the possibility of diversification in
 Ship Cranes & Shipbuilding, and Railway Bridges, which have good
 business potential.
 
 PROCESS EQUIPMENT DIVISION
 
 The Division achieved a turnover of approx. Rs.40 Crore It has executed
 orders of Cane Milling Plant of size 39x78and also High Pressure
 Boiler of 90 T/Hr. capacity, having Pressure of 67 Kg/an at 510 C
 Temperature. The supply and erection of 3 Nos. Horton Spheres of 16.18
 M. Diameter for Indian Space Research Organization (ISRO) have been
 completed.  Orders for 3 Nos. large size Buffer Vessels, each of 3.2 M.
 Diameter x 28.5 M. Long and weighing about 1 05 MT for Praxair India
 Ltd. for storage of gaseous oxygen, are under execution. The Division
 has also booked orders to supply 1 6 nos.  Buffer Vessels of different
 sizes which would be executed in the current year.
 
 STEEL FOUNPRY DIVISION
 
 The Foundry achieved the highest-ever production of 19792 tons and
 turnover of Rs.1734 mn, which are 47% and 33% higher respectively
 compared to the previous year. It has maintained its leadership in the
 supplies of steel castings for manufacture of Rolling Stock. The
 working of the new State-of-the-Art Foundry equipped with Kunkel Wagner
 Plant from Germany has fully stabilized.
 
 The quality of castings produced in the new Foundry meets international
 standards. Its reputation is gaining world-wide recognition, and there
 has been a stream of export enquiries. In fact, the Division has booked
 some export orders for High-Tech Castings and already exported two
 pilot batches of casting, one to USA and other to Australia.
 
 The Company is actively working on expansion of the new foundry and has
 also undertaken modemization-cum-expansior of the old foundry. It is
 expected to be completed by the middle of 2009, which.will raise the
 capacity of the foundry to 40000 tons per year.
 
 During the last quarter of the year, there has been a steep escalation
 in the cost of major inputs for steel making which has put the margins
 under pressure.
 
 AGRO MACHINERY
 
 During the year, the Ministry of Agriculture, Govt, of India, enforced
 requirement of a new Emission Certificate (Bharat Trem-lll) for Power
 Tillers. This resulted in disruption of the off-take, which was 254
 Nos. only valued at Rs.21 7 lacs. However, the new Emission Certificate
 has since been acquired, and the Division is well-poised to receive
 good orders in the current year.
 
 MINI HYDEL POWER
 
 The Companys JV for 3 MW Mini-Hydel Power Project on river Neora in
 Darjeeling Dist. has been merged with the Company as per approval of
 the Scheme of Merger by the Honble High Court of Kolkata, effective
 from 1st August 2007. The project has been facing certain problems on
 account of inadequate water discharge during the lean/semi-lean season
 (October-May) and also technical issues relating to the turbines
 supplied by M/s Alstom. All efforts are being made to resolve the
 problems before arrival of Monsoon to be able to generate full power
 during the peak season. M/s WBIDC have granted the capital subsidy of
 Rs.2.5 crore to the Company under the State Subsidy Scheme for
 Mini-Power Project, and the amount has since been received by the
 Company in the current year.
 
 EXPORTS
 
 The exports of the Company during the year were approx. Rs.315 crore.
 The first export shipment of hi-tech Industrial and Railway Castings
 from the new State-of-the-Art-Foundry started during the year to
 renowned buyers in USA & Australia. The approval of AAR for export of
 Cast Steel Bogies for wagons is expected to be received in the next
 couple of months.
 
 REAL ESTATE
 
 The decision of the Honble Supreme Court of India on the legal issues
 relating to Birla Mills Land at Delhi is still awaited.  The hearing
 has been completed, and the decision has been reserved which is
 expected to be announced in due course.  The development plans of the
 property will be undertaken after the decision of the Honble Supreme
 Court of India.
 
 During the year, under a Scheme of Amalgamation approved by the Honble
 High Court of Calcutta, Evershine Merchants Pvt. Ltd., owning a
 property in Gurgaon, comprising of an area of 66,500 Sq.ft. (approx.),
 has been merged with the Company. It has been rented out to
 multinationals and other Companies of international repute with
 suitable lock-in-period, yielding an income of Rs.9 crore per annum,
 going upto Rs.10 crore per annum next year, with a provision of
 escalation in rent thereafter. The property is at a prime location
 having good prospect for long term capital appreciation.
 
 HUMAN RELATIONS
 
 Your Company has been widely acclaimed as a model employer for its
 unique track record of industrial harmony over several decades. In
 fact, the constructive cooperation between the workmen and the
 Management is the forte of the company.  The Management values human
 assets and has committed substantial resources to harness them. The
 Company has entered into a collaboration with the renowned Birla
 Institute of Technology & Science (BITS), Pilani, to promote
 industry-centric knowledge and skill upgradation. It has set up
 BITS-Texmaco Centre of Excellence at its premises in Belgharia to offer
 work-integrated-learning leading to B.S. Degree in Manufacturing
 Engineering and M.S. Degree in Engineering Management to the working
 professionals in Texmaco and also other industries in Kolkata. This
 will be the first programme of its kind in manufacturing technologies
 in Eastern India. The company has also initiated various other
 programmes to upgrade the technical skills of the workmen and
 communication skills of the staff at all levels.
 
 Your Directors appreciate the commitment and contribution of the
 workmen, staff and officers in the successive milestones of the company
 through their higher levels of performance.
 
 OPPORTUNITY & THREATS
 
 India is the second fastest growing economy in the world. It is
 attracting huge foreign direct investment and capital flows in the
 market place. Your Company engaged in critical infrastructure areas
 such as Rail Transport and Power, has ideal opportunities to mobilize
 the needed resources to leap into a new growth trajectory and reap its
 full potential. The Rail Sector, in particular, where your Company has
 been the acknowledged leader, is truly exciting with prospect of
 manifold growth spurred by the new initiatives of the Ministry of
 Railways. Your Directors have constituted a Committee of Directors to
 examine a Scheme of Re-organization in order to enhance shareholders
 value. The basic concept of the scheme would be to transfer the core
 business of the Engineering Division to a Subsidiary Company which can
 then focus on accelerated growth of engineering business and
 diversification in other synergistic areas. This will also enable the
 new Company to tap the private equity market to take advantage of the
 emerging business opportunities in infrastructure Sector.
 
 India story is based on strong fundamentals and calls for a long-term
 strategic plan for sustained growth. Although, the business climate
 currently appears to be somewhat clouded owing to the economic
 slow-down in some advanced countries, particularly the US, it is hoped
 that Indias economy is resilient enough and reasonably insulated from
 any major global impact.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 In accordance with Accounting Standard 21 {Consolidated Financial
 Statements), the Group Accounts form part of this Report & Accounts.
 The Group Accounts have been prepared on the basis of audited financial
 statements received from the subsidiaries, as approved by their
 respective Boards.
 
 CORPORATE GOVERNANCE
 
 A separate report on Corporate Governance pursuant to Clause 49 of the
 Listing Agreement with the Stock Exchanges is attached as a separate
 Annexure and forms a part of this Report.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 U/S 217(2AA)OF THE COMPANYS ACT, 1956
 
 Your Directors state:
 
 (i) That in the preparation of the annual accounts, applicable
 accounting standards have been followed, along with proper explanations
 relating to material departures, and the Notes in the Auditors Report
 in this regard are self-explanatory;
 
 (ii) That such accounting policies have been selected and applied
 consistently and judgements and estimates made that are reasonable and
 prudent, so as to give a true and fair view of the state of affairs of
 the Company at the end of the financial year, and of the profit of the
 Company for that period;
 
 (iii) That proper and sufficient care has been taken for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1 956 for safeguarding the assets of
 the Company, and for preventing and detecting fraud and other
 irregularities;
 
 (iv) That the annual accounts have been prepared on a going concern
 basis.
 
 The SEBIs guidelines regarding Corporate Governance have been
 implemented by the Company. An Audit Committee of the Board and
 Shareholders / Investors Grievance and Share Transfer Committee have
 been constituted and are functioning in keeping with the given
 guidelines.
 
 PARTICULARS OF EMPLOYEES
 
 The number of employees as at 31st March, 08 was 2014. A statement
 containing the required particulars of employees as stipulated under
 Section 21 7(2A) of the Companies (Particulars of Employees) Rules, 1
 975, is enclosed.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 As required under Section 21 7(1 )(e) of the Companies Act, 1956, read
 with Rule 2 of the Companies (Disclosures of Particulars in the Report
 of the Board of Directors) Rules, 1 988, information relating to
 conservation of energy, technology absorption and foreign exchange
 earnings and outgo is annexed.
 
 DIRECTORS
 
 Dr. K. K. Birla, Shri B. Rai and Shri H. C. Gandhi Directors of the
 Company, retire by rotation and are eligible for re-election.  
 
 AUDITORS
 
 The Auditors, M/s. K.N. Gutgutia & Co, retire and are eligible for
 re-appointment.
 
                                    For and on behalf of the Board
 
 NEW DELHI                                     K. K. BIRLA
 Dated: 16th May, 2008                            Chairman