Texmaco Rail & Engineering has formally responded to a voting recommendation issued by proxy advisory firm Institutional Investor Advisory Services India (IiAS) concerning the company's proposed Long Term Incentive Plan (LTIP) Scheme, 2026. The response, dated May 15, 2026, was submitted to both the National Stock Exchange of India and BSE Limited, with a request to disseminate the clarification to shareholders ahead of the postal ballot scheduled on the same date.

Background and Context

The postal ballot notice, originally dated March 31, 2026, sought shareholder approval for the Texmaco Rail Long Term Incentive Plan ("LTIP") Scheme, 2026. IiAS had issued a voting recommendation on this resolution, prompting the company to provide a detailed clarification addressing the proxy advisor's observations. The company's Company Secretary & Compliance Officer, Sandeep Kumar Sultania, signed and submitted both the exchange communication and the direct response to IiAS.

Performance Metrics Underpinning the LTIP

The company emphasized that its LTI framework is anchored in performance-based vesting, structured to align leadership incentives with long-term shareholder value creation. The vesting conditions are tied to a defined set of financial and value-creation parameters. The following table outlines the performance metrics and their respective weightages applied for each year of the scheme:

The company clarified that final vesting at the end of three years will be determined by the average performance across all three years of the scheme period. Importantly, no vesting will occur if 85% of the stated targets are not achieved, underscoring the plan's stringent performance orientation.

Rationale for Non-Disclosure of Target Thresholds

Addressing IiAS's concern regarding the absence of specific target thresholds in the resolution, the company stated that actual targets have not been disclosed primarily to avoid revealing commercially sensitive forward-looking information that could impact its competitive positioning. The company maintained that this approach balances shareholder transparency with the practical considerations of operating in a competitive business environment.

Governance Assurances Provided

To address governance-related observations, the company provided the following assurances to IiAS:

• The performance conditions are clearly defined, measurable, and have been approved by the Nomination & Remuneration Committee (NRC).
• Vesting outcomes will be subject to rigorous evaluation against pre-defined metrics.
• The company is committed to enhanced transparency and will disclose achievement levels and vesting outcomes in its Annual Report post-vesting, in line with evolving governance best practices.

Company's Appeal to IiAS

Concluding its response, Texmaco Rail & Engineering expressed confidence that the clarifications provided adequately address IiAS's concerns. The company requested IiAS to reconsider its observation and positively revise its voting recommendation accordingly. Shareholders were urged to consider the company's clarification while taking their voting decision on the postal ballot resolution.

Texmaco Rail & Engineering announced its audited standalone and consolidated financial results for the quarter and year ended March 31, 2026. The board recommended a dividend of 75%, or Re. 0.75 per share, subject to shareholder approval. In a significant commercial development, the company secured a massive export order worth $430.57 million (~₹4,045 crore) from Tsiko Africa Logistics and Barberry Holdings. The board also approved strategic investments in the defence sector and a new collaboration for railway signalling. However, the company acknowledged tough marketing and operating conditions in Q4 FY26, citing global supply chain issues, US tariffs, geopolitical tensions, and trade uncertainties as key performance factors — leading to a contingency provision of INR 700 crore. According to the company's latest investor presentation, Texmaco Rail expects over 3 times growth in exports of components and railway castings in the next 2-3 years, with the current order book standing at Rs. 5,408 Cr.

Q4 Financial Performance

The company reported a notable improvement in its Q4 consolidated financial performance despite the challenging environment. Net profit rose 45.1% to Rs. 58 Cr compared to Rs. 39.8 Cr in the same period last year. EBITDA stood at Rs. 116 Cr versus Rs. 118 Cr year-on-year, with the EBITDA margin expanding to 10.0% from 8.8%. Revenue for the quarter stood at Rs. 1,167 Cr, compared to Rs. 1,346 Cr in the corresponding quarter of the previous year.

Operating Challenges and Contingency Provision

Texmaco Rail flagged tough marketing and operating conditions during Q4 FY26 that adversely affected revenue. The company cited global supply chain disruptions, US tariffs, geopolitical tensions, and broader trade uncertainties as key factors impacting performance. In response to these headwinds, the company has made a contingency provision of INR 700 crore. This provision reflects the company's cautious approach to navigating an uncertain global trade environment.

Operational Highlights

Operationally, Texmaco Rail & Engineering delivered 2,196 Freight Cars during Q4 FY26, while Foundry Division volumes totalled 8,964 MT. For the full year, Freight Car deliveries reached 8,372 units, and the Foundry Division achieved 34,301 MT in sales. The company maintained a strong order book of Rs. 5,408 Cr as of March 31, 2026.

Major Export Order Win

Texmaco Rail & Engineering secured a landmark export order valued at $430.57 million (~₹4,045 crore) from Tsiko Africa Logistics and Barberry Holdings. This order represents a significant international business milestone for the company, underscoring its growing footprint in global railway and logistics markets. The company expects major revenue from the South African order by FY28, with deliveries concluding by FY28. The investor presentation further highlights the company's expectation of over 3 times growth in exports of components and railway castings over the next 2-3 years.

Outlook and Strategic Targets

Looking ahead, Texmaco Rail has set a goal to double its revenue and reach sustainable mid-teen EBITDA margins. For FY27, the company anticipates growth in both revenue and profit compared to the previous year. On the domestic front, the company anticipates a short-term demand of 150,000 to 200,000 wagons from Indian Railways, along with a steady annual requirement of 25,000 to 30,000 wagons for the next 5-7 years.

Strategic Decisions

The board approved entering the defence business through its subsidiary, Texmaco Defence Technologies Ltd. (TDTL), with an investment of up to Rs. 200 Crores over 3 to 5 years. Shares will be acquired at par value of Rs. 10 per share. Texmaco Rail & Engineering also entered into an agreement with Sigma Rail Systems Pvt. Ltd. for collaboration in railway signalling, components, safety, and power electronics. This domestic arrangement is a related party transaction involving promoter group members Abhishek Holdings Pvt. Ltd., Shri S.K. Poddar, and Smt. Jyotsna Poddar, conducted on an arm's length basis.

Auditor Reappointments

The board approved the reappointment of key auditors for FY 2026-27. M/s Deloitte Touche Tohmatsu India, LLP was reappointed as Internal Auditors, while M/s DGM & Associates, Cost Accountants was reappointed as Cost Auditors. Both reappointments were effective May 12, 2026.