The board of directors, which met in the city on Friday to finalise the annual accounts of the company, declared a dividend of 20 per cent despite registering a 63.71 per cent decline in the profit after tax, when it dropped to Rs 4.49 crore from Rs 12.38 crore in 1997-98. Profit before tax dropped to Rs 8.03 crore from Rs 9.23 crore (excluding profit on sale of fixed assets), a fall of 13 per cent.

Sales of the company in 1998-99 also dropped by 27.51 per cent from Rs 265.44 crore in 1997-98 to Rs 192.42 crore, due to a substantial curtailment in wagon off-take by the Indian Railways and strategic downsizing of operations in textile machinery division. The directors have mentioned about the demand recession, which affected the boiler and sugar machinery division.

In a statement from the company, the directors saythat the capital goods sector will be the first to bear the burnt of the political uncertainty and it has already been reflected in the company's order book for the current fiscal. "In particular, the fortunes of the company would depend on the orders from Indian Railways, which are overdue for placement for the current year. Further, in the background of the aforesaid recent cut in wagon orders by the Railway Board and the reported slackness in the revenue earning traffic, the wagon industry is naturally concerned about the quantum of order, which will have a significant bearing in the industry's performance," the directors noted.

During 1998-99, Texmaco suffered a fall of wagon orders from 4,347 four wheeler units to 3,322 four wheeler units of the previous year. Moreover, the Railway Board curtailed some wagon orders, which were place earlier. However, the orders were later reinstated but at a reduced provision price.

"Moreover, wagons under the Own-Your-Wagon scheme also shrank to 795 four wheelerunits against 1,115 four wheeler units of the previous year. As a result of all these factors, the company could turn out only 4,245 four wheeler units during the year as against 5,470 four wheeler units in the previous year," the directors stated.

However, the structural division performed well and it received an order from Noell Stahl-und Maschinenbau GmbH, a German company, for supplying hydraulic gates and allied equipment for the Kaligandaki HDP project in Nepal.

On the foundry division, the report states: "Modernisation of the steel foundry is well under way and shall be completed shortly. Production of couplers has been established and the foundry is in a position to meet the total requirement of bogies and couples of wagon division, besides effecting supplies to other wagon builders." However, it added that the future of switches and crossings activity is clouded due to absence of definite demands projections from Indian Railways.