BOARD OF DIRECTORS COMPANY · PDF fileA horizontal cylindrical shell with its inner surface...

Mr. Vinod Narain Chairman – Non-Executive - Independent

Mr. Bhadresh K. Shah Managing Director – Executive - Promoter

Mr. Rajendra S. Shah Director – Non-Executive - Independent

Dr. S. R. Ganesh Director – Non-Executive

Mr. Bhupendra A. Shah Director – Non-Executive - Independent

Mr. Sanjay S. Majmudar Additional Director – Non-Executive

(w.e.f. 07.05.2007)

BOARD OF DIRECTORS

COMPANY SECRETARY

STATUTORY AUDITORS

Mr. S. N. Jetheliya

M/s.Talati & Talati

Chartered Accountants,

Ambica Chambers,

Near Old High Court,

Navrangpura,

AHMEDABAD-380 009

REGISTERED OFFICE

115, GVMM Estate,

Odhav Road,

AHMEDABAD – 382 410

Phone No. 079-22901078-81

Fax No. 079-22901077

Website : www.aiaengineering.com

REGISTRAR & TRANSFER AGENT

Intime Spectrum Registry Limited

C/13, Pannalal Silk Mills Compound,

Kantilal Maganlal Ind. Estate,

L.B.S. Marg, Bhandup (West)

MUMBAI – 400 078

Phone No. 022-25960320-28

Fax No. 022-25960329

BANKERS

State Bank of India

GVMSAV Ltd. Branch,

Odhav Road,

Ahmedabad - 382 410

ABN AMRO BANK N.V.

7, Alkapuri, R.C. Dutt Road,

Vadodara – 390 007

CONTENTS

The World of AIA Engineering 00

Numbers & Beyond 00

Directors’ Report 00

Report on Corporate Governance 00

Management Discussion and Analysis 00

Standalone Financial Statements 00

Consolidated Financial Statements 00

17th ANNUAL REPORT 2006-07

AIA ENGINEERING LIMITEDAIA ENGINEERING LIMITEDAIA ENGINEERING LIMITEDAIA ENGINEERING LIMITEDAIA ENGINEERING LIMITED

SEGMENT I

THE WORLD OF AIA ENGINEERING

1 0



AIA Engineering – Riding the Infrastructure Boom

The macro-economic backdrop…

Over the last few years, India has emerged as one of the fastest growing

economies of the world. India’s GDP grew by a record 9.4 per cent in

2006-07, following two years of over 8 per cent growth.

The once tepid manufacturing sector propelled growth in the country’s

Gross Domestic Product (GDP). It grew by a robust 12.3 per cent in

2006-07. The services sector continued its good run as evidenced by

yet another double-digit growth performance.

In its bid to sustain this phase of high growth, the Government of India

is leaving no stone unturned. Massive investments, directly or via

public-private partnerships, are being put-up to improve India’s patchy

infrastructure. Building of the Golden Quadrilateral, the NSEW corridor,

construction and development of ports & airports (of both the existing

and the new ones) and adding capacities in the power sector are some

of the major initiatives that are already underway.

With infrastructure development getting its due focus, demand for key

raw material inputs – steel and cement – is rising at a brisk pace.

Since the current investment cycle is expected to last longer, companies

in the steel and the cement sectors are investing heavily to create new

capacities not only to meet future domestic demand but to also tap

demand from export markets.

Another infrastructure sector that is showing signs of acceleration in

growth is power generation. After growing at a rather modest rate of

3.5-5 per cent during the last six years ended March 2006, the electricity

sector recorded a robust 7.3 per cent growth in 2006-07. Growth in

the current fiscal is expected to be equally robust.

India being a power-deficit nation, investments in the power sector

are on the rise too. The private sector, which currently has less than

15 per cent share in India’s power generation capacity, is looking to

improve upon its share. To that effect, companies like Reliance Energy

and Tata Power have announced large investments.

17th ANNUAL REPORT 2006-073 0


Close to 50,000 MW of coal-based thermal power generating capacity is

proposed to be added during the 11th plan (2007-12), thereby making

way for a sustained growth in the power generation sector.

The mining sector is another big beneficiary of higher investment and

output from infrastructure industries such as steel, cement and power.

Minerals such as coal, iron ore and limestone are some of the key raw

material components for the aforesaid industries. Higher demand from

the user industries (in India) and a sustained global commodity cycle

have resulted in high mining activity, not just in India but across most of

the mineral rich nations.

The rise in mining activity in India is also reflected in the quarterly growth

(Jan-Mar’07) in the mining and quarrying index, which, at over 7 per

cent was the highest in recent years.

Where does AIA fit in…

The boom in the infrastructure sector and the resultant capital

expenditure augurs well for companies like AIA Engineering. It is one of

the unique companies in the value added high chrome metallurgy

segment catering primarily to the needs of the cement, utilities (power)

and mining sectors.

The company specializes in manufacturing mill internals, which are widely

used to carry out grinding operations in the industries mentioned above.

The grinding operations use two types of mills - tube mills (which are

horizontal) and vertical mills.

The primary purpose of the mill is to grind the raw materials / inputs,

which is a very crucial part of the production process given that it has a

direct bearing on cost and quality of the final output.

The company also offers services such as installation, supervision and

mill process optimization for greater efficiency as a part of its overall

offering.



A brief description of What We Do…

Tube Mill Operations

A horizontal cylindrical shell with its inner surface fitted with wear

resistant liners is what constitutes a tube mill, in case of grinding

operations for cement. Spherical balls of different sizes, collectively

known as the grinding media along with the material to be ground are

fed to the mill from one end. The mill is then made to rotate around

its axis. The first chamber liners are designed such that as a result of

this rotation, the grinding media is lifted to a specified height and

dropped on the material. The feed is then crushed and ground due to

the impact and abrasive action of the balls. Apart from the grinding

operations, the liners and the grinding balls protect the main body of

the mills from wear and tear. The mill is separated into two chambers

by an assembly of diaphragms, grates and black plates which screen

the feed such that only a certain size of feed can pass into the second

chamber. The end product of fine material is discharged from the

other end through a discharge diaphragm.

For mineral grinding, tube mills normally have a single chamber

without partition.

Tube Mill Internals – Product portfolio

Product Description AIA’s Cutting Edge

Grinding

Media

o Cast steel high chrome balls o Hard and abrasion & wear

resistant to deformation o Crack-proof on the surface o Well heat-treated so that

the core of the sphere balls have uniform distribution metallurgy

o Customized solutions o Uninterrupted mill operations o Optimum mill efficiency o Increase in mill availability

solution to the customer



Vertical Mill Operation

Grinding in these mills takes place when the feed material passes

between the rotating table liners and rollers.

Vertical Mill Internals - Product portfolio

Liners

o These impart suitable

trajectory to the high chrome balls

o Designed to avoid loss of

energy and breakage

o Uniquely designed for specific operations

o Optimum lifting action and

expansion of the ball charge

o Minimizes dead zone of the

ball charge

o Significant reduction of the

wear rate

o Minimum operating cost due

to longer lifetime

o Minimum downtime & inventory

Diaphragm

o They screen the material

from granulometry point of

view

o Aid optimum grinding efficiency by controlling the

size, timing and the feed

screening process

Product Description AIA’s Cutting Edge

Roller and Table liners

Manufactured as necessitated by application. Some types include:

o Mono-block rolls o Segmented rolls o Segmented tables o Grinding rings & hollow balls o Rolls and table segments

o Reliable performance o Different alloy-based

mills to optimize life span without sacrificing safety



Services:

Besides offering mill internals, AIA also advises on the composition

of grinding media (with respect to the total tonnage, the size

distribution, and its metallurgy). Further, it also designs other mill

internals depending on the feed and the desired fineness of the

finished product and also offers other services such as installation

supervision and mill process optimization for maximum efficiency.

The process improvement that AIA offers to its clients includes the

following:

Services rendered

Description

Mill Audit

o Complete understanding of the mill by AIA engineers o Thorough study of application parts for mill internals o To verify mill condition from maintenance & process

viewpoint o Identify bottlenecks, study wear-out & determination

of proposed guarantees

Designing

o Ensure right design for right application

Alloy Selection

o Most crucial stage prior to manufacturing o Determined after taking into consideration the three

wear mechanisms – impact, corrosion and abrasion

Supervision during

installation

o Installation of wear parts under expert supervision of

AIA’s engineers

Optimizing of

grinding system

o Regular visits to the plants to conduct mill studies o Fine tuning



Retrofitting - Replacement of the complete set of mill internals.

Over the years, AIA has retrofitted (replaced / overhauled) more than

750 mills. The company believes in providing value added offerings

to its customers at the time of retrofitting by recommending new

designs and metallurgy (best suited to the client) and not merely

replacing the existing design. With its experience and expertise, AIA

has developed and has lived upto its reputation of not just a supplier

of mill internals but that of a complete end-to-end value-added

solutions provider for its customers. Some of the benefits derived by

AIA’s customers include:

o Optimal chamber lengths based on existing feed and product

requirements

o Appropriate liner profiles for maximizing productivity

o Appropriate metallurgy for maximizing life of internals without

sacrificing safety

o Opportunity for optimizing ball charge

Replacement Demand, the main business

driver…

A significant portion of AIA’s business is derived from replacement

demand as over a period of time, mill internals witness substantial

wear out.

While mill internals like diaphragms and liners take something like

2-3 years to wear out, parts like grinding media wear out continuously

thereby necessitating regular replacements.



With increasing wear out, the grinding operations become less efficient

thereby adversely affecting the final output. A replacement of mill

internals is thus required.

While tube mill is the most versatile for all grinding processes and

has a wide range of applications, vertical mills are becoming more

popular in case of dry grinding due to lower power consumption.

Revenue break-up…

29367.7

40696.4

52303.0

0

10000

20000

30000

40000

50000

60000

2004-05 2005-06 2006-07

Net Sales (Rs. lac)



25%

30%

35%

40%

45%

50%

55%

60%

2004-05 2005-06 2006-07

Sales break-up (% share)

Domestic Exports

57%

43%

52%48%

51%49%

Order book position…

18,500

29,500

40,500

0

10,000

20,000

30,000

40,000

50,000

2004-05 2005-06 2006-07

Order book position (Rs.lac)



Our Global footprint…

… Spans 61 nations

International Clientele -

§ Holcim

§ Lafarge

§ Heidelberger

§ Cemex

§ Italcimenti

§ FL Smidth

§ Polysius

§ Kawasaki Heavy Industries

Clientele in India:

§ BHEL

§ Grasim

§ ACC

§ Ultratech

§ Gujarat Ambuja

§ Century

§ KHD – Humbolt

§ Maharashtra State Electricity

Board (MSEB)

§ Gujarat Electricity Board

(GEB)



AIA Engineering – A One Stop Shop for

its Customers

With process optimization as the focus, AIA offers customized

solutions to its clients. Our three pronged approach, as shown

above, enables us to offer solutions that result in – Desired

End Product, Reduced Costs and Increased

Productivity.



Infrastructure and Capex Plans

At the time of our initial public offer in December 2005, the companyhad a capacity to manufacture 65,000 tonnes of mill internals perannum. Back then, our plan was to set up a Greenfield plant withproduction capacity of 52,000 tonnes per annum.

However, during the course of implementation of this capex plan, thecompany decided to augment its capacity further and has accordinglyadded the necessary balancing equipment and infrastructure.

Thus, in toto, the original expansion plan to add 52,000 tonnes ofnew capacity now stands revised to 100,000 tonnes. The total capitaloutlay for this project now stands at Rs.1,250 million (as compared tothe original capital expenditure of Rs.750 million).

The new capacity will come up in two phases. The first phase of 50,000MT has already been commissioned and is in commercial production.The second phase of 50,000 MT is expected to be commissioned forcommercial production in fourth quarter of 2007-2008.

Further, buoyed by robust demand from each of our user industries,we are planning to undertake another round of capacity expansion.Under the new plan, we will add fresh capacity of upto 100,000 tonnesper annum, either through brownfield or greenfield expansion at astrategic location, which is yet to be decided.

The company has already arranged the funding for this project. InDecember 2006, 1.02 million shares were placed to QualifiedInstitutional Buyers at Rs.1,225 per share to raise Rs.125 crore.

Construction in Progress (April 2006)



Shed Erection under progress (April 2006)

Aerial View of Foundry

Foundry Area under construction (July 2006)



Vertical Turret Lathe

Fettling Bay

Aerial View of Foundry

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SEGMENT II

NUMBERS & BEYOND

17 0



FINANCIAL STATEMENT SUMMARY

Balance Sheet Consolidated

Particulars FY - 2004-05 FY - 2005-06 FY - 2006-07

Rs. in Lacs Rs. in Lacs Rs. in Lacs

SOURCES OF FUNDS

Equity Share Capital 1307.64 1777.64 1879.68

Reserves & Surplus 7447.65 25631.37 47299.21

Total Shareholder’s Fund 8755.29 27409.01 49178.89

Loans 5552.02 4854.04 1651.28

Deferred Tax Liability 209.33 198.67 190.12

Minority Interest 318.17 701.89 818.54

Total Liabilities 14834.81 33163.61 51838.83

APPLICATION OF FUNDS

Gross Block 5317.40 9397.25 13713.36

Less: Depreciation 2524.75 4360.88 5158.74

Net Block 2792.65 5036.37 8554.62

Capital Work in Progress 195.74 675.78 6068.18

Total Fixed Assets 2988.39 5712.15 14622.80

Investments 139.06 9668.80 14652.46

Gross Current Assets 15713.32 28902.19 40356.25

Less: Current Liabilities & Provisions 4008.47 11121.33 17793.77

Net Current Assets 11704.85 17780.86 22562.48

Miscellaneous Expenditure 2.51 1.80 1.09

Total Assets 14834.81 33163.61 51838.83

NETWORTH 8752.78 27407.21 49177.80



Particulars FY - 2004-05 FY - 2005-06 FY - 2006-07

Rs. in Lacs Rs. in Lacs Rs. in Lacs

Sales 29367.68 40696.37 52303.00

Other Income 797.81 1039.95 1638.53

Increase / Decrease in Stock 60.16 1314.01 2169.25

Total Income 30225.65 43050.33 56110.78

Raw Material Expenses 16909.36 19257.20 24473.01

Employees Costs 1574.68 2258.91 2216.26

Other Expenses 7054.53 12343.07 15347.37

PBDIT 4687.08 9191.15 14074.14

Interest & Finance Charges 278.59 527.83 241.23

PBDT 4408.49 8663.32 13832.91

Depreciation 334.03 709.22 820.59

Profit / (Loss) Before Taxation 4074.46 7954.10 13012.32

Taxation 1385.08 2521.13 3456.35

Profit / (Loss) After Taxation 2689.38 5432.97 9555.97

Minority Interest 25.50 197.19 123.87

Profit / (Loss) After Minority Interest 2663.88 5235.78 9432.10

Equity Capital 1307.64 1777.64 1879.68

Reserves (Excluding revaluation Reserves) 7447.65 25631.37 47299.21

Key Ratios

FINANCIAL PERFORMANCE RATIOS % FY 2004-05 FY 2005-06 FY 2006-07

Other Income / Total Income 2.64 2.42 2.92

Raw Material Cost / Net Sales 57.58 47.32 46.79

Interest / Total Income 0.92 1.23 0.43

PAT / Net Sales 9.07 12.87 18.03

EBIDTA / NET SALES 13.24 22.58 26.91

Tax / Total Income 4.58 5.86 6.16

Total Income / Gross Block 568.43 458.12 409.17

Total Income / Working Capital 258.23 242.12 248.69

BALANCE SHEET RATIOS (TIMES)

Debt / Equity Ratio 0.63 0.18 0.03

Current Ratio 3.92 2.60 2.27

TURNOVER RATIOS (TIMES)

Inventory Turnover Ratio 7.00 6.80 5.32

Debtors Turnover Ratios 3.10 3.30 3.68

PER SHARE DATA RATIOS (Rs.)

Earning Per Share (EPS) 16.66 35.94 52.21

Statement of Profit and Loss Consolidated



Financial Highlights - Charts



9.1%

12.9%

18.0%

0%

5%

10%

15%

20%

2004-05 2005-06 2006-07

PAT Margin (%)

16.7

35.9

52.2

0

10

20

30

40

50

60

2004-05 2005-06 2006-07

Earnings per share (Rs.)



Shareholder Wealth Creation

Total Shareholder return is a measure of the gain delivered to theshareholders’ of the company not only on account of dividendsbut also by way of capital appreciation in the underlyinginvestment.

Backed by a robust business model and high demand for its wares,

your company’s business has grown at a healthy rate in recent years.

Not only have our sales gone up substantially we have also seen an

equally healthy expansion in our margins. What’s more, we continue

to deliver exceptional returns to our shareholders.

AIA Engineering’s stock price rose by a phenomenal 92.3 per cent

during the course of the financial year 2006-07. In comparison, the

benchmark index – Sensex, delivered a rather modest (on a relative

basis), 13 per cent return. The return mentioned here does not

include gain from dividends.

Since its listing in December 2005, the AIA Engineering scrip has

delivered an astounding 446 per cent return to its shareholders.



MEET THE MANAGEMENT

Vinod Narain – Non-Executive / Independent Chairman

A Mechanical Engineer from Birmingham, England, he is an eminent

personality, well respected in industry circles. He brings to the table

his vast industry experience and expertise.

Bhadresh Shah - Managing Director

A metallurgical engineer from IIT Kanpur, he is the founder of AIA

Engineering. His vision and positioning AIA as a niche metallurgical

products company has placed it among the top three global companies

in the mill internals space.

Rajendra Shah – Non-Executive / Independent Director

An Ahmedabad-based industrialist, he is a vital member of the AIA

think tank and a key contributor in important policy decision making.

Dr.S.R. Ganesh - Non-Executive Director

He is a Mechanical Engineer from IIT Mumbai with a Management

Degree from the Sloan School of Management, MIT, USA. He brings to

the table his strategic inputs and facilitates informed decision making.

Bhupendra A. Shah – Non-Executive / Independent Director

A Chemical Engineer from IIT, Kanpur with a Masters in Science from

the University of California, Berkeley, USA, his domains of expertise

span finance and administration.

Sanjay S. Majmudar – Non-Executive / Additional Director

He is a practicing Chartered Accountant. His financial acumen facilitates

the planning of financing for the multiple projects that the company

undertakes.

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SEGMENT III

STATUTORY REPORTS

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To,

The Members,

AIA Engineering Limited

Ahmedabad

The Directors of the Company take pleasure in submitting the 17th Annual Report and the Audited Annual Accounts of

the Company for the year ended 31st March, 2007.

1. FINANCIAL HIGHLIGHTS: (Standalone)

Particulars Year ended Year ended

31.3.2007 31.3.2006

Rs. in Lacs Rs. in Lacs

Sales & Other Income 41107.25 30771.09

Profit before Interest, Depreciation and Taxation 9991.33 6124.58

Interest 47.45 283.57

Depreciation 251.26 191.72

Profit before tax 9692.62 5649.29

(i) Provision for Taxation (Current) 2942.00 1890.00

(ii) Short / Excess provision of Taxation (7.19) 0.93

(iii) Provision for Taxation (Deferred) 36.77 (0.92)

(iv) Provision for Fringe Benefits Tax 28.90 31.20

Total Tax (i+ii+iii+iv) 3000.48 1921.20

Profit after tax 6692.14 3728.09

Surplus Brought Forward from Previous Year 5499.32 2650.78

Balance available for appropriations 12191.46 6378.87

Transferred to General Reserve 669.22 372.81

Proposed Dividend on Equity Shares 657.89 444.41

Tax on Dividend on Equity Shares 111.81 62.33

Balance Carried Forward 10752.54 5499.32

2. OPERATIONAL REVIEW:

During the year under review, the Turnover of the Company has gone up by 32.37% from Rs. 30175.35 Lacs to

Rs.39943.32 Lacs. Exports of the Company have gone up by 29.07% from Rs. 13565.28 Lacs to Rs.17508.26

Lacs. The Profit Before Tax (PBT) has increased by 71.57% from Rs. 5649.29 Lacs to Rs.9692.62 Lacs. The Profit

after Tax (PAT) has increased by 79.51% from Rs. 3728.08 Lacs to Rs.6692.14 Lacs.

On a consolidated basis, the Company (together with its Subsidiaries) registered a Turnover of Rs.52303.00 Lacs

in the Financial Year 2007 as compared to the Turnover of Rs.40696.37 Lacs registered in the Financial Year 2006,

representing a 28.52% growth in the consolidated Turnover. Correspondingly, the Consolidated Profit after Tax grew

by a healthy 80.15% at Rs.9432.10 Lacs in the Fiscal Year 2007 as compared to PAT of Rs.5235.78 Lacs in 2006.

3. DIVIDEND:

The Board of Directors is pleased to recommend a Dividend of Rs. 3.50 per Share on 18796788 Equity Shares

of Rs.10 each of the Company for Financial Year 2006-07. The amount of Equity Dividend outgo, including tax

thereon will be Rs.769.70 Lacs.

4. FURTHER ISSUE OF SHARES - QIP:

During the year under review the Company has allotted 1020408 Equity Shares of Rs.10 each at a premium of

Rs.1215 per share through Qualified Institutions Placement (QIP) pursuant to Chapter XIII-A of SEBI (Disclosure &

Investor Protection) Guidelines 2000 to Qualified Institutional Buyers (QIBs) on 19th December 2006. Consequent

to this, the Issued and Paid-up Share Capital of the Company has increased by Rs.102 Lacs and a premium of

Rs.12398 Lacs has been credited to Share Premium Account.

5. CAPITAL EXPENDITURE OUTLAY:

During the year under review, the Company has incurred Rs. 9214.80 Lacs (including Rs.5957.01 Lacs of Capital

work in progress) on Capital Expenditure.

DIRECTORS’ REPORT



6. TECHNOLOGY:

The Company continues to develop new alloys & parts for various applications for improved wear rates. To

strengthen the capability further, Company is considering establishing a separate R & D Unit at Odhav, Ahmedabad.

The products of the Company continue to remain benchmark for quality for its customer.

7. SALES & SERVICE ORGANISATIONS:

The Company’s Sales Offices in U.A.E., U.K., U.S.A., Australia and Philippines are being strengthened with

recruitment of new staff. The Company is pursuing penetrating Chinese market through a strategic alliance. The

Company is now actively considering opening of a Sales Office in China given initial favourable response to its

products in this market.

8. HUMAN RESOURCE POLICY:

The Company takes pride in its highly motivated and committed team of employees, some of them with the

Company, since inception. While the employee strength has increased sizably with addition of Moraiya unit,

instilling confidence and encouraging long term bonds, the Company offered higher remunerations to both, existing

as well as new employees. On their part the employees performed to their full potential and contributed to the growth

and development of the Company.

9. COMPUTERISATION AND COMMUNICATION:

The Company has continued to invest resources in maintenance and up-gradation of the existing ERP software.

The Company has initiated talk with ERP implementation agencies to consider implementation of new ERP.

10. BUSINESS PROSPECTS:

The Company is operating in a high technology oriented niche Engineering segment, involving manufacturing of impact,

abrasion and wear resistant, High Chrome Mill Internal products. These High Chrome Mill Internals are used as

consumables in the process of grinding /crushing in the mills in the Cement Industry, Mining Industry and Utility Industry.

All the above three segments have excellent growth prospects. Within India, the Cement Industry has shown

significant rise in production, thanks to growth in Infrastructure segment. Similarly, Utility Industry (Thermal Power

Plants) is also growing owing to deficit in the Power Generation. Mining is essential for extraction of core minerals,

which are the Raw Material for various ferrous and non-ferrous Industries. The Mining activity is also gaining a

momentum, especially in the iron ore segment. This trend is reflected in several other developing economies like

China, Russia, etc.

The Directors are very happy to inform that the Company has a significant market share in this business. It has

established itself as one of the leading suppliers to major Cement groups. Apart from Cement manufacturers, the

Company also has healthy relationships with the OEMs.

Moreover, the Company has succeeded in building a business which is hedged against external market conditions

because of the following:

1. There are only a few recognized suppliers, who are manufacturing the products manufactured by the Company.

2. Nearly 70% of the Company’s business comes from the ‘replacement’ demand which is not linked to the

economic capital spending cycles and OEM business.

3. The Company supplies to three different industries across geographies – Cement, Mining and Utility are all

local industries and a down turn in some part of the world will always be negated by a boom in another.

The Company supplies products to more than 60 Countries World wide.

4. The top customer does not account for more than 10% of sales.

As the members are aware the Company has embarked upon a project involving setting up of a Greenfield EOU

unit at Moraiya with an aggregate additional capacity of 1,00,000 Tons per annum in two phases, each of

approximately 50,000 Tons per annum. The first phase of the said expansion project has already been commissioned

and the Company is confident that after overcoming the initial teething troubles which are normal for any project

of this magnitude, the Company will be able to reach the normal level of production by Q-2 2008. The second

phase of the ongoing expansion project is also expected to come in production by end of Q-4 2008.

When the above Greenfield project was planned, the Company’s plans were to capitalize upon the mining

opportunity outside India and also to consolidate the market share of cement outside India.

Indeed, the Company has excellent growth prospects in the years to come. Incidentally, the Directors would like

to place on record that the present capacities are fully booked for virtually next six months, and the Company is

currently facing a capacity constraint, which would be partly relieved once the ongoing Greenfield expansion project

is implemented in full.



11. FUTURE EXPANSION:

As mentioned earlier, the ongoing EOU Greenfield project at Moraiya is under implementation. Thus, the first phasehas already come in production creating additional capacity of around 50,000 TPA and the second phase involvingthe capacity of further 50,000 TPA is expected to come in production by March, 2008.

In addition to the above ongoing project, the Company has also firmed up plans for setting up another high chromeMill Internals unit with the capacity of additional 1,00,000 TPA at a suitable location, preferably either in a SEZor in any other convenient location in Gujarat. The primary driver of this second expansion being planned is thestrategy of the Company to ramp-up its capacities quickly so as to fully capitalize upon the opportunity availableto the Company. The Company is also contemplating certain backward integration opportunities including settingup of a Captive Power Plant and a Ferro Chromium plant of a suitable size.

The Company intends to use the QIP proceeds for part funding of the above plans.

12. INTELLECTUAL PROPRIETORY RIGHTS:

To protect the Company’s intellectual property, the Company has filed so far 7 patents in India out of which fourwere filed in 2002-2003, one in January 2005 and one each in 2006 and 2007. The first four patents filed in2002 and 2003 are under opposition in the Patent office and we are taking steps to get them approved. We havealso filed patent in Germany, USA, Belgium and Japan.

13. SUBSIDIARY COMPANIES:

As required under the Listing Agreements with the Stock Exchanges and in accordance with the AccountingStandard 21 (AS-21), Consolidated Financial Statements being prepared by the Company include financial informationof its Subsidiaries.

The Ministry of Company Affairs, Government of India, on an application made by the Company dated 6th April2007 granted exemption to the Company from attaching to its Annual Report for the year ended 31st March 2007,the individual Annual Reports of each of its 7 Subsidiary Companies vide its letter No. 47/200/2007-CL-III dated16th April 2007 subject to the compliance of terms and conditions as mentioned in their letter.

The Company has 7 subsidiaries in India and abroad. A statement containing brief financial details of thesecompanies for the year ended 31st March 2007 is included in the Annual Report. The Annual Accounts of theSubsidiary Companies and the related detailed information will be made available to the investors of the Companyseeking such information at any point of time. The annual accounts of the Subsidiary Companies will be availablefor inspection by any investor at the Registered Office of the Company.

14. INSURANCE:

The Company has taken adequate insurance coverage of all assets and stocks against various calamities viz. fire,floods, earthquake, cyclone, act of terrorism etc.

15. DEPOSITS:

The Company has not accepted deposits from the public during the year under review, within the meaning ofSection 58A of the Companies Act, 1956.

16. INDUSTRIAL RELATIONS:

With all the statutory compliances the Company maintained its image of being a progressive and compliantCompany. Industrial relations maintained were excellent with regular interaction with the business and industryfraternity, through prestigious institutions like, Confederation of Indian Industries, Gujarat Chamber of Commerceand Industries and Ahmedabad Management Association. This helped securing Company interests in variousmatters and for keeping abreast with latest development interests in various matters and for keeping abreast withlatest developments in the business and industry.

17. ENVIRONMENT – SAFETY – HEALTH:

Safety is a key word and safe operating practices and safe work for all, are the two Key Result Areas (KRAs). Withregular tool box meetings at shop floors level, all out awareness and involvement were achieved. Personnel protectiveequipments and health check ups contributed to safety and good occupational health of employees. Environmentalclearance conditions were fully complied with.

18. INTERNAL CONTROL AND AUDIT:

Company has a proper and adequate system of Internal Control to ensure that all assets are safeguarded and protectedagainst loss from un-authorised use or disposition and those transactions are authorised, recorded and reported correctly.

During the year under review, Internal Audit of the Company has been carried out by a firm of Chartered Accountants.

19. CORPORATE GOVERNANCE:

In line with the Company’s commitment to good Corporate Governance Practices, the Company has complied withall the mandatory provisions of Corporate Governance as prescribed in Clause 49 of the Listing Agreement with



the Stock Exchanges. A separate report on Corporate Governance and Practicing Company Secretaries Report thereon

are included as a part of the Annual Report.

20. MANAGEMENT’S DISCUSSION AND ANALYSIS (MDA):

MDA covering details of operations, International markets, Research and Development, Opportunities and Threats,etc. for the year under review is given as a separate statement, which forms part of this Annual Report.

21. DIRECTORS:

Mr. Vinod Narain and Dr. S. R. Ganesh, Directors of the Company retire by rotation at the ensuing 17th Annual

General Meeting and being eligible, offered themselves for re-appointment.

Mr. Sanjay S. Majmudar was appointed as an Additional Director of the Company by the Board of Directors in

their meeting held on 7th May 2007 and will retire at the ensuing Annual General Meeting pursuant to the provisionsof Section 260 of the Companies Act, 1956. Notice has been received from a member under Section 257 of the

Companies Act, 1956 together with necessary deposit of Rs.500 proposing the appointment of Mr. Sanjay S.

Majmudar to the Board of Directors of the Company.

The Board recommends the re-appointments of Mr. Vinod Narain, Dr. S. R. Ganesh and Mr. Sanjay S. Majmudar

as Directors of the Company.

Pursuance to Clause 49 of the Listing Agreement, brief resumes of Mr. Vinod Narain, Dr. S. R. Ganesh and Mr.

Sanjay S. Majmudar, together with their expertise in specific functional areas and names of the Companies in whichthey hold office of a Director and / or Chairman / Membership of Committees of the Board, is given in the Notice

of the Annual General Meeting.

22. AUDITORS:

Members are requested to appoint Statutory Auditors for the current year and fix their remuneration. M/s Talati &Talati, Chartered Accountants, the Company’s Auditors will retire at the conclusion of the ensuing Annual General

Meeting and being eligible offer themselves for re-appointment.

23. PARTICULARS OF EMPLOYEES:

The particulars of employees, as required under Section 217 (2A) of the Companies Act, 1956 are given as anAnnexure-A to this report.

24. PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS

AND OUTGO:

The additional information regarding conservation of energy, technology absorption and foreign exchange earningsand outgo, stipulated under Section 217 (1) (e) of the Companies Act, 1956 are given as an Annexure–B to this

report.

25. DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors hereby confirm that:

(i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed;

(ii) sound accounting policies have been selected and applied consistently and judgments and estimates madethat 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 ended 31st March 2007 and the Profit and Loss Account for the year ended

on that date;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance

with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;

(iv) the Annual Accounts have been prepared on a going concern basis.

26. ACKNOWLEDGEMENT:

The Directors thank the Company’s Customers, Vendors, Bankers, Auditors, Investors and Government bodies fortheir continued support during the year. The Directors place on record their appreciation of the contributions made

by employees at all levels. The Company’s consistent growth was made possible by their hard work, solidarity,co-operation and support.

For and on behalf of the Board,

Place : Ahmedabad (Vinod Narain)Date : 7th June 2007 Chairman



ANNEXURE- “A” TO THE DIRECTORS’ REPORT

Information under section 217(2A) of the Companies Act, 1956 read with the Companies (particulars of employees) Rules,

1975 and forming part of the Directors’ report for the year ended 31st March, 2007.

(A) Employed throughout the financial year under review and were in receipt of remuneration for the Financial Year in

the aggregate of not less than Rs.24,00,000 p.a.

1. Name Shri Bhadresh K. Shah

2. Age 56 Years

3. Qualification B.Tech Metallurgical

4. Designation Managing Director

5. Date of commencement of employment. 1.4.1991

6. Experience 30 Years

7. Remuneration Rs.66.72 Lacs p.a.

8. Particulars of last employment :

a) Employer Ahmedabad Induction Alloys Ltd.

b) Last Post Managing Director

c) No. of Years 18 Years

(B) Employed for part of the Financial Year under review and were in receipt of remuneration at the rate of not less

than Rs.2,00,000 per month : Nil


Place : Ahmedabad (Vinod Narain)

Date : 7th June 2007 Chairman



ANNEXURE - “B” TO THE DIRECTORS’ REPORT

Information under section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the

report of Board of Directors) Rules, 1988 and forming part of the Directors’ Report for the year ended 31st March 2007.

FORM – A

A) CONSERVATION OF ENERGY :

a) Production capacity of Liner Furnace has been increased by improved loading per Tray which has resulted

output from 900 MT / Month to 950 MT / Month. In view of this, consumption of LDO has decreased from

80 Ltrs. / MT of Casting Heat Treated to 75 Ltrs./ MT.

b) Due to installation of Wind Driven Air Turbo Ventilators in place of electrically operated Exhaust Fan in Roof

of Main Foundry, power consumption has reduced from 15 KWH to Zero.

I. POWER & FUEL CONSUMPTION:

Particulars Current Year Previous Year

2006-2007 2005-2006

1. Electricity

a) Purchased Units 31870138 28505948

Total Amount (in Rs.) 168379984 141353638

Rate/Unit/(Rs.) 5.28 4.96

b) Own Generation

Through Diesel Generator Unit 84089 63710

Unit per Litre of Diesel Oil 2.20 2.21

Cost/Unit (Rs.) 15.95 15.92

c) Through Steam Turbine/Generator

Units N.A. N.A.

Units per Litre of Fuel/Oil/Gas/ N.A. N.A.

Cost/Unit (Rs.) N.A. N.A.

2. Coal (Specify Quantity and where used)

Quantity (in Tons) N.A. N.A.

Total cost (Rs.) N.A. N.A.

Average Rate/(Rs.) N.A. N.A.

3. Light Diesel Oil

Quantity (in Kilo Litre) 1350760 1386570

Total Amount 37456575 37160076

Average Rate (Rs.) 27.73 26.80

4. Others/Internal Generation.

Quantity N.A. N.A.

Total Cost N.A. N.A.

Rate/Unit (Rs.) N.A. N.A.

II. CONSUMPTION PER UNIT OF PRODUCTION:

Particulars Current Year Previous Year

2006-2007 2005-2006

Product :

Castings Unit (Tonnes) 19944 18486

(Excluding production on job work 11314 Tonnes)

[Previous Year 9347 Tonnes]

Electricity per Ton of Castings (Units) 1598 1542



FORM – B

(B) TECHNOLOGY ABSORPTION :

I. RESEARCH & DEVELOPMENT (R & D)

a) Specific areas in which R & D carried out by the Company.

Sintercast technology has been adopted for Vertical Shaft Impact (VSI) Crusher parts.

b) Benefits derived as a result of the above R & D.

Large market is available for VSI Crusher in Middle East Market.

c) Future plans of action.

To extend Sintercast concept to different VSI Crusher parts all over the world.

d) Expenditure on R & D (Rs. in Lacs).

1. Capital - Nil

2. Recurring - Nil

3. Total - Nil

4. Total R & D expenditure as percentage of total turn over - Nil.

II. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

a) Efforts in brief made towards technology absorption, adaptation and innovation.

Adaptation of Disamatic Moulding Line for Grinding Media.

b) Benefits derived as a result of the above efforts.

Production of Grinding Media in high volume is possible with limited space and manpower. Company

will be able to cater large requirement of Grinding Media in Mining Industry.

c) Imported technology.

No technological inputs were used from outside. All developments were in house.

d) Foreign Exchange Earnings and outgo:

Year ended Year ended

31.3.2007 31.3.2006

Rs. in lacs Rs. in lacs

i) Total foreign exchange used : 2384.55 1344.01

ii) Total foreign exchange earned 17508.26 13565.28


Place : Ahmedabad (Vinod Narain)

Date : 7th June 2007 Chairman



REPORT ON CORPORATE GOVERNANCE

COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE

The Company’s philosophy on Corporate Governance aims at assisting the management of the Company in the efficient

conduct of the business and in meeting its responsibilities to all the stakeholders. The Company always strives to achieve

optimum performance at all levels by adhering to good Corporate Governance practices, such as:

• Fair and transparent business practices.

• Effective management control by Board.

• Adequate representation of promoters, executives and independent directors on the Board.

• Monitoring of executive performance by the Board.

• Compliance of Laws.

• Transparent and timely disclosure of financial and management information.

We take pleasure in reporting that your Company has complied in all respects with the features of Corporate

Governance specified in Clause 49 of the Listing Agreement.

I. BOARD OF DIRECTORS

(A) Composition of the Board:

The Composition of the Board of Directors, with reference to the number of Executive and Non-Executive Directors,

meets the requirement of Code of Corporate Governance. The Board is headed by the Non-Executive Chairman, Mr.

Vinod Narain. The present strength of the Board of Directors is 6 which include 1 Executive Director, 3 Non-Executive

Independent Directors in terms of Clause – I (A) (iii) of Clause 49 of the Listing Agreement and 2 Non-Executive

Directors. Board represents a balance mix of professionalism, knowledge and expertise.

Board Meetings / Directors’ Particulars:

Company’s Board met five times during the year under review on 9th June 2006, 31st July 2006, 27th

September 2006, 31st October 2006 and 31st January 2007. The Company held one Board Meeting in each

quarter and the gap between any two Board Meetings was not more than four months as prescribed under

the Listing Agreement. Details of the Directors, their positions, attendance record at Board and last AGM, other

Directorships (excluding private limited, foreign companies and alternate directorships) and the membership

of Board Committees other than your Company as on 31st March 2007 are as follows:

Name of the Directors Category Board Meetings Attendance at

Attended the Last AGM

held on

27-9-2006

Mr. Vinod Narain Non-Executive / Independent 4 Present

Mr. Bhadresh K. Shah Executive / Promoter 5 Present

Mr. Rajendra S. Shah Non-Executive / Independent 4 Present

Dr. S. R. Ganesh Non-Executive 3 Absent

Mr. Bhupendra A. Shah* Non-Executive / Independent 3 Present

*Appointed as an Additional Director w.e.f. 31.07.2006 and regularized as Director of the Company at the

AGM held on 27.09.2006.

Number of other Directorships & Committee Memberships/Chairmanships:

Name of the Directors Other Directorships Committee Membership Committee Chairmanship

Mr. Vinod Narain 1 None None

Mr. Bhadresh K. Shah 2 None None

Mr. Rajendra S. Shah 1 None None

Dr. S. R. Ganesh 1 None None

Mr. Bhupendra A. Shah None None None

(B) Non-Executive Directors’ Compensation and Disclosures:

Non-Executive Directors, including Independent Directors are paid sitting fees in accordance with the applicable

laws.



Role of Independent Directors:

The Independent Directors play an important role in the deliberations in Board Meetings and bring with them

rich expertise in their respective fields.

(C) Information available to the members of the Board:

All the informations as specified in Clause 49 of the Listing Agreement is provided to the Board of Directors.

Information like businesses to be transacted at Board Meeting is submitted well in advance and agenda papers

are submitted to them when they arrive in city where the Board meeting is scheduled to be held or are tabled

during the course of Board Meetings.

(D) Code of Conduct:

Company’s Board has laid down a Code of Conduct for all Board Members and Senior Management of the

Company. The Code of Conduct is available on the website of the Company www.aiaengineering.com. All

Board Members and Senior Management Personnel have affirmed compliance of the Code of Conduct. A

declaration signed by the Managing Director to this effect is enclosed at the end of this report.

II. COMMITTEES OF THE BOARD:

The Company has five (5) Board level Committees, namely:

a) Audit Committee;

b) Shareholders’ / Investors’ Grievance Committee;

c) Remuneration Committee;

d) IPO Proceeds Utilization Committee; and

e) QIP Committee.

a) AUDIT COMMITTEE:

As on 31st March 2007, the Audit Committee comprise of 3 Independent Non-Executive Directors and one

Non-Executive Director. Names of the members and the Chairman of the Committee as on 31st March 2007

together with their attendance are given in the following table.

Name of the Member / Chairman No. of Meetings Meetings Attended

Mr. Vinod Narain - Chairman 5 3

Mr. Rajendra S. Shah 5 3

Dr. S. R. Ganesh 5 4

Mr. Bhupendra A. Shah* 5 2

* appointed as member of the Audit Committee w.e.f. 27.09.2006.

The Audit Committee held five (5) meetings during Financial Year 2006-07 on 31st May 2006, 9th June 2006,

31st July 2006, 31st October 2006 and 30th January 2007. The time gap between any two meetings was not

more than four months.

The Chairman of the Audit Committee attended the last Annual General Meeting of the members of the

Company held on 27th September 2006.

The Managing Director, Executive Director (Finance), Statutory Auditors and Internal Auditors are invited

whenever necessary to the meetings of the Audit Committee.

Mr. S. N. Jetheliya, Company Secretary acts as Secretary to the Committee.

The Terms of Reference of the Audit Committee cover the matters specified for Audit Committee under Clause

49 of the Listing Agreement and Section 292A of the Companies Act, 1956.

Brief description of terms of reference:

i) Supervision of the Company’s financial reporting process.

ii) Reviewing with the management, the financial results before placing them to the Board with a special

emphasis on accounting policies and practices, internal controls, compliance with the accounting

standards and other legal requirements concerning financial statements.

iii) Reviewing the adequacy of internal control systems and internal audit functions including their policies,

procedures, techniques and other regulatory requirements with the statutory auditors.

iv) Recommending the appointment and removal of external auditors and their remuneration.

v) Keeping watch on timely payment to shareholders, creditors etc.

vi) Reviewing of significant Related Party Transactions, if any.



vii) Reviewing management discussion and analysis of financial condition and result of operations.

viii) Reviewing the performance of the Statutory and Internal Auditors and appointment, removal and terms

of remuneration of Chief Internal Auditors.

b) SHAREHOLDERS’ / INVESTORS’ GRIEVANCE COMMITTEE


(i) Redressals of Shareholders and investors complaints like transfer of shares, non-receipt of Annual

Reports, non-receipt of declared dividends, etc.

(ii) Oversee the performance of the Registrar and Transfer Agents and recommend measures for overall

improvement in the quality of investor services.

Composition, Name of Members and Chairperson:

1. Mr. Rajendra S. Shah - Chairman

2. Mr. Bhadresh K. Shah - Member

Mr. S. N. Jetheliya, Company Secretary acts as the Compliance Officer of the Committee.

Meetings and attendance during the year:

The Committee meets on need basis. During the year under review Committee met six times on 31st May

2006, 7th July 2006, 27th September 2006, 18th November 2006, 9th December 2006 and 23rd March 2007.

Number of Shareholders complaints received :

The total number of Complaints received and replied to the satisfaction of Shareholders during the year under

review were 169. There are no outstanding complaints as on 31st March, 2007.

Number of Complaints not solved to the satisfaction of shareholders:

Nil

Number of pending share transfers:

Nil

c) REMUNERATION COMMITTEE:


To formulate a remuneration policy and recommend/review the remuneration payable to the Executive Directors

and other Senior Executives.

Composition, Name of Members and Chairperson:

1. Mr. Vinod Narain - Chairman

2. Mr. Rajendra S. Shah - Member

3. Dr. S. R. Ganesh - Member

Meeting and Attendance during the year:

During the year under review one Remuneration Committee meeting was held on 31st July 2006 where all

the members were present.

Remuneration Policy:

To review the remuneration package of the Managing Director / Senior Executives and recommend suitable

revision to the Board.

Details of remuneration to all the Directors:

The details of remuneration paid to the Managing Director during the year 2006-2007 are given below:

Name of the Director and Salary Perquisites Total

Designation (Rs. in lacs) (Rs. in lacs) (Rs. in lacs)

Mr. Bhadresh K. Shah,

Managing Director 60.00 6.72 66.72

The Company does not have any stock option plan or performance linked incentive for the Executive Director.

The appointment of Managing Director is made on the terms and conditions as mentioned in the resolution

dated 27th September 2006 and pursuant to the Agreement entered into with the Managing Director on

16th October 2006.



The details of Sitting Fees paid to the Independent Non-Executive Directors and Non-Executive Director for

attending Board and Committee Meetings during the financial year 2006-2007 is given below:

Sr.No. Name of the Directors Sitting Fees Paid (Rs. in lacs)

1 Mr. Vinod Narain 0.35

2 Mr. Rajendra S. Shah 0.35

3 Dr. S. R. Ganesh 0.35

4. Mr. Bhupendra A. Shah 0.25

Mr. S. N. Jetheliya, Company Secretary acts as the Secretary of the Committee.

d) IPO PROCEEDS UTILISATION COMMITTEE:

i) Composition, Name of Members and Chairperson:

1. Mr. Bhadresh K. Shah - Chairman

2. Mr. Rajendra S. Shah - Member

ii) Brief description of terms of reference:

1. To monitor the execution of the projects specifically in context of utilization of the issue proceeds.

2. To submit quarterly reports to BSE, NSE and SEBI till the completion of the project.

During the year under review the Committee met on 22nd April 2006, 26th July 2006, 19th October 2006 and

27th January 2007.

e) QIP COMMITTEE: (Constituted on 28-11-2006)

i) Composition, Name of Members and Chairperson:

1. Mr. Rajendra S. Shah - Chairman

2. Mr. Bhadresh K. Shah - Member

3. Mr. Bhupendra A. Shah - Member

ii) Brief description of terms of reference:

1. To monitor the execution of the projects specifically in context of utilization of the issue proceeds.

2. To appoint Merchant Bankers, Legal Advisors etc.;

3. Approving the contents of preliminary placement document and the Final Placement Document and

filing the same with any authority or persons including the Stock Exchanges as may be required;

4. To take all necessary steps to apply for in principal approval from the Stock Exchanges;

5. To approve the issue price, the numbers of shares to be allotted, the basis of allocation and

allotment of equity shares subject to minimum of 10% of the total issue being allotted to Mutual

Funds;

6. Opening a separate Special Account with a Scheduled Bank to receive monies in respect of the

issue of the Equity Shares of the Company; and

7. To do all such acts, deeds and things as may be necessary or desirable with regards to the issue

of shares through Qualified Institutions Placement to Qualified Institutional Buyers.

During the year under review the Committee met on 28th November 2006, 14th December 2006, 19th December 2006

and 27th January 2007.

III Subsidiary Companies:

None of the subsidiaries of the Company come under the purview of the Material Non-Listed Subsidiary. However,

the particulars of the significant transactions and arrangements entered into by the Unlisted Subsidiary Companies

and the minutes of the unlisted Subsidiary Companies are placed at the Board Meetings of the Holding Company.

IV Disclosures:

(A) Related Party Transactions:

The Company has not entered into transactions of material nature with related parties i.e. Directors or

Management, their subsidiaries or relatives conflicting with the Company’s interest at large. The Register of

Contracts containing transactions in which Directors are interested is placed before the Board regularly for its

approval. The details of Related Party Transactions are disclosed in financial section of this Annual Report.



(B) Disclosure of Accounting Treatment:

In the preparation of the Financial Statements, the Company has followed Accounting policies and Practices

as prescribed in the Accounting Standards and there is no change in the accounting treatment during the

year under review.

(C) Board Disclosure – Risk Management:

The Company has laid down procedures for the Risk Assessment and its Minimization. These procedures

are periodically reviewed by the Board to ensure that executive management controls risk through means of

a properly defined framework.

(D) Proceeds from Qualified Institutions Placement (QIP):

During the year under review, Company allotted 1020408 Equity Shares of Rs.10 at a premium of Rs.1215

per share aggregating to Rs.124.99 crore through Qualified Institutions Placement pursuant to Chapter XIII-

A of SEBI (Disclosure & Investor Protection) Guidelines 2000 to 14 Qualified Institutional Buyers (QIBs) on

19th December 2006.

(E) Remuneration of Directors:

Mr. Bhadresh K. Shah is the only Executive Director of the Company and remuneration paid to him is as under:

Name of the Director Salary Perquisites Total

and Designation (Rs. in lacs) (Rs. in lacs) (Rs. in lacs)

Mr. Bhadresh K. Shah, 60.00 6.72 66.72

Managing Director

The Company does not have any stock option plan or performance linked incentive for the Executive Director.

The appointment of Managing Director is made on the terms and conditions as mentioned in the resolution

dated 27th September 2006 and pursuant to the Agreement entered into with the Managing Director on 16th

October 2006.

The details of Sitting Fees paid to the Independent Non-Executive Directors and Non-Executive Director for

attending Board and Committee Meetings during the financial year 2006-2007 is given below:

Sr.No. Name of the Director Sitting Fees Paid (Rs. in lacs)

1 Mr. Vinod Narain 0.35

2 Mr. Rajendra S. Shah 0.35

3 Dr. S. R. Ganesh 0.35

4. Mr. Bhupendra A. Shah 0.25

The Directors’ Remuneration Policy of your Company conforms to the provisions under Companies Act, 1956.

The Board determines the remuneration of the Non-Executive Directors.

(F) Management

(i) Management Discussion and Analysis Report:

Management Discussion and Analysis Report is set out in a separate section included in this Annual

Report and forms a part of this Report.

(ii) Disclosure of material Financial and Commercial Transactions:

As per the disclosure received from the Senior Management, no material, financial and commercial

transactions that may have a potential conflict with the interest of the Company at large were taken place

during the year under report.

(G) Shareholders:

(i) Disclosures regarding appointment or re-appointment of Directors:

Mr. Vinod Narain and Dr. S. R. Ganesh will retire by rotation at the ensuing Annual General Meeting

and being eligible, have offered themselves for re-appointment. Mr. Sanjay S. Majmudar was appointed

as an Additional Director by the Board of Directors on 7th May 2007 and will retire pursuant to the

provisions of Section 260 of the Companies Act, 1956 at the ensuing Annual General Meeting

The Board has recommended the re-appointments of the retiring Directors and also of Mr. Sanjay S.

Majmudar.



The brief resume and other informations required to be disclosed under this section are provided in the

notice of the Annual General Meeting.

(ii) Quarterly results are forwarded to the Stock Exchanges where the Equity Shares of the Company are listed

and the same is posted on Company’s website.

(iii) Shareholding of Non-Executive Directors as on 31st March 2007:

Name of Directors Number of Shares

Mr. Vinod Narain NIL

Mr. Rajendra S. Shah 1

Dr. S. R. Ganesh NIL

Mr. Bhupendra A. Shah 24

(H) Compliance by the Company:

The Company has complied with all the mandatory requirements of the Listing Agreements with Stock

Exchanges as well as regulations and guidelines of SEBI. Further, during the last three years, no penalties or

strictures are imposed on the Company by the Stock Exchanges or SEBI or any statutory authority, on any

matter related to capital markets.

(V) CEO / Executive Director (Finance) Certification:

The Managing Director and the Executive Director (Finance) of the Company have certified to the Board as required

under Clause 49 (V) of the Listing Agreement for the year ended 31st March 2007.

(VI) Means of Communication:

(1) The quarterly and half yearly results are published in widely circulating national and local dailies such as “The

Business Standard”, “Economic Times”, “Financial Express - Gujarati” and “Hindu Business Line” in English

and Gujarati. These results are not sent individually to the Shareholders but are put on the website of the

Company.

(2) As per requirements of Clause 51 of the Listing Agreement, all the Data related to quarterly financial results,

shareholding pattern etc., are provided through the special website www.sebiedifar.nic.in within the time

frame prescribed in this regard.

(3) The Company’s results and official news releases are displayed on the Company’s website address:

www.aiaengineering.com. The Company holds meetings with the investors and analysts.

(VII) General Body Meetings: (Last three years disclosures)

The particulars of the last three Annual General Meetings held are given hereunder:

ANNUAL GENERAL BODY MEETINGS:

a) Location, date and time for last 3 Annual General Meetings were:

Financial Year Date Venue Time

2005-06 27-09-2006 H.T. Parekh Convention Centre, 10.00 A.M.

Ahmedabad Management Association, ATIRA Campus,

Dr. Vikram Sarabhai Marg, Ahmedabad–380 015

2004-05 05-08-2005 115, G.V.M.M. Estate, Odhav Road, Ahmedabad-382 410 11.30 A.M.

2003-04 30-09-2004 115, G.V.M.M. Estate, Odhav Road, Ahmedabad-382 410 11.00 A.M.

Extra-Ordinary General Meeting:

During the year under review one Extra Ordinary General Meeting of the Members of the Company was held

on 28th November 2006 to pass a Special Resolution:

Pursuant to the provisions of Section 81 (1A) of the Companies Act, 1956 to authorize the Board of Directors

of the Company to offer, issue and allot Equity Shares through Qualified Institutions Placement (QIP) under

Chapter XIII-A of SEBI (Disclosure & Investor Protection) Guidelines 2000 to Qualified Institutional Buyers (QIB)

aggregating to not more than 125 crore.



b) Annual General Meetings (AGM): (Last 3 years)

Date of AGM: 27-09-2006

Special Resolutions:

a) Pursuant to the provisions of Section 81 (1A) of the Companies Act, 1956 to authorize the Board of

Directors of the Company to offer, issue and allot Equity Shares through ESOP / ESPS to the permanent

Employees including Directors of the Company whether Whole-time or working in India or Overseas or

otherwise except Promoter Directors.

b) Pursuant to the provisions of Section 81 (1A) of the Companies Act, 1956 to authorize the Board of

Directors of the Company to offer, issue and allot Equity Shares through ESOP / ESPS to the permanent

Employees of the Subsidiary Company (ies), whether Indian Subsidiary or Foreign Subsidiaries including

Directors of the Subsidiary Companies whether working in India or Overseas or otherwise except

Promoter Directors.

c) Whether special resolutions were put through postal ballot last year, details of voting pattern:

No

d) Person who conducted the postal ballot exercise:

N.A.

e) Whether any resolutions are proposed to be conducted through postal ballot:

No Special Resolution requiring a Postal Ballot is being proposed at the ensuing Annual General Meeting of

the Company.

f) Procedure for Postal Ballot :

Prescribed procedure shall be complied with whenever necessary.

(VIII) GENERAL SHAREHOLDERS’ INFORMATION

Date and Time of 17th AGM Friday, the 31st August 2007 at 10.00 A.M.

Venue of AGM H.T. Parekh Convention Centre, Ahmedabad Management Association,

ATIRA Campus, Dr. Vikram Sarabhai Marg, Ahmedabad–380 015

Financial Year 31st March 2007

Book Closure Date 18th August 2007 to 31st August 2007

Registered Office Address 115, GVMM Estate, Odhav Road, Odhav, Ahmedabad-382 410

Dividend Payment Date Within 30 days from the date of declaration of Dividend.

Compliance Officer Mr. S. N. Jetheliya, Company Secretary

Email for Redressal of Investors’

Complaints in terms of Clause 47 (f)

of the Listing Agreement [email protected]

Website www.aiaengineering.com

Financial Calendar (subject to change) for the Financial Year 2007-08

First Quarter Results On or before 31st July 2007

Second Quarter & Half Yearly Results On or before 31st October 2007

Third Quarter Results On or before 31st January 2008

Audited Results for the year 2007-08 On or before 30th June 2008

a) Listing on Stock Exchanges:

Name and Address of the Stock Exchanges Scrip Code

Bombay Stock Exchange Limited

25th Floor, P. J. Towers, Dalal Street, Fort, Mumbai – 400 001 532683

National Stock Exchange of India Limited

Exchange Plaza, Bandra-Kurla Complex, Bandra (E), Mumbai – 400 051 AIAENG

The listing fees for the year 2007-08 have been paid to both the Stock Exchanges.

During the year under review, the Company has issued 1020408 Equity Shares of Rs.10 each at a premium of Rs.1215

per share through Qualified Institutions Placement (QIP) pursuant to Chapter XIII-A of SEBI (Disclosure &

Investor Protection) Guidelines 2000 to Qualified Institutional Buyers (QIBs) in December 2006. The trading

in new shares started with effect from 27th December 2006.



b) Market Price Data: The securities of the Company have been listed on BSE and NSE. The stock market prices

were as under:

Bombay Stock Exchange National Stock Exchange

Limited of India Limited

Month BSE High Low High Low

Sensex

April 06 12042.56 786.00 602.00 784.90 579.00May 06 10398.61 718.90 511.00 751.00 501.00June 06 10609.25 659.90 391.65 659.95 376.50July 06 10743.88 660.00 501.00 661.40 430.00Aug. 06 11699.05 820.00 592.00 824.00 593.00Sept. 06 12454.42 874.00 710.00 871.25 693.90Oct. 06 12961.90 948.75 792.75 953.00 792.00Nov. 06 13696.31 1267.00 900.00 1261.00 900.10Dec. 06 13786.91 1525.70 1215.00 1529.85 1191.20Jan. 07 14090.92 1442.00 1300.00 1434.95 1286.00Feb. 07 12938.09 1462.95 1180.00 1460.00 1171.00Mar. 07 13072.10 1315.00 1083.00 1300.00 1130.00

c) Registrar & Transfer Agent :

Intime Spectrum Registry Limited,



L.B.S. Marg, Bhandup (West),

MUMBAI – 400 078

Phone No. 022-25960320-28

Fax No. 022-25960329

Email [email protected]

d) Share Transfer System:

The share transfers are processed and the share certificates are returned to the shareholders within a maximum

period of 30 days from the date of receipt, subject to the documents being valid and complete in all respects.

e) Distribution of Shareholding:

(i) Shareholding pattern as on 31st March, 2007.

Category No. of Shares held No. of % of

Physical Electronic Shares Holding

Promoters Shareholding 837384 12247924 13085308 69.61

Mutual Funds & UTI 0 3397917 3397917 18.08

Banks, FI & Insurance Companies 0 3806 3806 0.02

Foreign Financial Institutions 0 1096192 1096192 5.83

NRIs / OCBs 0 18374 18374 0.10

Other Corporate Bodies 0 467738 467738 2.49

Indian Public 1079 726374 727453 3.87

Total 838463 17958325 18796788 100.00

(ii) Distribution of Shareholding as on 31st March 2007.

No. of Equity Shares No. of Folios % of Total Folios No. of Shares % of Holding

1 to 500 11633 97.97 370841 1.97

501 to 1000 102 0.86 77299 0.41

1001 to 2000 34 0.29 51554 0.27

2001 to 3000 20 0.17 46658 0.25

3001 to 4000 11 0.09 39954 0.21

4001 to 5000 6 0.05 29246 0.16

5001 to 10000 13 0.11 94868 0.51

10001 & above 55 0.46 18086368 96.22

Grand Total 11874 100.00 18796788 100.00

Shareholders in Physical Mode 19 0.00 838463 4.46

Shareholders in Electronic Mode 11855 100.00 17958325 95.54



f) Dematerialization of Shares & Liquidity :

The Shares of the Company are compulsorily traded in DEMAT form in the Stock Exchanges where they are listed.

The Shares are available for dematerialization on both the Depositories viz. National Securities Depository Limited

(NSDL) and Central Depository Services (India) Limited (CDSL).

As on 31-03-2007, 17958325 Equity Shares are in Dematerialized Form representing 95.54% of the total paid up

Equity Share Capital of the Company. The ISIN allotted to the Company’s scrip is INE212H01018. The Shares of

the Company are actively traded at Bombay Stock Exchange Limited, Mumbai (BSE) and National Stock Exchange

of India Limited, Mumbai (NSE).

g) Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, conversion date and likely impact on

Equity :

The Company has not issued GDRs / ADRs / Warrants or any convertible instruments.

h) Plant Locations:

(a) G.V.M.M. Estate, Odhav Road,

Odhav, Ahmedabad – 382 410

(b) Plot Nos. 70-77, Survey Nos. 423/P, 426/P & 427/P,

Mahagujarat Industrial Estate,

Sarkhej-Bavla N. H. 8-A,

Village : Moraiya, Post: Changodar, Taluka: Sanand

Dist.: Ahmedabad – 382 213

i) Address for Correspondence :

i) For transfer / dematerialisation of shares, change of address of members and other queries:

Intime Spectrum Registry Limited



L.B.S. Marg, Bhandup (West),

MUMBAI – 400 078

Phone No. 022-25960320-28

Fax No. 022-25960329

Email : [email protected]

ii) Any query relating to Dividend, Annual Reports etc.

The Company Secretary


115, GVMM Estate,

Odhav Road, Odhav,

AHMEDABAD-382 410

Phone No. 079-22901078-81

Fax No. 079-22901077

Email: [email protected]

Investors’ related query mail to: [email protected]

j) Details of Non-Compliance

There was no non-compliance during the year and no penalties were imposed or strictures passed on the Company

by the Stock Exchanges, SEBI or any other Statutory Authority. The Company obtained a Certificate from the

Practicing Company Secretaries on Corporate Governance and annexed the Certificate with the Directors’ Report and

sent the same to all the Shareholders of the Company. The same Certificate shall also be sent to all the concerned

Stock Exchanges along with the Annual Reports filed by the Company.



Practicing Company Secretaries Certificate on Corporate Governance

A certificate issued by M/s Tushar Vora & Associates, Practicing Company Secretaries with regard to compliance of

conditions of Corporate Governance is attached to this report.

NON-MANDATORY REQUIREMENTS

a) Chairman of the Board

A Non-Executive Chairman heads the Board of the Company.

b) Remuneration Committee

The Board has constituted a Remuneration Committee consisting of three Non-Executive Directors.

c) Shareholder Rights

As the Quarterly, Half Yearly and Annual Results are published in leading Newspapers having wide circulation, the

same are not sent to the Shareholders of the Company individually.

d) Postal Ballot

The Company has no occasion to place a resolution requiring Postal Ballot for Shareholders approval as recommended

under the relevant Rules & Clause 49 of the Listing Agreement.

The above report was adopted by the Board of Directors in their meeting held on 7th June 2007.



Practicing Company Secretaries Certificate on Corporate Governance

To

The Members of


Ahmedabad

We have examined the compliance of conditions of Corporate Governance by AIA ENGINEERING LIMITED for the year

ended 31st March 2007 as stipulated in Clause 49 of the Listing Agreement of the Company with the Stock Exchanges

in India.

The Compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination

was limited to the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the

conditions of Corporate Governance. It is neither an audit nor an expression of an opinion on the financial statements

of the Company.

In our opinion and to the best of our information and according to the explanation given to us, we certify that the

Company has complied with the conditions of Corporate Governance as stipulated in the above listing agreement.

We state that in respect of Investor grievances received during the year ended 31st March 2007, no Investor Grievances

are pending against the Company as on 31st March 2007 as per the records maintained by the Company and presented

to the Investors/ Shareholders Grievance Committee.

We further state that such Compliance is neither an assurance as to the future viability of the Company nor the efficiency

or effectiveness with which the management has conducted the affairs of the Company.

For Tushar Vora & Associates

Company Secretaries

TUSHAR M.VORA

Place : Ahmedabad Proprietor

Date : 07.06.2007 C.O.P. No.: 1745

DECLARATION

In compliance with Clause 49 of the Listing Agreement, I, Bhadresh K. Shah, Managing Director of the Company hereby

declares on the basis of informations furnished to me that all Board Members and Senior Managerial Personnel have

affirmed in writing the Compliance of their respective Code of Conducts adopted by the Board for the Financial Year

2006-07.

Place : Ahmedabad (Bhadresh K. Shah)

Date : 07.06.2007 Managing Director



MANAGING DIRECTOR / EXECUTIVE DIRECTOR (FINANCE) CERTIFICATION

To,

The Board of Directors,

AIA Engineering Limited,

Ahmedabad-382 410

We, the undersigned, in our capacities as the Managing Director and Executive Director (Finance) of AIA Engineering

Limited (“the Company”) to the best of our knowledge and belief certify that:

(a) We have reviewed the Financial Statements and the Cash Flow Statement for the year ended on March 31, 2007

and based on our knowledge and belief, we state that:

(i) These statements do not contain any materially untrue statement or omit any material fact or contain statements

that might be misleading.

(ii) These statements together present a true and fair view of the Company’s affairs and are in compliance with

existing Accounting Standards, applicable laws & regulations.

(b) We further state that to the best of our knowledge and belief, there are no transactions executed into by the Company

during the year which are fraudulent, illegal or violate the Company’s Code of Conduct.

(c) We are responsible for establishing & maintaining Internal Controls for financial reporting and we have evaluated

the effectiveness of the internal control systems of the Company pertaining to financial reporting and we have

disclosed to the Auditors and the Audit Committee those deficiencies, of which we are aware, in the design or

operation of the internal control system, if any, and that we have taken the required steps to rectify these deficiencies.

(d) We have indicated, based on our evaluation, wherever applicable, to the Auditors and the Audit Committee:

(i) significant changes, if any, in internal control over financial reporting during the year;

(ii) significant changes, if any, in accounting policies during the year and that the same has been disclosed in

the notes to the financial statements; and

(iii) instances of fraud which we have become aware and the involvement therein, if any, of management or an

employee having significant role in the Company’s internal control system over financial reporting.

Bhadresh K. Shah Kunal D. Shah

Managing Director Executive Director (Finance)

Place: Ahmedabad Place: Ahmedabad

Date : 07.06.2007 Date : 07.06.2007



MANAGEMENT DISCUSSION AND ANALYSIS

A. INDUSTRY OVERVIEW

Infrastructure is the pivot on which economic development of any country rests. Cement, Mining and Utilities are the basic

drivers of infrastructure development. Mill Internals manufactured by AIAEL find application in the above mentioned industries.

The Company basically employs alloy-casting process for manufacture of the products, which require designing of alloys

in relation to end application. The casting process is followed by precision heat treatment to develop required end

properties. Therefore, Company can generally be classified as a Foundry. The industry produces a specific range of high

chrome mill internals which are used as wear parts in the crushing / grinding operations in the mills/plants of Cement,

Mining and Utility industries, therefore the market prospects are linked with the requirement of these industries.

The demand of our products is driven by maintenance requirement market and project requirement market. Outlook in

both areas of demand is healthy.

Presently, the Company is mainly focusing on the Cement and Mining segment outside India, however, in India, it is

servicing all the three segments.

B. SWOT ANALYSIS

The Company is uniquely positioned as a supplier of High Chrome Mill Internals on a global scale, on account of the

following competitive strengths:

• Focus on the combination of Metallurgy, Design and Applications.

• Comprehensive solutions based approach, as distinct from supply of commodity products.

• Focus on technology research and development.

• Worldwide presence in more than 60 countries, being directly in front of the customers through a net work of

overseas marketing subsidiaries in the Middle East, Europe and USA and warehouse facilities.

• Low cost of production.

• Strategic commercial partnerships with leading OEMs and customers.

• A management team comprising of Technocrats, Professionals and Consultants having rich experience in High

Chrome Mill Internals industry.

WEAKNESS/THREATS

• Inability to scale up the capacities rapidly owing to extremely high importance of absolutely zero failure rate of the

products expected from the customers, requiring close monitoring of the quality.

• Issues related to logistics, particularly with the increasing volumes of the products.

OPPORTUNITIES AND STRATEGIES

• To tap the opportunities available in the global Mining segment and the Cement, Mining & Utility segment in India.

• To maintain and further strengthen our capabilities of Research & Development activity.

• To focus more on strategic relationship/ commercial partnerships with international groups.

C. SEGMENTWISE PERFORMANCE

The Company primarily operates in only one segment i.e. manufacturing of High Chrome Mill Internals. However, from

the market stand point, to give a better understanding of our market positioning, it may be mentioned that in F.Y. 2007,

51% of the total consolidated sales came from within India and balance 49% came from outside India.

D. OUTLOOK AND PROSPECTS

The Company is operating in a high technology oriented niche engineering segment, involving manufacturing of

impact, abrasion and wear resistant, high chrome mill internal products used by Cement, Mining and Utility industries.

The Company services the ‘replacement’ demand of these industries and the OEM requirement for new capacities added.

• The ‘replacement’ market is strong thanks to the strong demand of metals and cement.

• The OEM business is also poised for growth as new cement capacities are being added not only in India, but in

many other parts of the world.

The ongoing EOU Greenfield project at Moraiya is under implementation. The first phase has already come in production

creating additional capacity of 50,000 TPA and the second phase involving the capacity of further 50,000 TPA is

expected to come in production during Q4 of 2007-2008.



In addition to the above ongoing project, the Company has also firmed up plans for setting up another high chrome MillInternals unit with the capacity of additional 1,00,000 TPA at a suitable location, preferably either in a SEZ or in any otherconvenient location in Gujarat. The primary driver of this second expansion being planned is the strategy of theCompany to ramp-up its capacities quickly so as to fully capitalize upon the opportunity available to the Company. TheCompany is also contemplating certain backward integration opportunities including setting up of a Captive Power Plant

and Ferro Chromium plant of a suitable size.

E. RISKS AND CONCERNS

Given its large exports, the Company is exposed to foreign exchange rate fluctuation risk. The Company has startedhedging the risk in a systematic manner, so as to mitigate the same.

Another major area of risk is with regard to fluctuation in the raw material prices. However, the Company has convertedmajor portion of its contracts from fixed price to fluctuating price regime. Again, the Company is closely monitoring the

price movements and is regularly buying the raw materials during low price cycles so as to average out the impact ofprice fluctuations.

The Company faces the project risks for its Greenfield project – particularly pertaining to delays in the implementation,which can upset the targeted production schedules. However, the Company is closely monitoring the projectimplementation and is taking all steps to ensure that there are no abnormal delays in physical implementation.

The capacity expansion will augur well for the Company’s future growth prospects, as it has hitherto been a constraintin accepting new orders.

The Company is exposed to certain operating business risks, similar to most manufacturing companies, which ismitigated by regular monitoring and corrective actions.

F. INTERNAL CONTROL SYSTEM AND THE ADEQUACY

The Company has proper and adequate system of internal controls commensurate with its size and nature of operationsto provide reasonable assurance that all assets are safeguarded, transactions are authorized, recorded & reported properlyand to certain operating business risks, which is mitigated by regular monitoring and corrective actions.

The internal control system has been designed so as to ensure that the financial and other records are reliable and reflectsa true and fair view of the state of the Company’s business.

A qualified and independent Audit Committee of the Board of Directors actively reviews the adequacy and effectivenessof internal control systems and suggests improvements for strengthening them.

G. FINANCIAL PERFORMANCE REVIEW

The financial performance of the Company as a whole (on consolidated basis) is as under:-

I. Consolidated Performance

An analysis of the consolidated performance of the Company is given below:

(a) Physical Production

The production achieved is as under:

(Qty. in M.T.)

Product F.Y. 2007 F.Y. 2006

High Chrome Mill Internals 69398 59329

It will be seen that in physical terms, the Company has achieved 17% growth in Financial Year 2007 over the

Financial Year 2006.

(b) Sales Turnover

The comparative position of sales turnover achieved by the Company is as under :

(Rs. in Lacs)

Particulars F.Y. 2007 F.Y.2006

Sales in India 26750.31 21202.96

Sales Outside India 2552.69 19493.41

Total 52303.00 40696.37

It will be seen that the total sales of the Company have increased by 29% over the Previous Financial Year.

Further, sales in India have increased by 26% over the Previous Financial Year and sales outside India have

increased by 31% over the Previous Financial Year.



(c) Key Performance Indicators

An analysis of the key indicators as percentage to Sales is given below:

(Rs. in lacs)

Particulars F.Y: 2007 F.Y :2006

1 - Net Sales 52303.00 40696.37

2 Raw Materials Consumed (incl. stores, spares 22303.76 17943.18

& Trading Purchase)

- % of Sales 42.64% 44.09%

3 Employee Costs 2216.26 2258.91

- % of Sales 4.24% 5.55%

4 Other Expenditure 15347.37 12343.08

- % of Sales 29.34% 30.33%

5 EBIDTA 14074.14 9191.15

- % of Sales 26.91% 22.58%

6 Interest Cost 241.23 527.83

- % of Sales 0.46% 1.30%

7 Depreciation 820.59 709.22

- % of Sales 1.57% 1.74%

8 Profit Before Tax 13012.32 7954.10

- % of Sales 24.88% 19.54%

9 Profit After Tax 9432.10 5235.78

- % of Sales 18.03% 12.87%

II. Standalone performance

The analysis of standalone performance of the Company is given below:

(a) Physical Production

The production achieved is as under:

(Qty. in M.T.)

Product F.Y. 2007 F.Y. 2006

High Chrome Mill Internals 31258 27833

It will be seen that in physical terms, the Company has achieved 12% growth in Financial Year 2007 over the

Financial Year 2006.

(b) Sales Turnover

The comparative position of sales turnover achieved by the company is as under :

(Rs. in Lacs)

Particulars F.Y. 2007 F.Y.2006

Sales in India 22435.07 16610.07

Sales Outside India 17508.26 13565.28

Total 39943.33 30175.35

It will be seen that the total sales of the Company have increased by 32% over the Previous Financial Year.

Further, sales in India have increased by 35% over the Previous Financial Year and sales outside have

increased by 29% over the Previous Financial Year.



(c) Key Performance Indicators

An analysis of the key indicators as percentage to Sales is given below:

(Rs. in lacs)

Particulars F.Y: 2007 F.Y :2006

1 - Net Sales 39943.33 30175.35

2 Raw Materials Consumed (incl. stores,

spares & Trading Purchase) 22186.11 16693.17

- % of Sales 55.54% 55.32%

3 Employee Costs 1069.45 969.93

- % of Sales 2.68% 3.21%

4 Other Expenditure 7860.37 6983.40

- % of Sales 19.68% 23.14%

5 EBIDTA 9991.33 6124.59

- % of Sales 25.01% 20.30%

6 Interest Cost 47.45 283.57

- % of Sales 0.12% 0.94%

7 Depreciation 251.26 191.72

- % of Sales 0.63% 0.64%

8 Profit Before Tax 9692.62 6245.04

- % of Sales 24.27% 20.70%

9 Profit After Tax 6692.14 4323.82

- % of Sales 16.75% 14.33%

H) INDUSTRIAL RELATIONS AND HUMAN RESOURCE MANAGEMENT

The Company believes that human resource is the most important asset of the organization. During the year under

review, your Company continued its efforts to improve HR related processes, practices and systems to align these to the

organizational objectives. Training and development of its employees is ensured through on the job and outside training

programs and workshop.

The Company presently has 616 employees on its roll and continues to attract excellent talent to further its business

interest. Industrial Relations continue to be cordial.

Cautionary Statement

Statements made in the Management Discussion & Analysis describing the Company’s objectives, projections, estimates,

expectations may be “Forward-looking statements” within the meaning of applicable securities, laws & regulations.

Actual results could differ from those expressed or implied, important factors that could make a difference to the

Company’s operations include economic conditions affecting demand supply and price conditions in the domestic &

overseas markets in which the Company operates, changes in the government regulations, tax laws & other statutes &

other incidental factors.

None of the Senior Management personnel have Financial and Commercial transactions with the Company, where they

have personal interest, that would / could emerge as potential conflict with the interest of the Company at large.

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AUDITORS’ REPORT

To

The MembersAIA ENGINEERING LIMITED

AHMEDABAD

1. We have audited the attached Balance Sheet of AIA ENGINEERING LIMITED as at 31st March 2007, andalso the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed

thereto. These financial statements are the responsibil ity of the Company ’s Management. Ourresponsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those

standards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a test basis,

evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by management, as well as

evaluating the overall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India

in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure, astatement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that;

i. We have obtained all the information and explanations which to the best of our knowledge and

belief were necessary for the purpose of our audit;

ii. In our opinion, proper books of accounts as required by law have been kept by the Company so faras appears from our examination of those books;

iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this Report are

in agreement with the books of account;

iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with thisReport comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the

Companies Act, 1956;

v. On the basis of written representations received from the Directors, as on 31st March, 2007 andtaken on record by the Board of Directors, we report that none of the Directors is disqualified as on

31st March, 2007 from being appointed as a Director in terms of Clause (g) of Sub-Section (1) ofSection 274 of the Companies Act, 1956;

vi. In our opinion and to the best of our information and according to the explanations given to us, the

said accounts give the information required by the Companies Act, 1956, in the manner so requiredand give a true and fair view in conformity with the accounting principles generally accepted in

India;

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2007.

(b) In the case of the Profit and Loss Account, of the profit for the year ended on that date.

(c) In the case of the Cash Flow statement, of the cash flows for the year ended on that date.

For TALATI & TALATI

Chartered Accountants

(UMESH TALATI)

Place : AHMEDABAD PartnerDate : 7th June, 2007 Mem.No. 34834



ANNEXURE TO THE AUDITORS’ REPORT

(Referred to in paragraph 3 of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars including quantitative details

and situation of fixed assets.

(b) Majority of the assets have been physically verified by the management during the year and thereis a regular programme of verification which, in our opinion, is reasonable having regard to the size

of the Company and the nature of its assets. No material discrepancies were noticed on suchverification.

(c) During the year, the Company has not disposed off any major part of the Fixed Assets.

(ii) (a) The inventory has been physically verified during the year by the management. In our opinion, the

frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable

and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of the company, we are of the opinion that theCompany is maintaining proper records of inventory. The discrepancies noticed on verification

between the physical stocks and the book records were not material.

(iii) (a) The Company has granted unsecured loan to a Company covered in the register maintained under

Section 301 of the Companies Act, 1956. The maximum amount involved during the year wasRs.40.48 Lacs and the year-end balance of loan granted to this Company was Rs. Nil.

(b) In our opinion and according to the information and explanations given to us, the rate of interest andother terms and conditions on which loans have been granted to a Company listed in the register

maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to theinterest of the Company.

(c) The said Company has repaid principal amounts as stipulated and has been regular in the paymentof interest.

(d) There is no overdue amount of loans, granted to the Company listed in the register maintained u/s.

301 of the Companies Act, 1956.

(e) The Company has not taken any Loans, secured or unsecured, from Companies, Firms or other

Parties covered in the Register maintained u/s 301 of the Companies Act, 1956. Consequently,Clause (iii) (f) and (iii) (g) of Paragraph 4 of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internalcontrol procedures commensurate with the size of the Company and the nature of its business with regard

to purchase of inventory, fixed assets and with regard to the sale of goods. During the course of our audit,no major weaknesses have been noticed in the internal controls.

(v) (a) Based on the audit procedures applied by us and according to the information and explanationsprovided by the management, we are of the opinion that the transactions that need to be entered

into the register maintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions madein pursuance of contracts or arrangements entered in the registers maintained under Section 301 in

respect of any party during the year are of specialized nature of job and non-availability of alternativesource of supply hence the price paid/received could be considered reasonable.

(vi) In our opinion and according to the information and explanations given to us, the Company has not acceptedany deposit from the public and hence the provisions of Section 58A and 58AA or any other relevant

provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 withregard to the deposits accepted from the public are not applicable to the Company.

(vii) The Company has appointed a firm of Chartered Accountants as its Internal Auditor for the year underreview. The Internal Audit for the year is therefore carried out by the said firm. In our opinion, the Company

has an Internal Audit System commensurate with the size and nature of its Business.

(viii) The Central Government has not prescribed maintenance of cost records under section 209(1)(d) of the

Companies Act, 1956. Hence the provision of this clause is not applicable to the Company.



(ix) (a) According to the records of the Company, the Company is generally regular in depositing with appropriate

authorities undisputed statutory dues including Provident Fund, Employees State Insurance, Income-Tax, Sales Tax, Wealth Tax, Custom Duty, Service Tax, Excise Duty, Cess and other Statutory Duties

applicable to it. There are no undisputed Statutory dues as referred to above as at 31st March, 2007outstanding for a period of more than six months from due date they become payable.

(b) According to the information and explanations given to us, details of dues of Income Tax, Excise

Duty and Service Tax which have not been deposited on account of any dispute are given below:

Name of Nature of dues Amount under Periods to Forum

the statute dispute not which the where theyet deposited amount dispute is

Rs. in Lacs relates pending

Income Tax Income Tax including interest 6.15 1999-2000 TribunalAct 1961 and penalty, as applicable.

36.80 2001-2002

4.43 2003-2004

8.82 2004-2005

The Central Excuse Duty including interest 1.12 2005-2006 Commissioner-Excise Act 1944 and penalty, as applicable Appeals

Service Tax Service Tax including interest 16.51 1997-2001 CommissionerAct and penalty, as applicable Appeals

2.30 2001-2003

(x) The Company does not have any accumulated losses. The company has not incurred cash losses during the

financial year covered by our audit and the immediately preceding financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, we are

of the opinion that the Company has not defaulted in repayment of dues to the banks.

(xii) The Company has not granted any loans against security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund or a nidhi mutual benefit fund/society. Therefore, the provisions of thisclause of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly,

the provisions of clause XIV of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

(xv) In our opinion the Company has not given any guarantee for loans taken by others from bank or financial

institution hence the provision of this clause is not applicable to the Company.

(xvi) During the year under review Company has not availed any Term Loan. Therefore, the provisions of thisclause of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

(xvii) Based on the information and explanations given to us and on an overall examination of the balance sheet

of the Company, we report that no significant funds raised on short-term basis have been used for long-terminvestment by the Company.

(xviii) During the period covered under our audit, the Company has not made any preferential allotment of shares

to parties covered in register under Section 301 of the Companies Act, 1956.

(xix) During the period covered by our audit report, the Company has not issued any debentures. Accordingly, the

provision of clause (xix) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the Company.

(xx) We have verified that the end use of money raised by Initial Public Offer (IPO) and Qualified InstitutionsPlacement (QIP) is as disclosed in the Note No.1(xii) to Notes forming part of Accounts.

(xxi) We report that no fraud on or by the Company has been noticed or reported during the course of our Audit.

For TALATI & TALATI

Chartered Accountants

(UMESH TALATI)

Place : AHMEDABAD Partner

Date : 7th June, 2007 Mem.No. 34834



BALANCE SHEET AS AT 31st MARCH, 2007

As at

31st March,2006

Schedule Rs. in Lacs

SOURCES OF FUNDS

1. SHAREHOLDER’S FUNDS :

(a) Share Capital 1 1879.68 1777.64

(b) Reserves and Surplus 2 40682.34 22610.02

42562.02 24387.66

2. LOAN FUNDS :

Secured Loans 3 0.00 1373.61

3. DEFFERED TAX LIABILITIES (NET) 4 176.59 139.82

TOTAL : 42738.61 25901.09


1. FIXED ASSETS :

(a) Gross Block 5 6453.41 3316.30

(b) Less : Depreciation 1733.97 1494.76

Net Block 4719.44 1821.54

(c) Capital Work In Progress 5957.01 650.86

10676.45 2472.40

2. INVESTMENTS 6 16432.80 11449.14

3. CURRENT ASSETS, LOANS AND

ADVANCES : 7 28398.43 20854.66

Less : CURRENT LIABILITIES AND

PROVISIONS : 8 12769.07 8875.11

NET CURRENT ASSETS 15629.36 11979.55

TOTAL : 42738.61 25901.09

Notes forming part of the Accounts 15

As per our report of even date attached.

For and on behalf of

TALATI & TALATI VINOD NARAIN BHADRESH K. SHAH

Chartered Accountants Chairman Managing Director

UMESH TALATI BHUPENDRA A. SHAH S. N. JETHELIYA

Partner Director Company Secretary

PLACE : AHMEDABAD PLACE : AHMEDABAD

DATE : 7th June, 2007 DATE : 7th June, 2007

As at

31st March, 2007

Rs. in Lacs



PROFIT AND LOSS ACCOUNT FOR THE FINANCIAL YEAR ENDED 31st MARCH 2007


31st March, 2007 31st March,2006

Schedule Rs. in Lacs Rs. in Lacs

INCOME :-

Sales 9 39943.33 30175.35

Other Income 10 1163.92 595.74

Increase / (Decrease) in Stock 11 1701.11 179.19

TOTAL : 42808.36 30950.28

EXPENDITURE :-

Manufacturing Expenses 12 18315.39 15372.29

Trading Purchases 11789.15 6778.52

Administrative,Selling and Other Expenses 13 2712.49 2674.88

Interest Expenses 14 47.45 283.57

Depreciation 5 251.26 191.72

TOTAL : 33115.74 25300.98

PROFIT BEFORE TAXES 9692.62 5649.30

PROVISION FOR TAXES

a) Current Tax 2942.00 1890.00

b) Short (Excess) Provision for earlier years (7.20) 0.93

c) Deffered Tax 36.77 (0.92)

d) Fringe Benefits Tax 28.90 31.20

PROFIT AFTER TAXES 6692.15 3728.09

Surplus Brought forward from Previous year 5499.32 2650.78

PROFIT AVAILABLE FOR APPROPRIATIONS : 12191.47 6378.87

Appropriations :


Corporate Tax on Dividend on Equity Shares 111.81 62.33

Transferred to General Reserve 669.22 372.81

1438.92 879.55

Balance carried to Balance Sheet 10752.55 5499.32

Basic and Diluted Earning Per Share (Rs.) 37.05 25.59












SCHEDULES 1 TO 8 FORMING PART OF THE BALANCE SHEET AS AT 31st MARCH 2007

As at

31st March,2006

Rs. in Lacs

SCHEDULE : 1 SHARE CAPITAL

AUTHORISED :

26000000 Equity Shares of Rs.10 each

(Previous Year 26000000 Shares) 2600.00 2600.00

2000000 Redeemable Cumulative Preference

Shares of Rs.100 each

(Previous Year 2000000 Shares) 2000.00 2000.00—————— ——————

TOTAL 4600.00 4600.00

ISSUED, SUBSCRIBED & PAID UP :

18796788 Equity Shares of Rs.10 each fully paid 1879.68 1777.64

up ( Previous year 17776380 Shares )

(Includes 10461104 ( Previous Year 10461104 )

fully paid Bonus Shares issued by Capitalisation

of Share Premium)—————— ——————

TOTAL 1879.68 1777.64

SCHEDULE : 2 RESERVES AND SURPLUS

A. Capital Redemption Reserve 1913.38 1913.38

B. Shares Premium 14429.65 850.57

Add : Premium on Issue of Shares 12397.96 14335.00

Less : Initial Public Offer / QIP Expenses 248.09 755.92

—————— ——————

26579.52 14429.65

C. General Reserve 767.67 394.86

Add : Transferred from Profit and Loss Account 669.22 372.81

—————— ——————

1436.89 767.67

D. Profit and Loss Account 10752.55 5499.32

—————— ——————

TOTAL 40682.34 22610.02

As at

31st March, 2007

Rs. in Lacs



As at

31st March,2006

Rs. in Lacs

SCHEDULE : 3 SECURED LOANS

A. WORKING CAPITAL LOAN :

From Banks 0.00 1373.61

All the above Loans are secured by paripassu

charge in favour of State Bank of India and

ABN AMRO Bank N.V. on the Company’s movable

and immovable properties both present and

future by way of hypothecation and mortgage.

—————— ——————

TOTAL 0.00 1373.61

SCHEDULE : 4 DEFFERED TAX LIABILITIES /

DEFFERED TAX ASSETS (NET)

A. DEFFERED TAX LIABILITIES :

Arising on account of timing difference

- Depreciation 202.64 160.93—————— ——————

TOTAL DEFERRED TAX LIABILITIES (A) 202.64 160.93

B. DEFFERED TAX ASSETS :

Arising on account of timing difference

- Technical Knowhow Fees 0.00 5.90

- Leave Encashment 25.43 13.41

- Service tax 0.62 1.80

—————— ——————

TOTAL DEFERRED TAX ASSETS ( B ) 26.05 21.11

—————— ——————

TOTAL : ( A - B ) 176.59 139.82

As at

31st March, 2007

Rs. in Lacs



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As at

31st March,2006

Rs. in Lacs

SCHEDULE : 6 INVESTMENTS (AT COST)

LONG TERM NON TRADE INVESTMENTS: (QUOTED)

A. INVESTMENT IN SUBSIDIARY COMPANIES IN INDIA :

456881 Equity Shares of Welcast Steels Ltd. of

Rs.10 each fully paid up.

(Previous year 456881 Equity Shares) 1296.27 1296.27

LONG TERM NON TRADE INVESTMENTS: (UNQUOTED)

A. INVESTMENT IN SUBSIDIARY COMPANIES IN INDIA :

1. 82939 Equity Shares of Paramount Centrispun

Castings Pvt.Ltd.of Rs.100 each fully paid up

(Previous year 82939 Equity Shares ) 166.91 166.91

2. 157000 Equity Shares of Reclamation Welding

Ltd. of Rs. 100 each fully paid up


324.13 324.13

B. INVESTMENT IN SUBSIDIARY

COMPANIES OUTSIDE INDIA :

1. 32500 Equity Shares of Vega Industries (Middle

East) FZE, U.A.E. of US$ 10 each fully paid up


2. 30000 Class A Shares of Vega Industries (Canada) Inc.

of $ 1 CAD each fully paid up

(Previous year 30000 Class A Shares ) 10.60 10.60

159.99 159.99

C. INVESTMENT IN OTHER COMPANIES :

25 Equity Shares of Koramangla Properties Pvt. Ltd.

of Rs.100 each fully paid up


D. CURRENT INVESTMENT IN

MUTUAL FUND : (UNQUOTED)

1. ING Vysya FMP Series XX Plan 602.35 0.00

6000000.000 Units NAV of Rs.10.0393 each

(Previous year NIL Units NAV of Rs.NIL )

2. ING Vysya FMP Series XXIV Plan 1506.58 0.00



3. ING Vysya Plus Institutional Plan 100.03 0.00



4. ING Vysya Liquiid Fund Super Institutional Plan 319.71 0.00



5. ING Vysya FMP Series XIX Plan 100.40 0.00



As at

31st March, 2007

Rs. in Lacs



As at

31st March,2006

Rs. in Lacs

6. ING Vysya Liquid Fund Institutional Plan 244.27 0.00



7. ING Vysya FMP Series XI Plan 0.00 500.00

NIL Units NAV of Rs.NIL (Previous year 5000000

Units NAV of Rs.10.0386 each)

8. Prudential ICICI FMP Series 37 Plan 500.00 0.00



9. Sundaram BNP Paribas Fixed Term Series XXII Plan 3000.00 0.00

30000000 Units NAV of Rs.10.000 each


10. Principal PNB FMP-32 Plan 1500.84 0.00

15000000 Units NAV of Rs.10.0056 each


11. Principal PNB Floating Rate Fund SMP Institutional 500.49 500.00


(Previous year 5000000 Units NAV of Rs.10.0182 each)

12. Kotak FMP 3M Series 10 Plan 205.31 0.00



13. Kotak FMP 3M Series 14 Plan 2546.08 0.00



14. Kotak FMP Series XV Plan 0.00 505.52

NIL Units NAV of Rs. NIL (Previous year 5055140.075


15. Kotak FMP Series 23 Plan 0.00 500.00

NIL Units NAV of Rs.NIL


16. Kotak Liquid Institutional Premium Plan 0.00 0.06


(Previous year 529.6162 Units NAV of Rs.12.2281 each)

17. Reliance Fixed Horizon Fund Series-II Institutional 526.32 0.00



18. Reliance FMP III Series II Plan 0.00 500.36



19. Reliance FMP IX Series II Plan 0.00 504.31

NIL Units NAV of Rs.NIL (Previous year 5043134.017


20. Birla FMP Quartelry Series II Plan 3000.00 0.00



As at

31st March, 2007

Rs. in Lacs



As at

31st March,2006

Rs. in Lacs

21. Birla Cash Plus Institutional Daily Dividend Plan 0.00 321.28



22. Birla FTP Series Plan 0.00 503.50



23. DSP Merill Lynch Liquid Plus Plan 0.00 520.45



24. DSP Merill Lynch FTP-II Series Plan 0.00 503.27



25. DSP Merill Lynch FTP-IB Series Plan 0.00 1004.08



26. DSP Merill Lynch FTP-IC Series Plan 0.00 1500.25


(Previous year 150025.500 Units NAV of Rs.1000 each)

27. Standard Chartered GCCD Liquidity Manager Plan 0.00 404.97



28. Standard Chartered GCCD FMP 21st Plan 0.00 504.71


(Previous year 5047100 Units NAV of Rs.10 each)

29. Standard Chartered GCCD FMP 4th Plan 0.00 501.93


(Previous year 5019250 Units NAV of Rs.10 each)

30. LIC Daily Dividend Plan 0.00 193.04



31. JM Financial FMP Series II Plan 0.00 500.00



32. ABN AMRO FTP Series II Plan 0.00 200.99



14652.38 9668.72

AGGREGATE VALUE QUOTED UNQUOTED

Cost 1296.27 15136.53

Previous Year 1296.27 10152.87

Market Price 2133.63

Previous Year 4429.00

TOTAL 16432.80 11449.14

As at

31st March, 2007

Rs. in Lacs



As at

31st March,2006

Rs. in Lacs

SCHEDULE : 7 CURRENT ASSETS, LOANS AND ADVANCES

CURRENT ASSETS :

A. INVENTORIES

(As taken, valued & certified by the Directors)

Raw Materials 1756.69 545.13

Stores & Spares 516.84 187.29

Work-In Process 3033.28 1332.17—————— ——————

5306.81 2064.59

B. SUNDRY DEBTORS

(Unsecured, Considered Good)

a). Debts outstanding for a period exceeding 1034.12 1115.18

six months

b). Others (*) 9480.85 9623.04—————— ——————

10514.97 10738.22

Note : (*) Includes due from : Maximum due

during the year

Subsidiaries : 10262.35 4574.58 4683.77


C. CASH AND BANK BALANCES

a) Cash on hand 6.41 4.56

b) Balance with Scheduled Banks

i) In Fixed Deposit 1614.63 1114.63

ii) In Current Accounts 844.49 83.47—————— ——————

2465.53 1202.66

D. LOANS & ADVANCES :


a) Advances recoverable in cash or kind or for

value to be received (*) 640.62 682.84

b) Inter Corporate Deposits (*) 0.00 40.48

c) Advance Income tax & TDS

(Including Fringe Benefit tax) 7845.93 5354.84

d) Sundry Deposits and Advances 800.99 316.05

e) Loans and Advances to Staff 65.59 43.28

f) Balance with Central Excise /

Service Tax Department 757.99 411.70—————— ——————

10111.12 6849.19

Note : (*) Includes due from : Maximum due

during the year

Subsidiaries : 129.63 0.00 40.48


—————— ——————TOTAL 28398.43 20854.66

As at

31st March, 2007

Rs. in Lacs



As at

31st March,2006

Rs. in Lacs

SCHEDULE : 8 CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIES :

a) Sundry Creditors 3313.76 2407.14

b) Other Liabilities 63.94 53.51

c) Statutory Liabilities 83.01 95.09

d) Advances from Customers 594.00 236.19—————— ——————

4054.71 2791.93

PROVISIONS :

a) Provision for Taxation 7869.15 5518.25

b) Proposed Dividend on Equity Shares 657.89 444.41

c) Corporate Tax on Dividend on Equity Shares 111.81 62.33

d) Provision for Leave Encashment payable 75.51 58.19—————— ——————

8714.36 6083.18—————— ——————

TOTAL 12769.07 8875.11

As at

31st March, 2007

Rs. in Lacs



SCHEDULES 9 TO 14 FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE

FINANCIAL YEAR ENDED 31st MARCH 2007

Year ended

31st March,2006

Rs. in Lacs

SCHEDULE : 9 SALES

a. Domestic Sales 22435.06 16610.07

b. Export Sales 17508.27 13565.28—————— —————— —————— ——————

TOTAL 39943.33 30175.35

SCHEDULE : 10 OTHER INCOME

a. Interest ( Gross) 44.87 22.63

(T.D.S Rs.3.64 Previous Year Rs. 2.25)

b. Miscellaneous Receipts 42.24 113.88

c. Dividend received 749.29 161.05

d. Profit on Sale of Assets 1.03 5.28

e. Premium on Sale of Import Licenses 315.02 283.93

f. Sales tax Refund 9.93 4.37

g. Profit on Sale of Mutual Fund Units 1.54 4.60—————— —————— —————— ——————

TOTAL 1163.92 595.74

SCHEDULE : 11 INCREASE / (DECREASE) IN STOCK

a. Opening Stock : Work In Process 1332.17 1152.98

b. Closing Stock : Work In Process 3033.28 1332.17—————— ——————

TOTAL 1701.11 179.19

SCHEDULE : 12 MANUFACTURING EXPENSES

A. RAW MATERIALS CONSUMED

Opening Stock 545.13 1000.26

Add : Purchases 9624.33 6629.41—————— ——————

Sub Total 10169.46 7629.67

Less : Closing Stock 1756.69 545.13—————— ——————

8412.77 7084.54

B. STORES CONSUMED


Add : Purchases 4014.85 3098.27—————— ——————

Sub Total 4202.14 3196.59

Less : Closing Stock 516.84 187.29—————— ——————

3685.30 3009.30

C. PAYMENT TO & PROVISIONS FOR EMPLOYEES

a) Salaries, Wages and Bonus 939.04 835.57

b) Contribution to Provident Fund / ESIC/ Gratuity 99.34 101.43

c) Staff Welfare Expenses 31.08 32.92—————— ——————

1069.46 969.92

Year ended

31st March, 2007

Rs. in Lacs



Year ended

31st March,2006

Rs. in Lacs

SCHEDULE : 12 MANUFACTURING EXPENSES (Contd..)

D. OPERATIONAL AND OTHER EXPENSESa) Power and Fuel 1683.80 1413.54b) Labour Charges 723.69 437.75c) Job Conversion Charges 1936.28 1754.63d) Freight Inward,Octroi, Coolies and Cartages 551.45 481.13e) Repairs and Maintenance

- Plant and Machineries 212.71 179.33- Buildings 21.18 25.50- Other Assets 18.75 16.65

—————— ——————252.64 221.48

5147.86 4308.53—————— ——————

TOTAL : 18315.39 15372.29

SCHEDULE : 13 ADMINISTRATIVE,SELLING AND OTHER EXPENSES1. Insurance Premium Expenses ( Net ) 30.75 20.792. Rent, Rates and Taxes 24.20 18.793. Freight Outward, Coolies and Cartages 1323.89 1060.084. Commission Expenses ( Net ) 89.48 406.015. Service Charges 3.29 6.286. Directors’ Remuneration and Perquisites 61.94 64.717. Travelling Expenses - Directors 8.90 60.52 - Staff,Guests and Visitors 248.38 212.82

—————— ——————257.28 273.34

8. Statutory Audit Fees 2.50 1.509. Legal and Professional Consultancy Fees 288.90 142.1410. Bank Commission Charges 92.82 63.4311. Printing and Stationery Expenses 26.33 19.5812. Postage,Telephones,Courier,Internet & E-mail 54.83 53.3013. Sales Promotion / Gift Expenses 51.29 12.3514. Computer Expenses 10.05 10.9215. Vehicle Repairs and Maintenance 29.73 30.7416. Conveyance Expenses 15.87 7.0917. Security Expenses 25.26 18.2118. Subsciption and Membership Fees 4.13 9.5019. Entertainment Expenses 7.89 8.7720. Donation Expenses 33.81 27.3521. Advertisement Expenses 11.97 5.1122. Import / Export Licence Fees 4.49 3.2823. Licence Fees 1.19 1.2324. Bad Debts 65.51 22.5025. Product Warranty Expenses 85.14 38.9626. Late Delivery Penalty Charges 14.59 49.5027. Assets Written Off 0.63 0.0028. Tender Fees 1.17 0.8529. Water Charges 13.01 10.0930. Office Expenses 13.04 15.5531. Electricity Expenses 11.82 6.0232. Central Excise Duty (Net) 0.22 28.2833. Sales tax 0.01 0.0434. Service tax 6.33 3.1035. Cash Transaction tax 0.84 0.5636. Loss on Sale of Assets 1.61 4.6937. Goodwill Written off 5.72 5.7238. Exchange Rate Fluctuation Difference 6.18 195.7339. General / Miscellaneous Expenses 34.78 28.79

—————— ——————T O T A L : 2712.49 2674.88

Year ended

31st March, 2007

Rs. in Lacs



Year ended

31st March,2006

Rs. in Lacs

SCHEDULE : 14 INTEREST EXPENSES

a. Corporate Entities 0.00 13.04

b. Financial Institutions 0.00 35.10

c. Banks

- Cash Credit and Others 1.08 4.51

- Working Capital Demand Loan 4.40 126.73

- Export Packing Credit Loan 25.80 1.19

- Term Loan 0.00 81.06

- Inland / Foreign Bills Discounting 14.17 18.94—————— ——————

45.45 232.43

d. Directors 0.00 2.52

e. Others 2.00 0.48—————— ——————

T O T A L : 47.45 283.57

SCHEDULE :15 NOTES TO ACCOUNTS

1. Significant Accounting Policies:

i) Basis of Accounting :

The Accounts have been prepared on Mercantile Method of Accounting and recognise significant items

of Income and Expenditure on accrual basis.

ii) Revenue Recognisation :

Sales of goods is recognised at the point of despatch to the customer and stated net of Central Excise

Duty, VAT, Central Sales Tax, rebate and discount.

Export Benefits (Pass Book Credit) are accounted / recognized as and when utilized by the Company.

iii) Fixed Assets :

a) All costs relating to acquisition and installation of Fixed Assets up to the time the assets get ready

for their intended use are Capitalized.

b) Patents and Copyrights are in the form of other Intangible Assets and are stated at cost net of

accumulated amortization.

c) Capital work in progress includes cost of assets at sites, construction expenditure, advances made

for acquisition of capital assets.

iv) Depreciation :

a) Depreciation has been provided on Fixed Assets on Straight Line Method as per the rates specified

in Schedule XIV of the Companies Act, 1956 as amended from time to time.

b) Patents and Copyrights are amortized over a period 20 years as the life of the same are 20 years

from the date of application as prescribed in Patents and Copyrights Act.

c) Goodwill is amortized over a period of 5 years.

v) Investments :

Investments are classified as Long Term & Current Investments. Long Term Investments are shown at

cost or written down value (in case of other than temporary diminution) and current investments are

shown at cost or market value whichever is lower.

vi) Inventories :

Inventories of Raw Materials and Stores are valued at cost or net realizable value whichever is lower after

considering the credit of VAT and Cenvat.

Inventories of Work In Process is valued at cost.

Inventories of Finished Goods is valued at cost or net realizable value whichever is lower.

Year ended

31st March, 2007

Rs. in Lacs



vii) Retirement Benefit :

a) Contribution to Provident Fund is accounted on accrual basis.

b) Company has a scheme of Retirement Benefit namely Gratuity Fund recognized by the Income Tax

authorities. This fund is administered through Trustees and the Company ’s contribution thereto is

charged to revenue every year.

c) Leave encashment is charged to revenue on the basis of actuarial valuation.

viii) Central Excise Duty :

Central Excise Duty payable on Finished Goods is accounted for on clearance of the Goods from the

Factory.

ix) Foreign Currency Transactions :

a) Current Assets and Liabilities are translated at the exchange rate prevailing on the last day of Balance

Sheet.

b) Gains or Losses arising out of remittances/translations at the period end are credited/debited to the

Profit & Loss Account for the period.

c) Foreign exchange transactions are converted into Indian Rupees at the prevailing rate on the date of

the transaction.

x) Borrowing Cost :

Cost in connection with the borrowing of the funds to the extent related/attributed to the acquisition/

construction of qualifying Fixed Assets are capitalized upto the date when such assets are ready for its

intended use and other borrowing cost are charged to Profit & Loss Account.

xi) Product Warranty Expenses :

Product warranty expenses are determined based on past experience and estimates and are accrued in

the year of Sale.

xii) Qualified Institutions Placement :

On 19th December 2006, consequent to Qualified Institutions Placement (QIP), the Company issued and

allotted 1020408 Equity Shares of Rs.10/- each at a premium of Rs.1215/- per share through Qualified

Institutions Placement under Chapter XIII-A of SEBI (Disclosure & Investor Protection) Guidelines 2000 to

Qualified Institutional Buyers (QIB). The issued Share Capital increased by Rs.102.04 lacs and a premium

of Rs.12397.96 lacs has been credited to the Share Premium Account.

So far, the Company has utilized IPO & QIP Money as under for financing the objects of the Issues:

(Rs. in lacs)

IPO QIP

Amount Utilised 12391.89 256.17

Amount Unutilised (Including income thereon) 3004.72 12465.30

The unutilised proceeds have been temporarily invested in Mutual Funds and Fixed Deposits.

xiii) Qualified Institutions Placement Expenses :

Qualified Institutions Placement Expenses are adjusted against Share Premium Account.

2. Taxation on Income :

a) Provision for Current Tax is made as per the provisions of the Income Tax Act, 1961.

b) Provision for Fringe Benefit Tax is made in accordance with provisions relating to the levy of this tax as

contained in Chapter XII-H of the Income Tax Act, 1961.

c) Deferred Tax resulting from “timing differences” between book & taxable profit is accounted for, using

the tax rates and laws that have been enacted as on the Balance Sheet date. The deferred tax asset is

recognised & carried forward only to the extent that there is a reasonable certainty that the asset will be

realised in future.

d) During the Financial Year, Company has established an Export Oriented Unit (EOU) at Moraiya, Ahmedabad

under Letter of Permission (LOP) No. KASEZ/100%EOU/II/57/2005-06/1254 dated 07-06-2006 received

from The Development Commissioner, Kandla Special Economic Zone, Gandhidham which has become

partially operational w.e.f. 30-11-2006 and in view of that necessary records have been kept separately of

the said EOU to comply with the Provisions of Section 10B of the Income Tax Act, 1961.

3. In view of insufficient information from the suppliers regarding their status as Micro, Small, Medium Enterprises,

amounts due to these Enterprises as on 31-03-2007 cannot be ascertained.

4. Previous year’s figures have been regrouped wherever necessary to make them comparable with Current year’s figures.



5. Contingent Liabilities not provided for in Accounts :

(Rs. in lacs)

2006-2007 2005-2006

a) Outstanding Bank Guarantees 2456.02 1890.53

b) Letters of Credit 151.62 73.81

c) Excise & Service Tax matters in dispute 19.93 20.27

d) Income tax matters in dispute 56.19 20.39

6. Directors’ Remuneration :

(Rs. in lacs)

2006-2007 2005-2006

i) Remuneration 60.00 62.87

ii) Perquisites including Medical reimbursement 1.94 1.85

iii) Approximate monitory value of perquisites on account of equipments etc. 4.78 3.36

Total 66.72 68.08

7. Auditors’ Remuneration :

(Rs. in lacs)

2006-2007 2005-2006

a) Audit Fees 2.50 1.50

b) Tax Audit Fees 0.21 0.21

c) For Taxation matters 0.66 0.68

d) For Certification and other services 5.03 6.61

8. Additional Information pursuant to the provisions of paragraphs 3, 4-C & 4-D of Part - II of Schedule VI of the Companies Act,

1956. (As certified by Directors) :

Quantitative information of Goods manufactured :

2006-2007 2005-2006

Capacity, Production etc. M.T. Rs. in lacs M.T. Rs. in lacs

a) Licensed Capacity Not Applicable Not Applicable

b) Installed Capacity (Castings)

(As certified by the Management) 68600.000 - 18600.000 -

c) Actual Production

Manufacturing 30968.272 - 27367.908 -

Job Conversion 289.788 - 465.016 -

d) Sales / Dispatch:

Manufacturing 28757.776 24897.45 27400.426 20852.74

Job Conversion 289.788 147.09 465.016 227.58

Quantitative information of Trading activity :

2006-2007 2005-2006

M.T. Rs. in lacs M.T. Rs. in lacs

a) Opening Stock NIL NIL NIL NIL

b) Purchases 29801.348 11789.15 16591.609 6778.52

c) Sales 29801.348 13960.52 16591.609 8258.60

d) Closing Stock NIL NIL NIL NIL



A. C. I. F. Value of Imports :

2006-2007 2005-2006


1) Raw Materials 2944.130 1138.73 1756.620 808.81

2) Stores 415.29 240.17

3) Capital Goods 729.04 145.45

B. Expenditure in Foreign Currency :

2006-2007 2005-2006


1) Travelling Expenses 61.61 97.22

2) Salary & Remuneration NIL 47.39

3) Professional Fees 34.30 3.99

4) Subscription & Membership 1.37 0.97

5) Labour Charges 3.62 NIL

6) Sales Promotion 0.59 NIL

TOTAL 101.49 149.57

C. Value of Imported and Indigenous Raw Materials consumed and percentage thereof :

2006-2007 2005-2006


Indigenous 27988.341 7046.87 27186.461 6220.91

Percentage 83.76% 87.81%

Imported 3298.208 1365.90 1810.880 863.63


TOTAL 31286.549 8412.77 28997.341 7084.54

D. Value of Imported and Indigenous Stores consumed and percentage thereof :

2006-2007 2005-2006


Indigenous - 3462.51 - 2826.68


Imported - 222.79 - 182.62


TOTAL - 3685.30 - 3009.30

E. Earning in Foreign Exchange :

2006-2007 2005-2006


Export of Goods - 17508.26 - 13565.28

9. Disclosure required by Clause 32 of the Listing Agreement.

Amount of loans and advances in nature of loans outstanding from subsidiaries for the year ended 31st March 2007.

Subsidiary Company Outstanding as Maximum amount Investment in

at 31-03-2007 outstanding during shares of the

Rs. in lacs the year Company

Rs. in lacs (No.of Shares)

Reclamation Welding Ltd. NIL 40.48 157000



10. Based on the guiding principles given in Accounting Standard on “Segment Reporting” (AS-17) issued by the Institute

of Chartered Accountants of India, the Company operates mainly in manufacturing of High Chrome Mill Internals and all

other activities are incidental thereto, which have similar risk and return, accordingly, there are no separate reportable

Segment as far as Primary Segment is concerned.

11. Related party disclosures under Accounting Standard 18 :

(i) Subsidiaries : (ii) Relatives of Key Management Personnel :

1. Reclamation Welding Ltd. 1. Hotel Gulmarg

2. Paramount Centrispun Castings Pvt. Ltd. 2. L.D.M. X-ray Clinic

3. Vega Industries Ltd., U.S.A. 3. K.M.Shah Nursing home

4. Vega Industries Ltd., U.K. 4. Mrs. Giraben K. Shah

5. Vega Industries (Middle East) FZE, U.A.E. 5. Mrs. Geetaben B. Shah

6. Welcast Steels Limited

(iii) Key Management Personnel :

1. Mr.Bhadresh K.Shah (Managing Director)

(Rs. in Lacs)

Sr. Nature of Relationship Subsidiaries Relatives of Key Key

No Management Management

Personnel Personnel

1. Sales and Services 17195.47 NIL NIL

2. Purchases / Job Charges/ Services

and Reimbursement of Expenses 15944.55 NIL NIL

3. Rent paid NIL 4.44 NIL

4. Salary paid NIL 1.36 NIL

5. Hotel Charges NIL 4.58 NIL

6. Interest Income 1.40 NIL NIL

7. Directors’ Remuneration

(Please refer Note No.6 above) NIL NIL 66.72

GRAND TOTAL 33141.42 10.38 66.72

Balance Outstanding at the year end 4100.75 0.25 NIL

12. Earnings per Share (EPS) – The numerators and denominators used to calculate Basic and Diluted Earnings per Share :

2006-2007 2005-2006

Profit attributable to the Equity Shareholders (Rs. in lacs) (A) 6692.14 3728.08

Basic / Weighted average number of Equity Shares

outstanding during the year - (B) 18064331 14570079

Nominal value of Equity Shares – (Rs.) 10 10

Basic/Diluted Earnings per Share (Rs.) (A)/(B) 37.05 25.59



13. Additional Information pursuant to the provisions of Part-IV of Schedule VI of the Companies Act,1956 :

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE :

I. Registration Details :

Registration No.: 015182 State Code : 04

Balance Sheet Date : 31-03-2007

II. Capital raised during the year (Amount in Rs. Thousands) :

Public Issue (QIP) : Right Issue : NIL

Equity Share Capital 10204

Share Premium 1239796

Bonus Issue: NIL Private Placement: NIL

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) :

Total Liabilities 4273861 Total Assets 4273861

Source of Funds Application of Funds

Paid up Capital 187968 Net Fixed Assets 1067645

Reserve & Surplus 4068234 Investments 1643280

Deferred Tax Liabilities (Net) 17659 Net Current Assets 1562936

IV. Performance of the Company (Amount in Rs. Thousands) :

Turnover 3994333 Total Expenditure 3311574

Profit Before Tax 969262 Profit After Tax 669214

Earnings per Share (In Rs.) 37.05 Dividend Rate 35%

V. Generic Names of the Three Principal Products/Services of the Company (As per Monetary Terms):

Item Code No. (ITC Code) (1) 73269013

(2) 7626990990

Product Description (1) Grinding Media Balls & Cylpebs

(2) Other Cast Articles of Iron or Steel.

Signature to Schedule 1 to 15











CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 31st MARCH 2007










31st March 2007 31st March 2006


A. Cash Flow from Operating Activities:

Net Profit before Tax and Exceptional Items 9692.62 5649.30Add / (Less) :Leave Encashment 17.32 18.72Depreciation 251.26 191.71Profit on Sale of Mutual Fund Units (1.54) 0.00Loss on Sale of Assets (Net) 0.58 (0.60)Interest and Finance Charges 47.45 283.57Interest and Other Income (794.16) (183.68)Goodwill and Assets Written Off 6.35 5.72Sundry Balances Written Back (1.78) 0.00

Operating Profit Before Working Capital Changes 9218.10 5964.74(Increase) / Decrease in Current AssetsSundry Debtors 223.26 (2674.65)Loans and Advances (770.85) (898.26)Inventories (3242.22) 186.97Increase / (Decrease) in Current Liabilities 1279.40 1046.03

Cash Operating Profit before Income Tax Paid 6707.69 3624.83Income Tax / Fringe Benefits Tax Paid (2491.09) (1812.19)

Net Cash Inflow / (Outflow ) from Operating Activities 4216.60 1812.64

B. Cash Flow from Investing Activities:Interest and Other Income Received 794.16 183.68

Total Inflow of Cash from Investing Activities 794.16 183.68Issue of Initial Public Offer (IPO) 0.00 470.00Premium on Issue of Intial Public Offer (IPO)(Net) 0.00 13579.08Issue of Qualified Institutions Placement (QIP) 102.04 0.00Premium on Issue of Qualified Institutions Placement (QIP)(Net) 12149.87 0.00Purchase of Fixed Assets (9088.35) (1042.40)Project Pre-operative Expenditure 0.00 (28.80)Purchase of Investment / Mutual Funds (4983.66) (10825.96)

Net Cash Inflow / (Outflow ) from Investing Activities (1025.94) 2335.60

C. Cash Flow from Financing Activities:Repayment of Borrowings (Net) (1373.61) (2586.05)Interest Paid on Borrowings (47.44) (283.57)Preference Dividend Paid 0.00 (507.41)Equity Dividend Paid (506.74) (33.86)

Net Cash Inflow / (Outflow ) from Financing Activities (1927.79) (3410.89)

Net Increase / (Decrease) in Cash and Cash Equivalents 1262.87 737.35Cash and Cash Equivalents As at 1st April 1202.66 465.31Cash and Cash Equivalents As at 31st March 2465.53 1202.66Net Increase / (Decrease) in Cash and Cash Equivalents 1262.87 737.35



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740740


AIA ENGINEERING LIMITED - CONSOLIDATED

AUDITORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

TO

THE BOARD OF DIRECTORS OF

AIA ENGINEERING LIMITED

1. We have audited the attached consolidated balance sheet of AIA Engineering Limited (“the Company”),

and its subsidiaries (collectively referred as ‘the AIA Group’) as at March 31, 2007 and also the

consolidated profit and loss account and the consolidated cash flow statement for the year ended on

that date annexed thereto. These financial statements are the responsibility of the Management of

the Company. Our responsibility is to express an opinion on these financial statements based on our

audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those

Standards require that we plan and perform the audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement. An audit includes examining, on a test

basis, evidence supporting the amounts and disclosures in the financial statements. An audit also

includes assessing the accounting principles used and significant estimates made by the management,

as well as evaluating the overall financial statement presentation. We believe that our audit provides

a reasonable basis for our opinion.

3. We did not audit the financial statements of subsidiaries, whose financial statements reflect total

assets of Rs.96.23 crores as at March 31, 2007 and total revenue of Rs.433.56 crores for the year

then ended. These financial statements and other financial information have been audited by other

auditors whose reports have been furnished to us, and our opinion is based solely on the report of

other auditors.

4. We report that the consolidated financial statements have been prepared by the Company ’s

management in accordance with the requirements of the Accounting Standard (AS) 21 - Consolidated

Financial Statements issued by the Institute of Chartered Accountants of India.

5. On the basis of information and explanations given to us and on the consideration of the separate

Audit Reports on individual Audited financial statements of AIA Engineering Limited and its

subsidiaries, in our opinion the consolidated financial statements give a true and fair view in conformity

with the accounting principles generally accepted in India:

(i) in the case of the consolidated balance sheet, of the state of affairs of the AIA Group as at

March 31, 2007

(ii) in the case of consolidated profit and loss account, of the profit for the year ended on that date;

and

(iii) In the case of consolidated cash flow statement, of the cash flows for the year ended on that

date.

For Talati & TalatiChartered Accountants

Umesh TalatiPlace : Ahmedabad Partner

Date : 7th June 2007 (Membership No.34834)

75 0



CONSOLIDATED BALANCE SHEET AS AT 31st MARCH, 2007

As at

31st March,2006

Schedule Rs. in Lacs

SOURCES OF FUNDS

1. SHAREHOLDERS’ FUNDS :

(a) Share Capital 1 1879.68 1777.64

(b) Reserves and Surplus 2 47299.21 25631.38

49178.89 27409.02

2. MINORITY INTEREST 818.54 701.89

3. LOAN FUNDS :

(a) Secured Loans 3 1216.71 4038.76

(b) Unsecured Loans 4 434.57 815.28

1651.28 4854.04

4. DEFERRED TAX LIABILITIES (NET) 5 190.12 198.67

T O T A L : 51838.83 33163.62


1. FIXED ASSETS :

(a) Gross Block 6 13713.36 9397.25

(b) Less : Depreciation 5158.74 4360.88

Net Block 8554.62 5036.37

(c) Capital Work In Progress 6068.18 675.78

14622.80 5712.15

2. INVESTMENTS 7 14652.46 9668.80

3. CURRENT ASSETS, LOANS AND

ADVANCES : 8 40356.25 28902.19

Less : CURRENT LIABILITIES AND

PROVISIONS : 9 17793.77 11121.32

NET CURRENT ASSETS 22562.48 17780.87

4. MISCELLANEOUS EXPENSES 1.09 1.80

(To the extent not written off)

T O T A L : 51838.83 33163.62










As at

31st March, 2007

Rs. in Lacs



CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE FINANCIAL

YEAR ENDED 31st MARCH 2007



Schedule Rs. in Lacs Rs. in Lacs

INCOME :

Sales 10 52303.00 40696.37

Other Income 11 1638.53 1039.95

Increase /( Decrease) in Stock 12 2169.25 1314.01

T O T A L : 56110.78 43050.33

EXPENDITURE :-

Manufacturing Expenses 13 34956.37 27243.66

Employees emoluments 14 2216.26 2258.91

Administrative and Other Expenses 15 1731.24 1438.60

Selling & Distribution Expenses 16 3132.77 2918.01

Interest Expenses 17 241.23 527.83

Depreciation 6 820.59 709.22

T O T A L : 43098.46 35096.23

PROFIT BEFORE TAXES 13012.32 7954.10

PROVISION FOR TAXES

a) Current Tax 3425.48 2527.55

b) Deferred Tax (7.53) (46.57)

c) Fringe Benefits Tax 38.40 40.15

T O T A L : 3456.35 2521.13

PROFIT AFTER TAXES 9555.97 5432.97

LESS : MINORITY INTEREST 123.87 197.19

PROFIT AFTER MINORITY INTEREST 9432.10 5235.78

Less:Prior period Adjustment 5.60 0.55

Add:Surplus Brought from Previous Year 9415.68 5085.55

Profit Available for Appropriation 18842.18 10320.78

Appropriations :

Transfer to General Reserve 709.22 383.81


Tax on Proposed Dividend on Equity Shares 113.62 64.12

Balance carried to Balance Sheet 17348.69 9415.68

Basic and Diluted Earning Per Share (Rs.) 52.21 35.94












SCHEDULES 1 TO 9 FORMING PART OF THE BALANCE SHEET AS AT 31st MARCH 2007

As at As at



SCHEDULE : 1 SHARE CAPITALAUTHORIZED :

26000000 Equity Shares of Rs.10/- each (Previous Year 26000000 Shares) 2600.00 2600.002000000 Redeemable Cumulative Preference Shares of Rs.100/- each(Previous Year 2000000 Shares) 2000.00 2000.00

T O T A L : 4600.00 4600.00

ISSUED, SUBSCRIBED & PAID UP :18796788 Equity Shares of Rs.10/- each fully paid up (Previous year 1879.68 1777.6417776380 Shares) (Includes 10461104 (Previous Year 10461104)fully paid Bonus Shares issued by Capitalisation of Share Premium)

T O T A L : 1879.68 1777.64

SCHEDULE : 2 RESERVES AND SURPLUSA. Capital Redemption Reserve 1925.74 1925.74B. Shares Premium 14477.45 898.37

Add : Premium on Issue of Shares 12397.96 14335.00

26875.41 15233.37Less : Initial Public Offer/ QIP Expenses 248.09 755.92

26627.32 14477.45C. General Reserve 1068.38 684.57

Add : Transferred from Profit and Loss Account 709.22 383.81

1777.60 1068.38D. Revaluation Reserve 30.81 36.14

Less: Withdrawals on account of Depreciation 5.34 5.33

25.47 30.81E. Profit and Loss Account

Profit as per Profit and Loss Account 17348.69 9415.68F. Foreign Currency Translation Reserve 46.23 (2.69)

TOTAL 47751.05 26915.37Less: Adjustment on Account of Consolidation 451.84 1283.99

T O T A L : 47299.21 25631.38

SCHEDULE : 3 SECURED LOANSA. TERM LOAN :

From Financial Institution 7.20 10.27 From Banks 340.50 505.36

347.70 515.63B. WORKING CAPITAL LOAN :

From Banks 869.01 3523.13

T O T A L : 1216.71 4038.76

SCHEDULE : 4 UNSECURED LOANSA. From Directors and Shareholders 434.57 696.80B. Inter Corporate Deposits 0.00 118.48

T O T A L : 434.57 815.28

SCHEDULE : 5 DEFERRED TAX LIABILITIES / DEFERRED TAX ASSETS (NET)

A. DEFERRED TAX LIABILITIES : Arising on account of timing difference 260.96 232.68

B. DEFERRED TAX ASSETS : Arising on account of timing difference 70.84 34.01

T O T A L : ( A - B ) 190.12 198.67



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SCHEDULE : 7 INVESTMENTS ( AT COST )

LONG TERM NON TRADE INVESTMENTS: (QUOTED)

INVESTMENT IN OTHER COMPANIES :

25 Equity Shares of Koramangla Properties Pvt.

Ltd.of Rs.100/-each fully paid up

( Previous year 25 Equity Shares ) 0.03 0.03

INVESTMENT IN GOVERNMENT SECURITIES :

National Savings Certificates 0.05 0.05

CURRENT INVESTMENT IN MUTUAL FUND UNITS : (UNQUOTED) 14652.38 9668.72

T O T A L : 14652.46 9668.80

SCHEDULE : 8 CURRENT ASSETS, LOANS AND ADVANCES

CURRENT ASSETS :

A. INVENTORIES

(As taken, valued & certified by the Directors)

Raw Materials 2647.72 1316.83

Stores & Spares 794.21 486.12

Work-In Process 3658.96 1856.65

Finished Goods 2709.81 2323.77

DEPB Licence on hand 15.57 0.00

9826.27 5983.37

B. SUNDRY DEBTORS


a) Debts outstanding for a period exceeding six months 1042.33 3048.49

b) Others 13178.70 9251.53

14221.03 12300.02

C. CASH AND BANK BALANCES

a) Cash on hand 8.40 10.87

b) Balance with Scheduled Banks

i) In Fixed Deposit 1721.35 1249.24

ii) In Current Accounts 2758.14 587.08

4487.89 1847.19

D. LOANS & ADVANCES :

(Unsecured , Considered Good)

a) Advances recoverable in cash or kind or for

value to be received 968.11 1399.41

b) Inter Corporate Deposits 0.00 3.48

c) Advance Income tax & tax deducted at source 8409.45 5869.46

d) Sundry Deposits and Advances 1302.61 572.36

e) Loans and Advances to Staff 93.28 64.07

f) Balance with Central Excise Department 1047.61 862.83

G) Exchange rate diff. due to consolidation 11821.06 8771.61

T O T A L : 40356.25 28902.19



As at As at



SCHEDULE : 9 CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIES :

a) Sundry Creditors 6025.31 2505.88

b) Other Liabilities 238.45 1220.05

c) Statutory Liabilities 138.80 257.59

d) Advances from Customers 599.26 248.38

7001.82 4231.90

PROVISIONS :

a) Provision for Expenses 1402.76 191.05

b) Provision for Taxation 8506.53 6097.21

c) Proposed Dividend on Equity Shares 670.65 457.17

d) Corporate Tax on Dividend on Equity Shares 113.62 64.12

e) Provision for Leave Encashment Payable 98.39 79.87

10791.95 6889.42

T O T A L : 17793.77 11121.32

SCHEDULES 10 TO 17 FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE

FINANCIAL YEAR ENDED 31st MARCH 2007



Rs. in Lacs Rs.In Lacs

SCHEDULE : 10 SALES

a. Sales In India 26750.31 21202.96

b. Sales Outside India 25552.69 19493.41

T O T A L : 52303.00 40696.37

SCHEDULE : 11 OTHER INCOME

a. Interest ( Gross ) 79.54 27.00b. Miscellaneous Receipts 476.52 441.49c. Dividend received 749.29 161.05d. Profit on Sale of Assets 2.80 31.30e. Premium on Sale of Import Licenses 315.03 369.24f. Income tax Refund 0.00 0.90g. Sales tax Refund 9.93 4.37h. Profit on sale of Mutual Fund Units 1.54 4.60

i. Exchange Rate Fluctuation difference 3.88 0.00

T O T A L : 1638.53 1039.95

SCHEDULE : 12 INCREASE / DECREASE IN STOCK

a. Opening : Work In Process 1856.65 1525.27

: Finished Goods 2350.30 1341.14

: DEPB licence on hand 0.00 0.00

Less : 4206.95 2866.41

b. Closing Stock : Work In Process 3658.96 1856.65

: Finished Goods 2709.81 2323.77

: DEPB licence on hand 7.43 0.00

6376.20 4180.42

T O T A L 2169.25 1314.01






SCHEDULE : 13 MANUFACTURING EXPENSES

A. RAW MATERIALS CONSUMED


Add : Purchases 18344.76 14353.30

Sub Total 19660.33 16125.02

Less : Closing Stock 2605.16 1316.83

17055.17 14808.19

B. STORES CONSUMED


Add : Purchases 4976.21 4348.00

Sub Total 5456.37 4693.58

Less : Closing Stock 794.21 486.12

4662.16 4207.46

C. TRADING PURCHASES 2755.68 241.54

S U B T O T A L : 24473.01 19257.19

OTHER MANUFACTURING EXPENSES

a) Power and Fuel 5183.40 4275.69

b) Labour Charges ( Net ) 1287.75 707.47

c) Job Conversion Charges 309.94 248.58

d) Freight Inward, Octroi, Coolies and Cartages 647.88 568.48

e) Other manufacturing Expense 2251.92 1438.45

9680.89 7238.67

f) Repairs and Maintenance

- Plant and Machineries 671.08 613.83

- Buildings 59.44 63.29

- Other Assets 71.95 70.68

802.47 747.80

T O T A L : 34956.37 27243.66

SCHEDULE : 14 EMPLOYEES EMOLUMENTS

a) Salaries, Wages and Bonus 1871.63 1840.05

b) Contribution to Provident Fund /ESIC/ Gratuity 182.50 173.71

c) Staff Welfare Expenses 162.13 245.15

T O T A L : 2216.26 2258.91

SCHEDULE : 15 ADMINISTRATIVE AND OTHER EXPENSES

1. Insurance Premium Expenses 69.25 73.01

2. Rent, Rates and Taxes 74.90 73.68

3. Service Charges 3.29 6.28

4. Directors’ Remuneration and Perquisites 203.48 142.76

5. Traveling Expenses -Others 4.50 65.92

6. Statutory Audit Fees 21.10 26.35

7. Legal and Professional Consultancy Fees 465.82 328.17

8. Bank Commission Charges 195.62 163.19

9. Printing and Stationery Expenses 48.66 48.18

10. Postage, Telephones, Courier, Internet & E-mail 142.75 119.95

11. Computer Expenses 20.67 13.82






SCHEDULE : 15 ADMINISTRATIVE AND OTHER EXPENSES (Contd...)

12. Vehicle Repairs and Maintenance 39.48 70.86

13. Conveyance Expenses 40.36 17.98

14. Security Expenses 37.21 29.78

15. Subscription and Membership Fees 8.05 11.46

16. License Fees 6.14 0.98

17. Donation Expenses 34.01 27.66

18. Advertisement Expenses 18.69 12.51

19. Bad Debts 82.81 47.39

20. Recruitment and Training Expenses 0.05 0.14

21. Entertainment Expenses 9.11 16.64

22. Water Charges 13.01 10.09

23 Books and Periodicals Expenses 0.00 0.18

24. Electricity Expenses 11.82 6.02

25. Tender Fees 0.45 0.64

26. Sales tax / Wealth Tax 31.53 1.64

27. Service tax / Cash transaction Tax 7.17 3.67

28. Loss on Sale of Assets 2.24 4.69

29. Goodwill Written off 5.72 5.72

30. Exchange Rate Fluctuation Difference 26.40 (14.44)

31. General / Miscellaneous Expenses 106.95 123.68

T O T A L : 1731.24 1438.60

SCHEDULE : 16 SELLING & DISTRIBUTION EXPENSES

a. Freight Outward, Coolies and Cartages 1751.94 1233.85

b. Commission Expenses 516.63 673.75

c. Traveling Expenses - Directors 8.90 68.19

- Staff and Others 611.23 371.84

d. Sales Promotion Expenses 80.10 113.06

e. Discount allowed 0.00 12.98

f. Other Expenses 15.27 279.87

g. Warranty and LDP Expenses 148.70 136.19

h. Central Excise Duty ( Net ) 0.00 28.28

T O T A L : 3132.77 2918.01

SCHEDULE : 17 INTEREST EXPENSES

a. Corporate Entities 36.84 13.04

b. Financial Institutions 0.70 35.10

c. Banks

- Cash Credit 81.47 27.78

- Working Capital Demand Loan 4.40 156.52

- Export Packing Credit Loan 25.80 38.03

- Term Loan 58.14 132.18

- Inland / Foreign Bills Discounting 22.63 63.14

192.44 417.65

d. Directors 0.00 4.54

e. Others 11.25 57.50

T O T A L : 241.23 527.83



SCHEDULE 18

NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS :

A) Significant Accounting Policies adopted by the Company in preparation and presentation of Consolidated

Accounts :

1. Basis of Accounting :

The financial statements are prepared in accordance with the requirement of the Companies Act, 1956, including the

mandatory Accounting Standards issued by the Institute of Chartered Accountants of India, as referred to in Section 211

(3C) of the Companies Act, 1956, under historical cost convention on an accrual basis. These consolidated financial

statements have been prepared to meet the requirements of clause 32 of the listing Agreement with the Stock Exchanges.

2. Principles of Consolidation :

a) The consolidated financial statements have been prepared in accordance with Accounting Standard 21 (AS 21) on

“Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India and on the basis of

the separate audited financial statements of AIA Engineering Limited (AIAEL) and its subsidiaries.

b) The consolidated financial statements have been prepared on the following basis :

(i) The financial statements of the Subsidiaries are combined on a line-by-line basis by adding together the

book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group

balances and intra-group transactions resulting in unrealized profits or losses in accordance with Accounting

Standard 21 (AS 21).

(ii) In case of foreign subsidiaries, being non-integral foreign operations, revenue items are consolidated at the

average rate prevailing during the year. All assets and liabilities are converted at rates prevailing at the year

end. Any exchange difference arising on consolidation is recognised in “Exchange Fluctuation Reserve”.

(iii) The difference between the costs of investment in the subsidiaries over the net assets at the time of

acquisition of the investment in the subsidiaries is recognised in the financial statements as Goodwill or

Capital Reserve as the case may be.

(iv) The consolidated financial statements are prepared using uniform accounting policies for like transactions

and other events in similar circumstances and necessary adjustments required for deviations if any have

been made in the consolidated financial statements.

The list of Subsidiary Companies included in consolidation with AIA Engineering Limited and AIA Engineering

Limited’s shareholding therein is as under:

Name of Country of Shareholding as Shareholding as

Subsidiary Incorporation at 31-03-2007 at 31-03-2006

Paramount Centrispun India 72.47% 72.47%

Castings Pvt. Ltd.

Reclamation Welding Ltd. India 98.13% 98.13%

Welcast Steels Limited India 71.59% 71.59%

Vega Industries U.A.E. 100% 100%

(Middle East) F.Z.E.

Vega Industries (Canada) Inc. Canada 100% 100%

Vega Industries Limited, U.K. U.K. 100% by Vega Industries 100% by Vega Industries

(Middle East) F.Z.E. (Middle East) F.Z.E.

Vega Industries Limited, U.S.A. 100% by Vega Industries 100% by Vega Industries

U.S.A. Limited, U.K Limited, U.K

3. Inventories :

Inventories of Raw Materials and Stores are valued at cost or net realizable value whichever is lower after considering the

credit of VAT and Cenvat.

Inventories of Work in Process are valued at cost.

Inventories of Finished Goods are valued at cost or net realizable value whichever is lower.

4. Depreciation :

Depreciation has been provided on Fixed Assets on Straight Line Method as per the rates specified in Schedule XIV of

the Companies Act, 1956 as amended from time to time except for the following subsidiaries :



Name of Subsidiary Basis of Depreciation

1 Welcast Steels Limited In case of assets acquired after 31-3-1996, Written Down Value Methodas per the rates specified in Schedule XIV to the Companies Act, 1956.

2 Vega Industries (Middle East) F.Z.E. Equal annual installments over estimated useful lives of the assets.

3 Vega Industries Limited, U.S.A. Straight-line method over the estimated useful lives of the assets.

4 Vega Industries (Canada) Inc. Accelerated method over the estimated useful lives of the assets.

5 Vega Industries Limited, U.K. Written down method over the estimated useful lives of the assets.

5. Revenue recognisation:

Sales of goods is recognised at the point of despatch to the customer and stated net of central excise duty, sales tax,rebate and discount.

Export benefits are accounted for on receipt basis except for Welcast Steels Limited where they are recognised on accrual basis.6. Fixed Assets:

a) All costs relating to acquisition and installation of Fixed Assets up to the time the assets get ready for their intended

use are capitalised.b) Patents and Copyrights are in the form of other Intangible Assets and are stated at cost net of accumulated

amortization.

c) Capital work in progress includes cost of assets at sites, construction expenditure, advances made for acquisitionof capital assets.

7. Foreign Currency Transactions:

a) Current Assets and Liabilities are translated at the exchange rate prevailing on the last day of the year.b) Gains or Losses arising out of remittances/translations at the year-end are credited/debited to the Profit & Loss

Account for the year.

c) Foreign exchange transactions are converted into Indian Rupees at the prevailing rate on the date of the transaction.8. Investments:

a) Investments are classified as Long Term & Current Investments. Long Term Investments are shown at cost or

written down value (in case of other than temporary diminution) and current investments are shown at cost ormarket value whichever is lower.

b) Investment in shares of foreign subsidiary Company is expressed in Indian Currency at the rates of exchange

prevailing at the time when the investment was made.9. Retirement Benefit:

a) Contribution to Provident Fund is accounted on accrual basis.

b) Company has a scheme of Retirement Benefit namely Gratuity Fund recognized by the Income Tax authorities. Thisfund is administered through Trustees/Life Insurance Corporation of India and the Company’s contribution theretois charged to revenue every year.

c) Leave encashment is charged to revenue on the basis of actuarial valuation.10. Borrowing Cost:

Costs in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction of

qualifying Fixed Assets are capitalized up to the date when such assets are ready for its intended use and otherborrowing costs are charged to Profit & Loss Account.

11. Segment Accounting:

Based on the guiding principles given in Accounting Standard on “Segment Reporting” (AS-17) issued by the Instituteof Chartered Accountants of India, the Company operates mainly in manufacturing of High Chrome Mill Internals and allother activities are incidental thereto, which have similar risk and return, accordingly, there are no separate reportable

Segment as far as Primary Segment is concerned.12. Related party Transactions:

Disclosure of transactions with Related Parties, as required by Accounting Standard 18 “Related Party Disclosures” has

been shown separately in Part-B Notes on Accounts.13. Taxation on Income :

a) Provision for Current Tax is made as per the provisions of the Income Tax Act.

b) Provision for Fringe Benefit Tax is made in accordance with provisions relating to the levy of this tax as containedin Chapter XII-H of the Income Tax Act, 1961.

c) Deferred Tax resulting from “timing differences” between book & taxable profit is accounted for, using the tax rates

and laws that have been enacted as on the Balance Sheet date. The deferred tax asset is recognised & carriedforward only to the extent that there is a reasonable certainty that the asset will be realised in future.

d) During this Financial Year, Company has established an Export Oriented Unit (EOU) at Moraiya, Ahmedabad under

Letter of Permission (LOP) No. KASEZ/100%EOU/II/57/2005-06/1254 dated 07-06-2006 received from TheDevelopment Commissioner, Kandla Special Economic Zone, Gandhidham which has become partially operationalw.e.f. 30-11-2006 and in view of that necessary records have been kept separately of the said EOU to comply with

the provisions of Section 10B of the Income Tax Act, 1961.



14. Qualified Institutions Placement:

On 19th December 2006, consequent to Qualified Institutions Placement (QIP), the Company issued and allotted 1020408

Equity Shares of Rs.10/- each at a premium of Rs.1215 per share through Qualified Institutions Placement under chapter

XIII-A of SEBI (Disclosure & Investor Protection) Guidelines 2000 to Qualified Institutional Buyers (QIBs). The Issued

Share Capital increased by Rs.102.04 lacs and the premium of Rs.12397.96 lacs has been credited to the Share Premium

Account. So far, the Company has utilised IPO/QIP Money as under for financing the objects of the Issues:

(Rs. in lacs)

IPO QIP

Amount Utilised 12391.89 256.17

Amount Unutilised (Including income thereon) 3004.72 12465.30

The unutilised proceeds have been temporarily invested in Mutual Funds and Fixed Deposits.

15. Qualified Institutions Placement Expenses:

Qualified Institutions Placement Expenses are adjusted against Share Premium Account.

B. Notes on Accounts :

1. In case of Vega Industries (Middle East) F.Z.E., U.A.E., Vega Industries (Canada) Inc., the revenue and expenses

transactions at the year end reflected in Profit & Loss Account have been translated into Indian Rupees at an average of

monthly exchange rate.

The assets and liabilities in the Balance Sheet have been translated into Indian Rupees at the closing exchange rate at the

year end. The resultant translation exchange, gain/ loss have been disclosed as “Foreign Currency Translation Reserve”.

2. Contingent Liabilities not provided for in Accounts:

(Rs. in lacs)

2006-2007 2005-2006

a) Outstanding Bank Guarantees 2905.79 8048.11

b) Letters of Credit 157.36 128.36

c) Excise & Service Tax matters in dispute 151.22 49.96

d) Income tax matters in dispute 56.19 134.11

e) ESI matters in dispute 1.16 1.16

f) Sales Tax matters in dispute 101.15 81.39

g) Custom duty matters in dispute 65.63 0

h) Labour matters in dispute 0.05 0

3. Related party disclosures under Accounting Standard 18 :

(a) Relatives of Key Management Personnel :

1. Hotel Gulmarg

2. L.D.M. X-ray Clinic

3. K.M.Shah Nursing home

4. Mrs. Giraben K. Shah

5. Mrs. Gita B. Shah

6. Mrs. Shantaben F. Shah

7. Mrs. Meenadevi O. Shah

8. Mrs. Sharda B. Shah

9. Mrs. Jyotsna M. Panday

10. Mr. Rajeev Panday

(b) Key Management Personnel :

1. Mr. Bhadresh K.Shah

2. Mr. Vinod Narain

3. Mr. Milind Panday

4. Mr. Pradip R. Shah

5. Mr. Omprakash F. Shah

6. Mr. Balkrishna F. Shah



(Rs. in lacs)

Sr. Nature of Relationship Relatives of Key

No Key Management Management

Personnel Personnel

1. Rent paid 4.44 0.00

2. Hotel Charges 4.58 0.00

3. Interest Charges (Gross) 36.51 0.00

4. Salary and Perquisites 5.10 105.78

5. Professional Charges 0.00 3.68

6. Directors’ Remuneration 0.00 141.54

7. Interest paid 0.79 0.00

Balance Outstanding at the year end 0.25 0.00

4. Earnings per Share (EPS) :

The numerators and denominators used to calculate Basic and Diluted Earnings per Share:

2006-2007 2005-2006

Profit attributable to the Equity Shareholders (Rs. in lacs) (A) 9432.10 5235.78

Basic / Weighted average number of Equity Shares

outstanding during the year (Nos.) - (B) 18064331 14570079

Nominal value of Equity Shares – (Rs.) 10 10

Basic/Diluted Earnings per Share (Rs.) (A)/(B) 52.21 35.94

5. Previous year’s figures have been regrouped wherever necessary to make them comparable with Current year’s figures.









Signature to Schedule 1 to 18



CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 31st MARCH 2007

2006-07 2005-06


A. Cash Flow From Operating Activities:

Profit Before Taxes 13012.32 7954.10

Add / (Less) :

Leave Encashment 18.52 40.40Depreciation (Net) 820.59 709.22

Surplus on Sale of Assets (Net) (2.80) (31.30)

Loss on Sale of Assets 2.24 4.69

Interest and Finance Charges 241.23 527.83

Interest and Other Income (828.83) (188.05)

Goodwill and Assets Written Off 5.72 5.72

Operating Profit Before Working Capital Changes 13268.99 9022.61

(Increase) / Decrease in Current Assets

Sundry Debtors (1921.01) (2891.46)

Loans and Advances (509.46) (2082.82)

Inventories (3842.90) (1787.88)

Increase / (Decrease) in Current Liabilities 2957.63 6663.75

Cash Operating Profit Before Income Tax Paid 9953.25 8924.20

Income Tax / Fringe Benefits Tax Paid (2539.99) (5813.76)

Net Cash inflow / (Outflow ) from Operating Activities 7413.26 3110.44

B. Cash Flow from Investing Activities:

Interest and Other Income Received 828.83 188.05

Total Inflow of Cash From Investing Activities 828.83 188.05

Purchase of Fixed Assets (8904.36) (4141.19)

Purchase of Investment / Mutual Funds (4983.66) (10826.05)

Net Cash Inflow / (Outflow ) from Investing Activities (13059.19) (14779.19)

C. Cash Flow from Financing Activities:

Repayment of Borrowings (Net) (3202.76) (697.98)

Interest Paid on Borrowings (241.23) (527.83)

Equity Dividend Paid (521.29) (541.26)

Issue of Qualified Institutions Placement (QIP) 102.04 0.00Premium on Issue of Qualified Institutions Placement (QIP) 12397.96 0.00

Qualified Institutions Placement Expenses (248.09) 0.00

Issue of Initial Public Offer (IPO) 0.00 470.00

Premium on Issue of Initial Public Offer (IPO) 0.00 13579.08

Net Cash inflow / (Outflow ) from Financing Activities 8286.63 12282.01

Net Increase / (Decrease) in Cash and Cash Equivalents (2640.70) 613.26

Cash and Cash Equivalents as at 1st April 1847.19 1233.93

Cash and Cash Equivalents as at 31st March 4487.89 1847.19

Net Increase / (Decrease) in Cash and Cash Equivalents 2640.70 613.26











Rs.

in L

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STA

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20

07

Chai

rman

Man

agin

g D

irec

tor

Dir

ecto

rC

ompan

y S

ecre

tary

Sr.

No.

Name of

Subsidiary

Company

Country

Reporting

Currency

Capital

Reserves

Total

Assets

Total

Liabilities

Investment

other than

Investment

in Subsidiary

Turnover

Profit

before

Taxation

Provision

for

Taxation

Profit after

Taxation

Proposed

Dividend

1

Param

ount

Centrispun

Castings Pvt. Ltd

India

INR

114.44

1078.96

1566.13

372.73

Nil

2836.00

325.60

118.05

207.55

Nil

2

Reclamation

Welding Limited

India

INR

160.00

744.23

974.04

69.81

Nil

1969.19

168.09

60.43

107.66

Nil

3

Welcast Steels

Limited

India

INR

63.84

1601.47

2705.90

1040.59

0.05

13332.76

338.72

113.48

225.24

12.76

4

Vega Industries

(Middle East)

F.Z.E.

U.A.E.

US Dollar

149.39

3021.32

3391.54

220.83

Nil

22790.42

2124.75

Nil

2124.75

Nil

5

Vega Industries

(Canada) Inc.

Canada

CAD

10.24

6.46

16.70

Nil

Nil

127.16

1.88

Nil

1.88

Nil

6

Vega Industries

Limited, U.K.

U.K.

Pound

6.88

747.64

756.25

1.73

Nil

9411.40

386.71

121.52

265.19

Nil

7

Vega Industries

Limited, U.S.A.

U.S.A.

US Dollar

24.01

213.08

1213.42

976.32

Nil

3429.66

107.23

41.17

66.06

Nil



CAUTIONARY STATEMENT

Statements made in this Annual Report describing the Company’s objectives,

projections, estimate, expectations may be “Forward-looking statements” within the

meaning of applicable securities laws & regulations. Actual results could differ from

those expressed or implied. Important factors that could make a difference to the

Company’s operations include economic conditions affecting demand supply and price

conditions in the domestic & overseas markets in which the company operates,

changes in the government regulations, tax laws & other statutes & other incidental

factors.



AIA ENGINEERING LIMITEDRegd. Office : 115, G.V.M.M. Estate, Odhav Road, Odhav, Ahmedabad – 382 410

ATTENDANCE SLIP

Seventeenth Annual General Meeting of the Members of the Company to be held on Friday the 31st August

2007 at 10.00 A.M. at H. T. Parekh Convention Centre, Ahmedabad Management Association, ATIRA Campus,

Dr. Vikram Sarabhai Marg, Ahmedabad – 380 015

Folio No.: ………………................…… DPID No………........…………… Client ID No……….........…………

Name of Shareholder (s) ……………………………………………………………………………………………

I /We certify that I am / We are Member (s) / Proxy of the Member (s) of the Company holding …………….. Shares.

………………….……………

Signature of Member (s) / Proxy

• A member or his duly appointed Proxy wishing to attend the meeting must complete this Attendance Slip and

hand it over at the entrance.

• Name of the Proxy in Block Letters. ………………….……………………………….……………………

(in case a Proxy attends the meeting)

……………………………………………………………………………………………………………………………………………

AIA ENGINEERING LIMITEDRegd. Office : 115, G.V.M.M. Estate, Odhav Road, Odhav, Ahmedabad – 382 410

PROXY FORM

I /We …………………………………………………………….. of …………………………… being a Member

/Members of AIA Engineering Limited hereby appoint …………………………………….. of

………………………… or failing him ………………………………………… of ……………………………..

as my/our proxy to attend and vote for me / us on my / our behalf at the Seventeenth Annual General Meeting

of the Members of the Company to be held on Friday the 31st August 2007 at 10.00 A.M. at H. T. Parekh

Convention Centre, Ahmedabad Management Association, ATIRA Campus, Dr. Vikram Sarabhai Marg,

Ahmedabad – 380 015 and at any adjournment thereof.

In witness where of

I /We have signed on this ………....…………… day of …………………2007.

Folio No.:…………………………… DPID No. ……………………………….

Client ID No. :………………………. No. of Shares ………………………….

A Member intending to appoint a Proxy should complete the Proxy Form and deposit it at the Company’s Registered

Office, at least 48 hours before the commencement of the meeting.

AFFIX

Re. 1

REVENUE

STAMP

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