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Page 1: Gabriel Report 06

Board of Directors

Deep C. AnandChairman

K. N. SubramaniamManaging Director

B. L. RuddyRussi Jal TaraporevalaC. S. PatelRavi K. SinhaJaithirth RaoM. S. SandhuPadmini Khare KaickerArvind Walia

Manufacturing Facilities

Ride Control Products

S-304, LBS MargMulund (West)Mumbai 400 080 (Maharashtra)

Chander Nagar Indl. AreaDelhi-Jaipur HighwayGurgaon 122 001 (Haryana)

B-2 MIDCAmbad Indl. AreaNashik 422 010 (Maharashtra)

5, Industrial Area No. 3Agra- Mumbai RoadDewas 455 001(Madhya Pradesh)

29th MilestonePune-Nashik HighwayVillage KuruliTaluka KhedPune 410 501 (Maharashtra)

52-55, S.No. 102/3 -106 (PT)Sipcot, Phase - IIMoranapalli VillageHosur 635 109 (Tamil Nadu)

B-193, Phase -IIDist. Gautam Budh NagarNoida 201 305 (Uttar Pradesh)

Engine Bearings

Plot No. 5, Sector IIParwanoo 173 220(Himachal Pradesh)

38th Milestone, NH 8,Delhi-Jaipur HighwayBehram Pur Road, Khandsa,Gurgaon - 122 001(Haryana)

Engine Bearings (100% EOU)Plot No. 5, Sector IIParwanoo 173 220(Himachal Pradesh)

Corporate Offices

1 Sri Aurobindo MargNew Delhi 110 016Tel : 011 - 26564542,26564666Fax : 011 - 26862644

Magnet HouseN M MargBallard EstateMumbai 400 038

Registered office

29th MilestonePune-Nashik HighwayVillage KuruliTaluka KhedPune 410 501(Maharashtra)Tel: 02135-645031-34,Fax: 02135-661030mail: secretarial@ gabriel.co.in

Gabriel India Limited

Financial Controller &Company SecretaryManoj Tulsian

BankersStandard Chartered BankBank of IndiaICICI BankPunjab National BankIndusInd BankCiti Bank

AuditorsPrice Waterhouse & Co.

SolicitorsUdwadia & Udeshi

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FinancialHighlights

2005-06 2004-05

Domestic Sales (Rs. Million) 5461.2 4635.3

Export Sales (Rs. Million) 156.2 143.3

Total Sales (Rs. Million) 5617.4 4778.6

Profit Before Tax (Rs. Million) 152.9 263.3

PBT as a % to Sales 2.7 5.5

Profit After Tax (Rs. Million) 88.4 178.9

PAT as a % to Sales 1.6 3.7

Return on Net Worth (%) 8.9 18.6

Net Worth per Share (Rs.) 13.9 134.2

Earning per Share (Rs.) - Basic & Diluted 1.2 24.9

Dividend per Shares (Rs.) 0.70 7.0

Dividend Cover (Times) 2.7 4.6

Return on Total Assets (%) 2.8 6.4

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3G A B R I E L I N D I A L I M I T E D

CompanyHighlights

■ TS 16949: 2002 certification for Noida facility

■ Shock Absorber supplies for General Motors Aveo from Chakan

■ ‘Best Vendor’ award from Eicher Motors for Dewas facility

■ ‘Best Vendor’ for quality and delivery from HMSI for Hosur facility

■ Gas Shock Absorbers for Victor Edge introduced by Hosur plant

■ Hosur plant commenced supplies to TVS new model motorcycle ‘Star’

■ Maruti Udyog recertified Noida facility and rated it among the best in QMS

■ Nashik facility achieved the target of zero PPM in ‘0’ km

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Gabriel India Limited is a leading

manufacturer of Shock Absorbers,

Struts, Front Forks and Engine

Bearings, with the widest range of Ride

Control products in India. The name

‘Gabriel’ is synonymous with ride

control products and has established a

strong presence both in domestic OE

as well as overseas markets.

Since its inception in 1961 with a single

plant in Mulund, Mumbai, the Company

has grown manifold and now has nine

CompanyProfile

manufacturing facilities across the

country - seven for Ride Control

Products and two for Engine Bearings.

Nashik, Chakan, Dewas, Noida, Hosur

and Parwanoo are all QS 9000

certified; Hosur, Dewas and Chakan

plants have ISO 14001 and OHSAS

18001; Mulund ISO 9000; Hosur,

Dewas, Noida, Nashik and Chakan

facilities have TS 16949: 2002 edition.

With over four decades of experience,

judicious investments in plant and

machinery, improved process

capabilities and technological up-

gradations, the Company is equipped

with the capacity to meet stringent and

high demand for quality products.

Ride ControlProducts

Shock Absorbers, Struts and Front

Forks catering to the requirements of all

segments of the market - OE,

Replacement and Exports - for

application in four, three and two-

wheelers as well as the Indian

Railways. Most of the facilities of

Gabriel India are located in close

proximity to those of its OE customers

to facilitate JIT supplies.

Gabriel India’s Mulund Plant

BOTTOM RIGHT: Mr Lukas Folc, MD, Skoda Auto Indiaon a visit to Gabriel-Chakan with the Anand AutomotiveSystems team

TOP PHOTO: Gabriel India Annual General Meeting atChakan

CENTRE: Mr S Sengupta, GM-Commercial Vehicles,Gabriel India receiving the ‘Best Vendor’ award from MrS Sandilya, Group Chairman & Chief Executive (left) andMr Rajesh Mittal, GM-Materials & Manufacturing(center), Eicher Motors

manufactures Shock absorbers for

two/three wheelers, cars, LCVs, HCVs,

air suspension buses, railways and is a

major supplier of shock absorbers to

OEMs like M&M, Bajaj Auto, Wheels

BOTTOM LEFT: Mr Tim Huffman, Cummins Inc.,Columbus examining the bearing machining on theAutoline during his visit to Gabriel-Parwanoo

The seven Ride Control facilities have a

combined capacity of over 10 million

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5G A B R I E L I N D I A L I M I T E D

India and Sutlej for air suspension

buses and also the Indian railways.

Shock absorbers for Golf carts,

Carvans & Railways are also exported

from the plant.

The Dewas facility manufactures

hydraulic, gas-pressurised and spring

seat Shock Absorbers as well as

Cartridges for passenger cars and

commercial vehicles. The plant during

the year recorded the highest

production level of 1.99 million shock

absorbers since its inception in 1992.

The plant received the ‘Best Vendor’

award in proprietary category in 2005

from Eicher Motors for its contribution

to supply chain management for the

second consecutive year.

Gabriel Dewas is the single source

supplier to Tata Motors, Lucknow and

the newly launched Tata Ace vehicle.

The facility also has 80% share of the

Shock Absorber business with Ashok

Leyland. The plant has added the

newly launched 1518, 2515 and 207

flat body vehicles of Tata Motors Ltd to

its existing list of customers.

To ensure JIT supplies to Maruti, the

first Strut plant of the Company was set

up in Gurgaon. Owing to its continued

focus on customer satisfaction and

upgraded quality products, the plant

receives technological assistance from

KYB Corp, Japan to meet the stringent

customer requirements.

Having undergone capacity expansion

for Front Forks to meet the increasing

demand of 2-wheelers in India,

Gabriel’s Hosur facility now produces

0.65 million Front Forks and 2.1 million

Shock Absorbers per annum. The plant

ensures JIT supplies to TVS Motor Co.

at Mysore and Hosur as well as Royal

Enfield at Chennai and Honda

Motorcycle and Scooter India at

Manesar, its major customers. The

plant embarked on an expansion drive

to meet the growing demand for

motorcycles. Owing to the commitment

BOTTOM: Mr K Kamaraj - Engineer, Product Engineeringof Toyota Kirloskar Motors (2nd from right), Mr K Miyahara,Project Manager, Overseas Project Group, Toyota MotorCorporation (centre), Mr S Yamaguchi, DGM, ProductDesign & Development Div., Toyota Kirloskar Motors ona visit to Gabriel Chakan plant

TOP: Gabriel Dewas team with the TS16949 certification

CENTRE: Mr T Shimizu-Vice President, Mr T Yoneda-Director and Mr Haruo Tatsumi, Yamaha Motors,Surajpur, on a visit to Gabriel Hosur plant

BOTTOM: Mr Atul Kirloskar, Chairman and MD,Kirloskar Oil Engines and Mr Vikram Kirloskar, ViceChairman, Toyota Kirloskar Motors on a visit to Gabriel-Chakan with Mr Deep C Anand, Chairman, AnandAutomotive Systems and Mr Nanal, Plant Head,Gabriel-Chakan

Top: Mr Masao Nakamura, Director-SOQI Inc., Japan(left) handing the Gas filled shock absorbers to Mr VRRao, Manager-Materials, TVS Motor Co., Hosur at thelaunch of the Gas filled Shock absorbersCENTRE: Installed a new Shock Absorber assemblyline at Chakan plant to manufacture world-class ShockAbsorbers for new generation passenger cars

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to its customers, the facility has

initiated TPM for continuous

improvement on productivity, quality,

cost and delivery. Exports to its

technical collaborators - SOQI Inc.,

Japan and Yamaha continued, during

the year.

The Nashik plant manufactures Shock

Absorbers for two and three wheelers

and Telescopic Front Forks for

motorcycles with technological know-

how provided by SOQI, a 100%

subsidiary of Yamaha Motor Company,

Japan. It is a major supplier to both the

OE and Aftermarket customers.

The Noida facility manufactures Shock

Absorbers and Front Forks, catering to

the requirement of Yamaha Motorcycles

and a wide range of products for the

Aftermarket.

The Chakan facility, located near Pune,

manufactures Shock Absorbers and

Struts for new generation cars with

technology from KYB Corp, Japan,

KYBSE Suspensions-Europe, Spain, a

wholly owned subsidiary of KYB Corp,

Japan and Arvin Ride Control Products,

USA. The plant maintains its position as

a single source supplier for Ford-Ikon,

Ford-Fiesta, Hyundai-Santro, Toyota

Innova, Tata Indica, GM Tavera and will

start supplies to Ford B-226 (Fusion)

platforms from 2006 - 2007.

for world-class vehicles, OEMs are

benchmarking international practices to

deliver quality and performance within

cost-effective means. In view of this,

the component suppliers are under

tremendous pressure to not only

reduce cost but also upgrade the

product technology capabilities.

OEMs are developing various platforms

globally, which require close co-

ordination with our technology partner

KYB Corp., Japan to develop new

BOTTOM LEFT: Mr Koichi Ema, Supervisor-InspectionGroup, Suzuki Japan, Mr Izumi Shibuy, Head-R&D andQC and Mr Milind P Hedaoo, Manager-R&D and QC,Suzuki India on their visit to the Hosur facility

TOP: Mr Masao Oono, GM-Operations Planning Dept,and Mr H Hatakeyama, Staff Manager, OperationsPlanning Dept, Auto Component Operations, KYBCorp., Japan on their visit to the Gurgaon plant

CENTRE: SOQI, Japan team on a visit to Gabriel-Noida,being welcomed at the plant. Seen in the picture are: MrShigeaki Nagano, Sales GM, Mr Yoshio Mabuchi,President and Ms Junko Takagi, Sales Dept, SOQI,Japan

Research andDevelopment

products for customers such as Maruti

Udyog Ltd (Suzuki), Toyota and Nissan.

Value added services such as CAE &

Ride tuning have become a norm.

In its effort to meet the customer

requirements, systematic investments

have been made in manpower,

enhancing hardware, software

capabilities and in particular Product

Validation and Testing facilities.

Research and development has always

been the hallmark of Gabriel. With

increasing expectations of consumers

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To maintain the leadership position in

Ride Control products, Gabriel India

focuses on its state-of-art

manufacturing technology. Strong and

experienced team of specialised

engineers work continuously to develop

indigenous solutions to provide world-

class products at low cost. In its

endeavour to enhance customer

satisfaction, the Technical Service

Group continuously develops

breakthrough solutions in process

engineering thus providing improved

product life.

During the year, the Company made

several process innovations, which led

to improvement in product

performance.

BOTTOM : Gabriel-Chakan team received the AnandEngineering Excellence award for invention of NewMethod by using digital vision technology for detectionof nodular chrome in Piston Rods

TOP: Mr S Sengupta, GM-Commercial Vehicles,Gabriel India presenting a memento to the ArvinMeritorteam on their visit to the Dewas plant, seen from L-R:Mr Dragos Oprea, Manager-Quality Assurance, Mr JimBarbison, Director-Worldwide Product Engineering andMr Nelson Goncalves, Director-Business Dev & ProductMgt Suspensions and Ride Control Worldwide

CENTRE: Mr Hiroshi Nakamura, Group Manager-Purchasing Division,Toyota Motor Corp beingwelcomed at Gabriel-Chakan

The Company has set-up a new

Product Validation Centre at its Nashik

facility to provide complete research &

development with state-of-the-art

testing and validation facility for shock

absorbers and front forks. A new high-

speed durability test machine,

fabricated locally has also been

installed. These investments in R&D will

yield new product development and

strengthen its portfolio providing

impetus to the growth of the Company,

besides being the preferred choice for

the OEMs in India.

World-ClassOrganisation

Gabriel India’s Engine Bearings facility

was set-up in 1978 at Parwanoo

(Himachal Pradesh) in collaboration

with Federal-Mogul Corporation, USA,

world leader in thin-walled, bimetal

Engine Bearings. The plant

manufactures a complete range of

Bimetal Bearings, Bushes, Flanges and

Thrust Washers, including manufacture

of metal powder and bimetal strips.

Gabriel India is a leading supplier of

EngineBearings

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engine bearings to domestic OEMs and

the replacement market in the

automotive industry as well as other

segments such as Railways, Marine

and Power generation. The products

are also being exported to several

overseas markets.

Responding to the growth in demand

from the passenger car industry for

Aluminium Tin Bearings, the Company

set-up a facility in Khandsa (Haryana) in

2003. Catering to the requirements of

customers in the OE and Aftermarket

segments, the Khandsa plant also

manufactures large size Bearings for

Railways and Bushes for automotive

applications.

Equipped with the latest sophisticated

machinery, the facilities have a

combined annual manufacturing

capacity of around 22.4 million pieces.

The manufacturing facilities are

vertically integrated from raw material

to finished products in equipments

which have programmable logic

controllers. These include induction

furnaces, tandem sinter lines, state-of-

the-art ‘Autoline’, automatic presses,

high speed boring and broaching

machines. The plating facility uses the

latest logic controls and has an

advanced effluent treatment plant. The

testing facility includes a computerised

Bearing profile analyser, atomic

absorption spectrometer and other

metallurgical equipment to sustain the

high quality of finished products.

While the Parwanoo plant is already QS

9000 certified, the Company is also

working towards a TS 16949

certification and is committed to health,

safety and environment.

TOP LEFT: Gabriel-Chakan team received the‘Productivity’ award for Capacity improvement of Rodand Strut Body Cell

CENTRE: Mr Hiroshi Ogawa, GM-KYB, Corp, Japan(centre) on a visit to Gabriel-Hosur with the GabrielIndia team

BOTTOM LEFT: Team from Yamaha Motors, Japan andYamaha Motors, India, planting a Coconut tree atGabriel-Hosur

BOTTM RIGHT: Gabriel India team receiving theGolden Peacock National Award for ‘ProcessInnovation’ from Mrs Shiela Dixit, Hon’ble ChiefMinister of Delhi

CollaboratorsGabriel India is in financial cum

technical collaboration for Ride Control

Products with ArvinMeritor Inc., USA,

global provider of integrated systems,

modules and components to the motor

vehicle industry serving light vehicle,

commercial truck, trailer and specialty

original equipment manufacturers and

certain aftermarkets, having an annual

sales turnover of US $ 8.8 billion.

The Company also has technical

agreements with KYB Corp., Japan,

KYBSE Suspensions-Europe, Spain, a

wholly owned subsidiary of KYB Corp.,

Japan and SOQI - a 100% subsidiary

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of Yamaha Motor Company, Japan.

The Collaborators offer continuous

support, including technical know-how

and training in latest manufacturing

processes along with regular visits to

the Company’s plants by senior

technical executives of the

collaborators.

Federal-Mogul, USA also continues to

hold equity of a little over 5% in the

Company.

strong brand image, the Company

undertakes various marketing initiatives

like introducing a vast product range,

new product development, market

penetration, sales promotion and

market research activities for both the

trade and various segments of vehicle

owners. All this helps the Company to

understand the changing business

scenario and provide insights on

market potential to stay ahead.

TOP: Gabriel’s announcement of sponsoring a team atFISSME 2005, Mr KN Subramaniam, MD-Gabriel Indiawith the team at the Corporate HQs of the Group

BOTTOM LEFT: Team Gabriel in action

MarketingStrategy

The Company lays emphasis on

trained sales personnel interacting

closely with the channel partners and

other decision makers in its endeavour

to provide quality products. A

countrywide distribution network,

comprising a large dealer base built

over the years is maintained to achieve

successful market penetration.

Regular meets are organised by the

Company to provide a platform for

exchange of information with

mechanics and reborers. Its all-India

service network provides technical

support to reborers and mechanics on

product related issues. To reinforce its

BOTTOM RIGHT: Gabriel’s participation at a Mechanicmeet at Trichy

Gabriel’s customer centric approach

has led to its position of a market

leader for RCD products and a

significant presence in the Engine

Bearing industry.

ExportsOwing to its focus on exports for Ride

Control products, the Company has a

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significant penetration of attractive

markets besides being a supplier to its

partners and direct sales to OEMs. The

Company also developed a large

number of products during the year to

cater to the new requirements of SOQI

Inc., Japan. The exports during the

year grew by 42% over the last financial

year. Exports to SOQI, Japan increased

significantly over the last year and will

continue to grow, owing to the new

product development. In its foray to

expand its presence in the overseas

market, the Company has started

supplies of shock absorbers to the

Latin American region.

To achieve the targeted export growth,

Gabriel India has signed a Global

Supply contract with ArvinMeritor,

CVS–Ride Control products division,

Toronto, Canada for the supply of 2

Million Shock Absorbers per annum

valued at USD 12 million per annum to

the OEM segment in North America,

i.e. USA, Canada and Mexico. New

products will be developed within the

next 3 years to attain the full potential

of this business, mentioned above,

focussing towards OEM requirements

in the Commercial vehicle, All Terrain

vehicle and Recreational vehicle

segments.

HumanResourceDevelopment

TOP: Gabriel-Noida team receiving the TS16949certification

CENTRE: R-L: Mr Arun Babbar, Associate VP-Materials and Mr Haruo Tatsumi, Executive Director &Executive VP, Yamaha Motors India on a visit toGabriel-Nashik

BOTTOM LEFT: Mr Abhange, GM-Technical, GabrielIndia, delivering a lecture on 2X2 productivity initiativeundertaken at Gabriel India, sharing his experience atthe ACMA forum

BOTTOM RIGHT: First Aid training in progress atGabriel-Chakan

The thrust areas for Engine Bearings

has been export of copper lead

powder and sintered strips to Europe

and North America, which is being

aggressively pursued with Global

manufacturers. Owing to the focus on

exports, a 100% EOU is being set-up

at Parwanoo for Flange Bearings,

which is in the commissioning stage

and is undergoing trial runs.

People are its most important asset - is

the firm belief of the Company. Its

people-practices focus on personal

and professional development to align

individual goals with organisational

objectives. The People orientation is

enshrined in the Anand Way - our core

values - that form the basis of the

working culture at Anand, which

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11G A B R I E L I N D I A L I M I T E D

inculcates best practices through

participation, pride in belonging,

development and growth opportunity,

open and honest communication and

commitment to and from people. This

philosophy and innovative practices

have helped the Company in retaining

its efficient and dedicated workforce.

In keeping with the Group’s values, the

Company provides immense

opportunities for training and

development besides other growth

opportunities. Job rotation, multi-

function responsibilities, empowerment

and overseas secondment are few

initiatives to create a congenial and

motivational environment. Training is an

important process for development of

people – this belief of the Company is

fulfilled by Anand’s technical and

management institute, Anand ‘U’,

which designs and conducts

organised depending on the

requirements of the people.

TOP: Shareholders of Gabriel India being welcomed atthe Chakan facility

BOTTOM LEFT: Inauguration of a Creche at Gabriel-Hosur by Mr Arvind Walia, COO, Gabriel India

BOTTOM RIGHT: HIV/AIDS awareness & preventionactivity through various audio visual media organisedby SNS Foundation in Mumbai

programmes tailor-made to the

Company’s requirements.

Significant technical training

programmes like TPM, lean

manufacturing, Kaizen, TQM and Six

Sigma are organised for all levels of

people, QCDGP initiative also forms an

integral part of the training process

where emphasis is laid on improving

Quality, Cost, Delivery, Growth,

Productivity/Profitability. Other training

programmes for soft skill development

like leadership, building assessment

skills, time management, personality

development, stress management are

CorporateSocialResponsibilityThe Company continues to attach

importance to the pursuit of excellence

as a responsible corporate citizen in its

operations. Thus fostering the ‘spirit of

giving’ by supporting SNS Foundation,

a charitable Trust.

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SNS Foundation, the CSR wing of

Anand Automotive Systems, has over

the years set-up development centres

throughout the country, in places where

its manufacturing facilities are located.

All SNSF programmes are aligned to

the country’s development goals,

aimed at empowerment of women,

providing education for children as a

strategy to eliminate child labour,

sustainable livelihood activities

integrated with natural resource

management and reproductive health.

In the ’70s, Gabriel India was the first

Company to set up a facility in

Parwanoo, a ‘notified backward area’

then, which has helped to provide

employment opportunities for the

people and develop the township as an

industrial base. Today, Anand also runs

an educational institution - the

Himachal Primary School, a hostel for

working women and a dispensary for

the residents of Parwanoo.

The Foundation was among the first to

undertake a long-term, live-stock-

based community empowerment

programme of the victims of Tsunami

with the contributions received from

Heifer International, Anand Automotive

Systems, its employees and Anand

collaborators. The first 3-year phase of

the programme for providing value-

based livelihood restoration,

conservation of environment and

disaster preparedness centres around

900 families in 12 villages in one of the

three worst Tsunami affected east-

TOP: Dr Prakash Jadhav, Deputy RTO explaining theimportance of road safety at Janta Marathi MediumSchool, Nashik as part of the ‘Road Safety’ campaignorganised by SNS Foundation

coast districts of Tamil Nadu State of

India.

Government of India has given due

recognition to SNS Foundation by

granting 100 % tax exemption under

section 35AC of the Income Tax Act.

BOTTOM: Dr Thimmaya educating the farmers fromKumbhawas village on organic farming techniques, aprogramme initiated by SNSF at Gurgaon and adjoiningvillages.

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Working Results at a Glance

96-9

7

97-9

8

98-9

9

99-0

0

00-0

1

01-0

2

02-0

3

03-0

4

04-0

5

05-0

6

Shareholders’ Funds (Rs. million)

96-9

7

97-9

8

98-9

9

99-0

0

00-0

1

01-0

2

02-0

3

03-0

4

04-0

5

05-0

6

Sales (Rs. million)

96-9

7

97-9

8

98-9

9

99-0

0

00-0

1

01-0

2

02-0

3

03-0

4

04-0

5

05-0

6

Gross Profit (Rs. million)

Distribution of Income (In %)

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Working Results at a Glance

96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06

Rs. Million

Share Capital 71 71 71 71 71 71 72 72 72 72

Reserves & Surplus 773 822 789 803 831 676 650 770 892 923

Shareholders’ Funds 844 893 860 874 902 747 722 842 964 995

Loans 1338 1573 1556 1425 1371 1282 1050 971 913 1033

Deferred Tax Liability 204 233 237 217 194

Funds Employed 2182 2466 2416 2299 2273 2233 2005 2050 2094 2222

Fixed Assets (Gross) 1460 1723 1800 1870 1960 2043 2302 2454 2545 2729

Depreciation 262 334 429 520 605 725 918 1055 1200 1352

Net Block 1198 1389 1371 1350 1355 1318 1384 1399 1345 1377

Investments 111 158 168 122 115 270 10 10 10 10

Net Current Assets 873 919 877 827 803 645 611 641 739 835

Net Assets Employed 2182 2466 2416 2299 2273 2233 2005 2050 2094 2222

Rs. Million

Sales 2075 2059 2076 2443 2683 3081 3754 4210 4779 5617

Gross Profit 357 346 303 335 345 368 470 492 486 394

Interest 149 193 225 206 186 172 130 84 70 83

Depreciation 48 76 97 98 109 122 137 146 153 158

Profit/(Loss) Before Tax 160 77 -19 31 50 74 203 262 263 153

Tax 21 9 0 4 4 34 86 95 84 65

Profit/(Loss) After Tax 139 68 -19 27 46 40 117 167 179 88

Rs.

Dividend per Share 5.0 2.5 1.0 2.0 2.5 3.0 5.0 6.0 7.0 0.7

Earning per Share 19.6 9.6 -2.7 3.7 6.4 5.6 16.4 23.2 24.9 1.2

Million Nos.

Production:

Shock Absorbers,

Struts & Front Forks 5.5 5.5 5.6 6.3 6.1 6.4 8.0 8.8 9.8 10.9

Bimetal Bearings 9.5 9.1 6.4 8.1 8.2 8.0 7.9 7.7 8.9 9.2

Year

* Every equity share of Rs. 10/- each was subdivided into 10 equity shares of face value of Re. 1/- each interms of a resolution passed by the members in the Extraordinary General Meeting held on Dec. 16, 2005

*

*

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NOTICE is hereby given that the Forty-Fourth Annual General Meeting of the Members of GABRIEL INDIA LIMITEDwill be held at the Auditorium of Gabriel India Limited, 29th Milestone, Pune-Nashik Highway, Village Kuruli, Taluka Khed,Pune – 410 501, on Monday, the 24th day of July, 2006, at 2.30 p.m. to transact the following businesses :-

Ordinary Business:

1. To receive, consider and adopt the Audited Balance Sheet as at March 31, 2006 and the Profit and Loss Account of theCompany for the year ended on that date and the Reports of the Board of Directors and Auditors thereon.

2. To declare a dividend.

3. a) To appoint a Director in place of Dr. Brian L. Ruddy, who retires by rotation, and being eligible, offers himself for re-appointment.

b) To appoint a Director in place of Mr. Jaithirth Rao, who retires by rotation, and being eligible, offers himself for re-appointment.

c) To appoint a Director in place of Mr. C. S. Patel, who retires by rotation, and being eligible, offers himself for re-appointment.

4. To appoint Auditors to hold office from the conclusion of this Meeting until the conclusion of the next Annual GeneralMeeting and to fix their remuneration.

Special Business

5. To consider, and if thought fit, to pass, with or without modification(s), the following resolution as an OrdinaryResolution :-

“RESOLVED THAT in accordance with the provisions of Sections 198, 269 and 309 read with Schedule XIII and all otherapplicable provisions, if any, of the Companies Act, 1956, or any statutory modification(s) or re-enactment thereof, approvalof the Company be and is hereby accorded to the re-appointment of and payment of remuneration and perquisites toMr. K. N. Subramaniam, as a Managing Director of the Company, for a period of 5 (five) years with effect from February20, 2006, on the terms and conditions, as set out hereinunder, with power to the Board of Directors (hereinafter referredto as “the Board” which term shall be deemed to include any Committee of the Board constituted to exercise its powers,including the powers conferred by this Resolution) to alter and vary the terms and conditions and/or remuneration, subjectto the same not exceeding the limit specified under Schedule XIII to the Companies Act, 1956, or any statutory modification(s)or re-enactment thereof.

A (I) Salary : In the range of Rs. 80,000 to 300,000 per month (Basic Salary and annual increase therein to bedecided by the Board within the above ceiling).

(II) Special Allowance: As may be decided by the Board from time to time which shall not attract Provident fund,Gratuity, Superannuation Fund etc.

B. PERQUISITES (including allowances)

a. Housing : Furnished/Unfurnished residential accommodation or house rent allowance of sixty percent of salaryin lieu thereof.The expenditure incurred by the Company on gas, electricity, water and furnishings shall be valued as per theIncome Tax Rules, 1962.

b. Medical Reimbursement : Expenses incurred for Mr. K. N. Subramaniam and his family in accordance with theCompany’s Rules.

c. Leave Travel Concession : For Mr. K. N. Subramaniam and his family, incurred in accordance with the Company’sRules.

d. Club Fees : Fees of clubs subject to a maximum of two clubs. This will not include admission and life membershipfees.

Notice

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e. Personal Accident Insurance : Premium as per the Company’s Rules.f. Contribution to Provident Fund, Superannuation Fund and Gratuity as per the Company’s Rules.g. Encashment of leave not availed of, as per the Company’s Rules.h. Provision of car and telephone at Mr. K. N. Subramaniam’s residence for his use.i. Any other benefits, amenities and facilities including educational allowance for a child as per the Company’s

Rules for the time being in force or authorized by the Board.j. Housing Loan : In accordance with the Company’s Rules.

In addition to the salary and perquisites, Mr. K N Subramaniam will also be entitled to Management Incentive Bonus asper the Company’s Scheme and commission as may be decided by the Chairman. However, the total remunerationpayable to Mr. K N Subramaniam by way of salary, commission, perquisites, allowances, benefits and amenities, asapproved by the Board from year to year, shall not exceed the limits laid down in Sections 198, 269 and 309 read withSchedule XIII and all other applicable provisions, if any, of the Companies Act, 1956, or any statutory modification(s) or re-enactment thereof. Further, if in any financial year during the currency of tenure of Mr. K N Subramaniam, the Companyhas no profits or if its profits are inadequate, the remuneration shall be payable as per the provisions as specified underSchedule XIII of the Companies Act, 1956, as minimum remuneration for such year to Mr. K N Subramaniam.

Explanation : “Family” means the spouse, dependent children and dependent parents of Mr. K N Subramaniam

C. Mr. K N Subramaniam will not divulge or disclose or use for his own purpose or any other purpose any information orknowledge or trade secret of the Company.

D. Subject to the superintendence, control and direction of the Board, Mr. K N Subramaniam shall exercise and performsuch powers and duties as the Board of Directors shall determine from time to time.

E. The appointment is terminable by either party by giving the other six months notice in writing.

RESOLVED FURTHER THAT the Board be and is hereby authorised to take all such steps as may be necessary, properor expedient to give effect to this Resolution.

RESOLVED FURTHER THAT any Director and the Company Secretary be authorised to execute under the common sealof the Company the necessary agreement with Mr. K N Subramaniam for giving effect to this resolution.”

6. To consider, and if thought fit, to pass, with or without modification(s), the following resolution as an OrdinaryResolution :-

“RESOLVED THAT Mr. Arvind Walia, who was appointed as an Additional Director of the Company pursuant to Section260 of the Companies Act, 1956, and Article 111 of the Articles of Association of the Company, and who holds office uptothe date of this Annual General Meeting and in respect of whom the Company has received a notice under Section 257of the Companies Act, 1956, in writing, proposing his candidature for the office of Director, be and is hereby appointed asa Director of the Company.

RESOLVED FURTHER THAT in accordance with the provisions of Sections 198, 269, 309, 310, 311 read with ScheduleXIII and other applicable provisions, if any, of the Companies Act, 1956, or any amendment or modification thereof, thisMeeting hereby approves the appointment of and payment of remuneration and perquisites to Mr. Arvind Walia as aWholetime Director, designated as President and Chief Operating Officer of the Company, with effect from January 25,2006 for a period of 5 (five) years, on the terms and conditions, as set out hereinunder, with power to the Board ofDirectors (hereinafter referred to as “the Board” which term shall be deemed to include any Committee of the Boardconstituted to exercise its powers, including the powers conferred by this Resolution) to alter and vary the terms andconditions and / or remuneration, subject to the same not exceeding the limit specified under Schedule XIII to the CompaniesAct, 1956, or any statutory modification (s) or re-enactment thereof.

A. (I) Salary : In the Range of Rs. 60,000 to 250,000 per month (Basic Salary and annual increase therein to bedecided by the Board within the above ceiling).

(II) Special Allowance : As may be decided by the Board from time to time which shall not attract Provident fund,Gratuity, Superannuation Fund etc.

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B. PERQUISITES (including allowances)

a. Housing : Furnished/Unfurnished residential accommodation or house rent allowance of sixty percent of salaryin lieu thereof.

The expenditure incurred by the Company on gas, electricity, water and furnishings shall be valued as per theIncome Tax Rules, 1962.

b. Medical Reimbursement : Expenses incurred for Mr. Arvind Walia and his family in accordance with the Company’sRules.

c. Leave Travel Concession : For Mr. Arvind Walia and his family, incurred in accordance with the Company’sRules.

d. Club Fees : Fees of clubs subject to a maximum of two clubs. This will not include admission and life membershipfees.

e. Personal Accident Insurance : Premium as per the Company’s Rules.f. Contribution to Provident Fund, Superannuation Fund and Gratuity as per the Company’s Rules.g. Encashment of leave not availed of, as per the Company’s Rules.h. Provision of car and telephone at Mr. Arvind Walia’s residence for his use.i. Any other benefits, amenities and facilities including educational allowance for a child as per the Company’s

Rules for the time being in force or authorised by the Board.j. Housing Loan: In accordance with the Company’s Rules.

In addition to the salary and perquisites, Mr. Arvind Walia will also be entitled to Management Incentive Bonus as per theCompany’s Scheme. However, the total remuneration payable to Mr. Arvind Walia by way of salary, perquisites, allowances,benefits and amenities, as approved by the Board from year to year, shall not exceed the limits laid down in Sections 198,269 and 309 read with Schedule XIII and all other applicable provisions, if any, of the Companies Act, 1956, or anystatutory modification(s) or re-enactment thereof. Further, if in any financial year during the currency of tenure ofMr. Arvind Walia, the Company has no profits or if its profits are inadequate, the remuneration shall be payable as per theprovisions as specified under Schedule XIII of the Companies Act, 1956, as minimum remuneration for such year toMr. Arvind Walia.

Explanation: “Family” means the spouse, dependent children and dependent parents of Mr. Arvind Walia.

C. Mr. Arvind Walia will not divulge or disclose or use for his own purpose or any other purpose any information orknowledge or trade secret of the Company.

D. Subject to the superintendence, control and direction of the Board and the Managing Director, Mr. Arvind Walia shallexercise and perform such powers and duties, as the Board of Directors including the Managing Director shalldetermine from time to time.

E. The appointment is terminable by either party by giving the other six months notice in writing.

RESOLVED FURTHER THAT the Board be and is hereby authorised to take all such steps as may be necessary, properor expedient to give effect to this Resolution.

RESOLVED FURTHER THAT any Director and the Company Secretary be authorized to execute under the common sealof the Company the necessary agreement with Mr. Arvind Walia for giving effect to this resolution.”

7. To consider, and if thought fit, to pass, with or without modification(s), the following resolution as a SpecialResolution: -

“RESOLVED THAT pursuant to Section 31 and all other applicable provisions, if any, of the Companies Act, 1956, theArticles of Association of the Company be and are hereby altered, modified and amended by insertion of a new Articlenumbered 8A immediately after Article 8 along with the marginal notes reading as follows:

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‘Buy Back of Shares 8A Notwithstanding anything contained in these Articles, the Board of Directorsmay, when and if thought fit, buy back such of the Company’s own shares orsecurities as it may think necessary, subject to such limits, upon such termsand conditions, and in accordance with the provisions of Sections 77A, 77AAand 77B of the Companies Act, 1956, or any statutory modification theretoand such other regulations and guidelines as may be issued in this regard.’

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to take all such actionsand do all such things as may be necessary from time to time for giving effect to the above resolution and mattersincidental thereto.”

8. To consider, and if thought fit, to pass, with or without modification(s), the following resolution as a SpecialResolution: -

“RESOLVED THAT in accordance with the provisions of Sections 198, 309(4) and all other applicable provisions, if any, ofthe Companies Act, 1956, or any statutory modification(s) or re-enactment thereof, the Company do hereby renew theSpecial Resolution, authorising the payment of commission at the rate up to one per cent of the net profits of the Companyin each year to be paid annually to the Directors of the Company other than the Directors who are in the whole timeemployment, for a further period of 5 years commencing from the financial year ending March 31, 2006, and that suchcommission may be divided amongst such Directors and in such manner or proportion as may be decided by theChairman.

RESOLVED FURTHER THAT the aforesaid commission shall be exclusive of the fees payable to such Directors for themeetings of the Board or Committees of the Board attended by such Directors.

RESOLVED FURTHER THAT the Board of Directors be and is hereby authorised to take such steps as may be necessary,desirable or expedient to give effect to this Resolution.”

By Order of the Board

Gabriel India Limited

Manoj TulsianFinancial Controller & Company Secretary

MumbaiMay 23, 2006

Registered Office:29th Milestone,Pune-Nashik Highway,Village Kuruli, Taluka Khed,Pune – 410 501Maharashtra, India

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Notes:

1. A member entitled to attend and vote at the Annual General Meeting may appoint a Proxy to attend and vote onhis behalf. A Proxy need not be a member of the Company.

The instrument appointing a Proxy, in order to be effective, must be duly filled, stamped and signed and must reach theRegistered Office of the Company not less than forty-eight hours before the commencement of the Annual GeneralMeeting.

2. Corporate Members are requested to send to the Company a duly certified copy of the Board Resolution, pursuant toSection 187 of the Companies Act, 1956, authorising their representative to attend and vote at the Annual GeneralMeeting.

3. Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956, relating to the Special Business to betransacted at the Annual General Meeting is annexed hereto.

4. The Register of Members and Share Transfer Books of the Company will remain closed from Friday, July 7, 2006 toMonday, July 24, 2006 (both days inclusive).

5. The Dividend, if declared at the Meeting, will be paid to those Members whose names stand on the Company’s Registerof Members as on Thursday, July 6, 2006. In respect of shares held in dematerialised form, the dividend will be paid on thebasis of particulars of beneficial ownership furnished by the Depositories as at the end of business hours on Thursday,July 6, 2006.

6. Members are advised that respective bank details and address as furnished by them or by NSDL / CDSL to the Company,for shares held in the certificate form and in the dematerialised form respectively, will be printed on their dividend warrantsas a measure of protection to Members against fraudulent encashment.

7. Proxies/Members are requested to bring the admission slips duly filled in to the Meeting.

8. Members are requested to bring their copies of the Annual Report and the Accounts to the Meeting.

9. Members are requested to quote the ledger folio in all communications with the Company.

10. Members desiring any information as regards the Accounts are requested to write to the Company at an early date so asto enable the Management to keep the information ready.

11. Members holding shares in the certificate form are requested to notify / send the following to the Company’s Registrarsand Share Transfer Agents, Karvy Computershare Private Limited (Unit: Gabriel India Limited) at ‘Karvy House’, 46,Avenue 4, Street No. 1, Banjara Hills, Hyderabad – 500 034,(Tel.: 040 23312454 / 23320751 / 752 / 251; Fax: 04023311968, 23323049, email : [email protected]) to facilitate better servicing :

i) any change in their address / mandate / bank details,

ii) particulars of their bank account, in case the same have not been furnished earlier, and

iii) share certificates held in multiple accounts in identical names or joint accounts in the same order of names, forconsolidation of such shareholdings into a single account.

12. a. Members are also requested to note that unclaimed / unpaid dividends up to the financial year ended March 31, 1995have been transferred to the General Revenue Account of the Central Government pursuant to Section 205A of theCompanies Act, 1956. Shareholders, who have not yet encashed their dividend warrant(s) for the said period arerequested to forward their claims to the Registrar of Companies, PMT Building, 2nd Floor, Deccan Gymkhana,Pune – 411 004 by submitting an application in the prescribed Form No. II.

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b. Pursuant to the provisions of Section 205A(5) and 205C of the Companies Act, 1956, the amount of dividend for thefinancial year ended March 31, 1999, which remains unpaid or unclaimed, will be due for transfer to the InvestorEducation and Protection Fund of the Central Government later this year.

Members who have not encashed their dividend warrants for the financial year ended March 31, 1999, or anysubsequent years are requested to lodge their claim with the Company’s Share Transfer Agents, Karvy ComputersharePrivate Limited.

Members are advised that no claims shall lie in this respect once the unclaimed dividend is transferred to the InvestorEducation and Protection Fund.

14. Additional particulars of Directors retiring by rotation and eligible for appointment/re-appointment pursuant to Clause 49of the Listing Agreement are mentioned elsewhere as a part of the Corporate Governance Report.

15. Members desirous of making a nomination in respect of their shareholding, as permitted by Section 109A of the CompaniesAct, 1956, are requested to write to the Share Transfer Agents of the Company for the prescribed form.

16. The Company’s shares are listed on The Bombay Stock Exchange and The National Stock Exchange of India Ltd. Thelisting fees for these exchanges have been paid.

ANNEXURE TO THE NOTICE

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956

ITEM NO. 5

Mr. K. N. Subramaniam was appointed as a Managing Director of the Company for a period of 5 (five) years w.e.f. February 20,2001.

Since his tenure as the Managing Director was expiring on February 19, 2006, the Board at its Meeting held on January 25,2006, proposed reappointment of Mr. K. N. Subramaniam for a further period of 5 (five) years w.e.f. February 20, 2006.

The particulars of Mr. K. N. Subramaniam, which are required to be disclosed pursuant to clause 49IV(E) of the ListingAgreements are mentioned elsewhere as a part of the Corporate Governance Report.

The Board considers that the Company will benefit from the reappointment of Mr. K. N. Subramaniam as the ManagingDirector and recommends the resolution for your approval.

Excepting Mr. K. N. Subramaniam, none of the Directors of the Company is in any way concerned or interested in the saidresolution.

This notice along with the explanatory statement should be considered also as an abstract of the terms of appointment ofMr. K. N. Subramaniam as Managing Director of the Company and a memorandum as to the nature of concern or interest ofthe Directors in the said appointment, as required under Section 302 of the Companies Act, 1956.

ITEM NO. 6

In terms of Section 260 of the Companies Act, 1956 and Article 111 of the Articles of Association of the Company, the Boardof Directors, at its meeting held on January 25, 2006, appointed Mr. Arvind Walia as an Additional Director of the Company tohold office up to the date of this General Meeting. The Company has received a Notice in writing under Section 257 of theCompanies Act, 1956, along with requisite deposit, from a Member of the Company signifying his intention to propose theappointment of the said Director at the ensuing Annual General Meeting.

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The particulars of Mr. Arvind Walia, which are required to be disclosed pursuant to clause 49 IV(E) of the Listing Agreementsare mentioned elsewhere as a part of the Corporate Governance Report.

The Board considers that the Company will benefit from the association of Mr. Arvind Walia and recommends the resolution foryour approval.

Excepting Mr. Arvind Walia, none of the Directors of the Company is in any way concerned or interested in the said resolution.

This notice along with the explanatory statement should be considered also as an abstract of the terms of appointment ofMr. Arvind Walia as Whole time Director of the Company and a memorandum as to the nature of concern or interest of theDirectors in the said appointment, as required under Section 302 of the Companies Act, 1956.

ITEM NO. 7

Sections 77A, 77AA and 77B of the Companies Act, 1956 stipulate provisions for purchase of own shares and other specifiedsecurities by a company. However, pursuant to clause (a) of sub-section (2) of Section 77A of the said Act, the Company isrequired to have necessary authorisation in its Articles of Association for buy-back of shares. Accordingly, as an enablingprovision, it is proposed to alter the Articles of Association of the Company by insertion therein of a new Article 8A immediatelyafter the existing Article 8. The new Article contains the powers of the Company to buy-back its own shares in accordance withthe applicable statutory provisions and guidelines. Your Directors therefore recommend the special resolution for approval ofthe Members. A copy of the Company’s Memorandum and Articles of Association is open for inspection of the members at theRegistered Office of the Company on any working day between 11.00 a.m. and 1.00 p.m. till the date of ensuing AnnualGeneral Meeting. None of the Directors of the Company is, in any way concerned or interested in the said resolution.

ITEM NO. 8

A commission upto one percent of the net profits of the Company computed in the manner laid down under Section 198 of theCompanies Act, 1956 in each year was sanctioned for payment to the Directors of the Company other than the ManagingDirector / Whole-time Director/s, by a Special Resolution passed at the Annual General Meeting held on July 30, 2001. Underthe provisions of Section 309(7) of the Companies Act, 1956, the aforesaid resolution can be renewed from time to time by aSpecial Resolution for further periods of not more than five years each. Since the Special Resolution has fallen due forrenewal, and to continue to avail of the benefits of professional expertise and business exposures of the eminent personalitieson the Board of the Company, it is proposed to renew the same, for a further period of five years commencing from thefinancial year ending March 31, 2006.

All the Directors of the Company except the Managing Director / Whole-time Director/s are deemed to be interested in theResolution set out in Item No. 8 of the Notice to the extent of the commission that may be received by them.

By Order of the Board

Gabriel India Limited

Manoj TulsianFinancial Controller & Company Secretary

MumbaiMay 23, 2006

Registered Office :29th Milestone,Pune-Nashik Highway,Village Kuruli, Taluka Khed,Pune – 410 501Maharashtra, India

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Your Directors have pleasure in presenting the Forty Fourth Annual Report together with the Audited Accounts for the yearended March 31, 2006.

Financial Highlights Year ended Year endedMarch 31, 2006 March 31, 2005

(Rs. Million) (Rs. Million)

Sales 5617.4 4778.6Profit before Interest and Depreciation 394.4 485.6Interest 82.7 70.0Depreciation 158.0 152.3Profit /(Loss) before Tax 152.9 263.3Provision for Current Tax 74.7 104.6Provision for Deferred Tax (22.6) (20.2)Provision for Fringe Benefit Tax 12.4 –Profit/(Loss) after Tax 88.4 178.9Proposed Dividend 50.3 50.3Proposed Corporate Dividend Tax 7.1 6.9Transfer to General Reserve 8.8 17.9

Analysis of Results for 2005-06

PerformanceThe Indian Economy witnessed a growth in GDP of 8.0%, which was contributed by major growth in the service sector of 9.5%,industrial growth of 9.4% and agriculture growth rate of 2.3%. Automotive industry grew by 14.9% which is substantially higherthan overall industry growth rate of 9.4%, fueled by increased customer demand, introduction of new models and easy availabilityof credit for financing. Within the automotive industry, motorcycle and two wheelers segment recorded a growth of 16.4%(previous year 17%), Passenger Cars by 7.5% (previous year 19%), whereas commercial vehicle business registered agrowth of 10.5%, a substantial drop compared to last year growth of 25%.

While volumes grew as outlined above, the year was a challenge to your Company as raw material costs relating especially tonon-ferrous metals & petroleum products continued their upward trend with an unprecedented increase, affecting most of theindustry segments including vehicle manufacturers and automotive component manufacturers like us.

Your Company continued its strong presence in OEM segment of Passenger Cars, Commercial Vehicles and Two wheelers.Aftermarket volumes were stagnant but your Company continued to maintain its leadership position in this segment dispiteproviding higher discounts to retain its existing share of business. This had an impact on the bottom line.

Your Company’s sales at Rs. 5617.4 million during the year under review recorded a growth of 17.5% over the previous year’ssales at Rs. 4778.6 million. This was achieved by new business developed during the year, increase in volumes from existingcustomer base and offering wider product range for Ride Control Products covering all segments and better penetration in allsegments.

Due to steep increases in raw material costs, in particular metals and oils, your Company’s margin were affected as priceincreases from OEMs to compensate the cost increase were inadequate. This resulted in your Company’s Profit before Taxdeclining to Rs.152.9 million against Rs. 263.3 million in the previous year. After making provision for tax, including for deferredtax liability as per Accounting Standard 22 of Rs. 64.5 million and newly introduced Fringe Benefit Tax, your Company achievedProfit after Tax of Rs. 88.4 million compared with Rs. 178.9 million in the previous year.

DividendYour Directors had declared an interim dividend of Rs. 3.0 per equity share of Rs. Ten each (previous year Interim DividendRs. 2.5 per equity share of Rs. Ten each). This dividend amounts to Rs. 21.5 million (previous year Rs. 18.0 Million) . The samewas distributed to the shareholders whose names appeared on the Register of Members as on November 4, 2005.

Your Directors further recommend for the approval of the shareholders a final dividend of Re 0.40 per equity share of RupeeOne each, thereby making total dividend for the year including interim dividend to Re. 0.70 per equity share of Rupee One

Report of the Board of Directors

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each i.e, 70% (previous year Rs.7 per equity share of Rs. Ten each or 70% ). The proposed total dividend will amount to Rs.50.3 million ( previous year Rs. 50.3 million). The final dividend, subject to its declaration will be distributed to the shareholderswhose names would appear on the Register of Members as on close of business hours on July 06, 2006.

Operations

Ride Control ProductsThe production of Shock Absorbers, McPherson Struts and Front Forks was higher at 10.9 million nos. in the year under reviewagainst 9.8 million nos. in the previous year. Sales turnover of the Ride Control Products increased to Rs. 5273.1 million fromRs. 4398.7 million in the previous year reflecting an increase of 19.9%. Your Company has strengthened and further enhancedthe OEM customer base by offering better quality products and development of new products to meet the requirements ofvarious OEMs, for the entire range of Ride Control Products. Your Company continued to make investments during the year toupgrade quality of final products and to enhance process capability. Major efforts were directed to enhance design, productdevelopment and validation capabilities of Company’s R&D Centre for four wheelers at Chakan and R&D Centre for twowheelers at Hosur.

Engine BearingsThe production of Engine Bearings at 9.2 million numbers was marginally higher than previous year’s production of 8.9 millionnumbers. However turnover of Rs. 344.2 million is lower compared to previous year’s turnover of Rs. 379.8 million. Thebusiness came under severe margin erosion with non-ferrous metals like Copper, Lead and Tin which are critical inputs forBearings, going through unprecedented increase in prices due to global supplies being much less than demand. Price recoveryfrom all segments of business were far less than the cost increases. Aftermarket demand was severely affected due to drop indemand with introduction of many new engines in the last few years which require far less overhauling. Engine overhauls alsocame down due to the Government’s strict enforcement of regulations to prevent overloading of trucks.

The Company invested Rs. 45 million in 100% EOU for manufacture of Flange Bearings for overseas markets mainly in NorthAmerica and this plant commenced commercial production in March ’06.

ExportsYour Company exported Ride Control Products and Engine Bearings valued at Rs. 156.2 million in the year as against Rs.143.3million during the previous year and this included exports to several developed markets. During the year, the Company continuedto export Shock absorbers to SOQI Inc., Japan, which has had excellent relations with the Company for the last several yearsas a provider of technology for two wheeler products.

The Company has made a major break through in the Export business by signing a Global Supply Contract with Arvin MeritorInc., USA for manufacture and export of 2 million shock absorbers valued at around 12-15 million US $ per annum (once it isfully ramped up by financial year 2008-09) primarily focussed towards North America OEM’s (USA, Canada and Mexico)through ArvinMeritor–CVS (Commercial Vehicle Systems) Ride Control Products Division based in Toronto–Canada. Theramp up of numbers involves new developments and OEM approvals through ArvinMeritor. The Company will continue itsefforts to secure new markets for entire range of products, particularly in North America and Western Europe.

CollaboratorsYour Company wishes to place on record its appreciation for the continued support extended by its collaborators. The Companywas pleased to receive from ArvinMeritor Inc. the Chairman, President and CEO alongwith their top management team andseveral other senior executives from their CVS operations. The Company also received several top executives from KYBCorporation, Japan, SOQI Hydraulics System Co. Ltd. Japan and from Federal Mogul Corporation. Your Company had veryfruitful discussions with these visiting executives from the Collaborators on several avenues of mutual co-operation includingsourcing of products and design engineering services from your Company.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and OutgoAs required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in theReport of Board of Directors) Rules 1988, information relating to the foregoing matters is given by way of an Annexure to thisReport.

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Fixed DepositsFixed Deposits at the end of the year were Rs.1.6 million. Out of this, 59 deposits amounting to Rs. 1.2 million had matured andhad not been claimed by depositors as on that date.

DirectorsIn accordance with Article 123 of the Articles of Associations, Dr. B.L. Ruddy, Mr. Jaithirth Rao and Mr. C.S. Patel retire byrotation and, being eligible, offer themselves for re-appointment.

The Board of Directors at its meeting held on January 25, 2006 has reappointed Mr. K.N Subramaniam as Managing Directorfor a period of five years from February 20, 2006 and appointed Mr. Arvind Walia as a Wholetime Director, designated asPresident & COO for a period of five years from January 25, 2006. The appointments are subject to the approval of theshareholders in the ensuing Annual General Meeting.

We extend our sincere thanks to Mr. H.R Prasad, who has resigned from the Board, for his excellent contribution towards thegrowth of the Company.

Directors Responsibility StatementPursuant to Section 217 (2AA) of the Companies (Amendment) Act, 2000 the Directors confirm that:

1. in the preparation of the annual accounts, the applicable accounting standards have been followed;

2. appropriate accounting policies have been selected and applied consistently, and have made judgements and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2006 and of the Profit and Loss Account for the year ended March 31, 2006;

3. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraudand other irregularities;

4. the annual accounts have been prepared on a going concern basis.

Corporate GovernanceA separate section on Corporate Governance is included in the Annual Report and the certificate from the Company’s Auditorsconfirming the compliance of conditions of Corporate Governance as stipulated in Clause 49 of the listing agreement with theStock Exchanges is annexed thereto.

AuditorsMessers Price Waterhouse & Co., Chartered Accountants, Auditors of the Company will retire at the conclusion of the ensuingAnnual General Meeting and are eligible for re-appointment. They have furnished a Certificate to the effect that the proposedre-appointment, if made, will be in accordance with sub-section (1B) of Section 224 of the Companies Act, 1956.

Employee RelationsEmployee relations were cordial at all locations. The Directors are pleased to record their appreciation of the services renderedby the employees and staff at all levels.

Particulars of EmployeesThe information required under section 217(2A) of the Companies Act, 1956 and the rules framed thereunder is annexedhereto and forms part of the Report.

Your Directors wish to thank the Collaborators, Technology Partners, Financial Institutions, Bankers, Customers, Suppliersand Shareholders for their continued support and co-operation.

For and on behalf of the Board

Mumbai Deep C. AnandDated : May 23, 2006 Chairman

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Annexure to the Directors’ Report

Information as per Section 217 (1) (e) of the Companies Act, 1956, read with Companies (Disclosure of particulars in theReport of Board of Directors) Rules 1988 and forming part of the Directors’ Report for the year ended March 31, 2006.

I. Conservation of EnergyYour Company has been continuously working towards Energy conservation. This year the Company has workedmainly in the following areas

� Installing energy efficient filtration systems in its grinding shops

� Reduction in idle running of service equipment

� Process improvement in aluminium tube machining

� Semi centralized systems for hardening services

� Optimization of motor power required for various processes

as a measure of reducing energy consumption, better insulation has been provided resulting in energy saving. Duringthe year the Company in one of its units has switched over from genset generated power supply to Electricity Boardsupplied power supply consequent to the sanction of power load from the Electricity Board. The Company has alsoinstalled new and latest instruments at its various manufacturing locations to improve continuous monitoring of energyconsumption.

II. Particulars as per Form B

Research and Development (R&D)1. Specific areas in which R&D was carried out by the Company

a) New Products for OEM platformsb) Up-gradation of existing products for longer life and performance.c) Value added services including vehicle tuning.d) Computer simulation using advanced packages for designing and fluid flow analysis.e) New Materialsf) New Processes and upgradation of existing processes in the area of machining and surface coatingsg) Assimilation of collaborators’ technologyh) Product Engineering for quality improvements, increased durability and benchmarking and approval of

alternate sourcesi) Reduction of rejections and warranty returnsj) Improving productivity

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

The Company has developed new applications of Struts, Cartridges and Shock Absorbers for exports and hasbeen regularly supplying for new generation passenger cars. The Company enjoys dominant market share withmajor OEMS like Hyundai for Santro, Maruti gas shock absorbers, Toyota IMV, Ford Ikon, Tata Motors - Indica,Mitsubishi Lancer, GM Chevrolet Tavera and new two wheelers of Honda Activa scooters and SOQI for Yamahascooters in Japan and all models of TVS Motors.

R&D has helped in design and development for new vehicle launches in the last year like Ford Fiesta and Fusion,GM Chevrolet Aveo and TVS Apache.

3. Future plan of action

The Company will continue to develop new range of Shock Absorbers, McPherson Struts and Cartridges, Bearings,modules and systems for domestic and export markets.

The requirement of all new cars, motor cycles and scooter manufacturers will be met for current and future modelsduring the coming years.

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4. Expenditure on R&D

Rs. MillionCapital : 0.4Recurring : 24.8

Total : 25.2

Total R&D expenditureas percentage of totalturnover : 0.4

Technology Absorption, Adaptation and Innovation1. Efforts, in brief, made towards technology adaptation and innovation :

i) During the year, the Ride Control technology from Arvin Meritor’s ASTI Italy was absorbed for manufacturing ofShock Absorbers and McPherson Struts for new generation of vehicles, Fiat Uno and Fiat Siena .

ii) Technology from KYB Corporation, Japan was used for manufacture of Shock Absorbers and McPherson Strutsfor Toyota Qualis, Toyota Innova, Mitsubishi Lancer, GM Tavera, Various models of Maruti covering Alto, Wagon R.Technology agreements have been renewed for upgradation of technology and for addition of products for newmodels to be introduced in the market.KYBSE Suspensions, Spain a wholly owned subsidiary of KYB Corporation Japan provided technology for newgeneration vehicles of European origin like Ford Escorts, Ford Ikon, Ford Fiesta and Ford Fusion platformsbesides Hyundai Santro and many more new models for next year.

iii) Technical Assistance with Yamaha-SOQIa. Has been renewed for upgradation of technology for Front Fork and two wheeler Shock Absorbers.b. New agreement has been signed for upgradation of technology for additional specific Front Forks and two

wheeler Shock Absorbers.2. Benefits derived as a result of the above efforts are product improvement, cost reduction, product development and

import substitution.

3. Particulars of imported technology in the last five years :Technology imported Year of Importi) McPherson Struts and Shock Absorbers from Arvin Ride Control Products, USA 1997 &

renewal 2004ii) Front Forks and Shock Absorbers from SOQI, Hydraulic System Co. Ltd. Japan 1999

(Subsidiary of Yamaha, Japan) renewal 2005iii) Front Forks and Shock Absorbers (Additional applications) from SOQI

Hydraulic System Co Ltd, Japan, (Subsidiary of Yamaha, Japan) 2001iv) McPherson Struts and Shock Absorbers from KYB Corporation, Japan 1995 &

renewal 2004v) Shock Absorbers from ArvinMeritor LVS Ride Control Division renewal 2005

Technology development and assimilation is an ongoing process. In order to meet the ever increasing demand ofcustomers and continuously changing world standards, continuous access to proven foreign technology is available.

4. R&D facilities for Ride Control products for four wheelers (passenger cars, commercial and utility vehicles) at GabrielChakan and for two and three wheeler at Hosur, Tamil Nadu are being reinforced and expanded for improved capabilitiesof design, engineering, validation and testing.

III. Foreign Exchange Earnings and OutgoingsTotal foreign exchange earned and used:

Earnings Rs. 156.2 MillionOutgoings Rs. 242.0 Million

For and on behalf of the Board

Mumbai DEEP C. ANANDDated: May 23, 2006 Chairman

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A. MANDATORY REQUIREMENTS

1. Company’s Philosophy on Code of Governance

The Company believes that good Corporate Governance is essential for achieving long term corporate goals andenhancing value to stakeholders. In this pursuit, your Company’s philosophy of Corporate Governance is aimed atassisting the management of the Company in the efficient conduct of its business and to continuously strive toattain high levels of accountability, transparency, responsibility and fairness in all aspects of its operations. YourCompany continues to lay great emphasis on broad principles of Corporate Governance. Your Company, with aview to achieve these objectives, has adopted corporate strategies, prudent business plans and continuousmonitoring of performance.

Clause 49 of the Listing Agreement with Stock Exchanges’ sets up norms and disclosures that are to be met bythe Company on Corporate Governance front. We confirm our compliance with Corporate Governance requirements,as stipulated under the said clause, vide this report.

2. Board of Directors

� Composition

The strength of the Board as on March 31, 2006 was 11 Directors. The Board comprises two Executive Directors,a Managing Director and a Wholetime Director. The rest are Non-Executive Directors. The Board meets therequirement of not less than one-third being independent Directors.

During the year under review, four Board meetings were held on May 24, 2005; July 19, 2005; October 28, 2005and January 25, 2006.

� The composition of Board of Directors and their attendance at the Board Meetings during the year and atthe last Annual General Meeting, as also number of other directorships, committee memberships andchairmanships held by them, are given below:

Directors Category Shares Attendance No. of other Directorships andheld Particulars Committee Membership/

Chairmanship held*

Board Last Director- Committee CommitteeMeetings AGM ships Memberships Chairmanships

Mr. Deep C Anand C 3218500 4 Yes 9 1 1Mr. K.N. Subramaniam MD 81000 4 Yes 3 - -Mr. Arvind Walia (w.e.f.January 25, 2006) WTD 17620 1 N.A. 2 1 -Dr. BL Ruddy NED NIL - No 3 - -Mr. RJ Taraporevala NED 259260 4 Yes 3 4 2Mr. BK Khare (retired w.e.f.July 19, 2005) NED N.A 2 Yes N.A N.A N.AMr. C.S. Patel NED 133330 4 Yes 9 2 -Mr. HR Prasad (ceased tobe a member w.e.f May 2, 2006 ) NED 10000 3 Yes 6 8 4Mr. Jaithirth Rao NED 55000 3 Yes 5 2 -Mr. Ravi K Sinha NED 20000 3 Yes - - -Mr. MS Sandhu NED NIL 4 Yes 1 - -Ms. Padmini Khare Kaicker(appointed w.e.f.July 19, 2005) NED 100000 2 Yes - - -

C: Chairman; MD: Managing Director; WTD : Wholetime Director; NED: Non Executive DirectorDirectors who are Chairpersons of Committees have been included in the list of members as well.* Includes directorship and committee membership in public limited companies only.The Board periodically reviews Compliance Reports of all laws applicable to the Company as well as steps taken by theCompany to rectify instances of non-compliances, if any.

Report on Corporate Governance

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3. Code of Conduct

The Board has laid down a Code of Conduct for all Board members and senior management of the Companyon December 29, 2005. The Code of Conduct has been posted on the website of the Company. All Boardmembers and senior management personnel have affirmed compliance with the Code. A declaration to thiseffect signed by the Managing Director is enclosed separately (Refer Appendix-1).

4. Audit Committee

After the introduction of the amendment to Section 292A of the Companies Act 1956, the Board in January 2001,re-constituted the Audit Committee. This Audit Committee had four meetings during the year 2005-06. Thecomposition of Audit Committee and attendance at its meetings is given hereunder :

Member Position No. of meetings attended

Mr. Ravi K Sinha Chairman 3Mr. B.K. Khare (ceased to be amember w.e.f. July 19, 2005) Member 2Mr. H.R.Prasad (ceased to be amember w.e.f May 2, 2006 ) Member 3Mr. C S Patel Member 4Ms. Padmini Khare Kaicker(appointed as a member w.e.f.October 28, 2005) Member 1

Ms. Padmini Khare Kaicker is an eminent professional and has expertise in the field of Taxation, Accounting andCorporate Laws.

The Audit Committee meetings are held both at the Corporate Head quarters and plant locations and are attendedby the Internal Auditors and the Finance Head. A Representative of the Statutory Auditors is invited, as required.The Company Secretary acts as the Secretary to the Audit Committee. The Chairman of the Audit Committee isan Independent Director and was present at the last Annual General Meeting of the Company.

The broad terms of reference of the Audit Committee are as follows:

– Review of the Company’s financial reporting process, and its financial statements– Review of accounting and financial policies and practices– Review of the internal control and internal audit system– Review of risk management policies and practices– Discussing with statutory Auditors before the audit commences on the nature and scope of audit, as well as

having post-audit discussion to ascertain any area of concern.

5. Remuneration to Directors

(A) Remuneration Committee:

The composition of the Remuneration Committee is as follows:Mr. Deep C. Anand ChairmanMr. C.S. Patel MemberMr. H.R. Prasad* Member

The Chairman of the Committee, Mr.Deep C Anand is a Non-Executive Director.

The Remuneration Committee was constituted on May 14, 2001 and one meeting was held during theyear 2005-06 which was attended by the Chairman and both the members.

The broad terms of reference of the Remuneration Committee include recommendation to the Board, of salary,perquisites, commission and retirement benefits and finalisation of the perquisites payable to the Company’sManaging Director, Wholetime Director and other Managerial personnel.

* Ceases to be a member w.e.f May 2, 2006. Ms. Padmini Khare Kaicker is appointed as the Committee memberw.e.f May 23, 2006.

Remuneration Policy:

Payment of remuneration to the Managing Director is governed by the Letter of Appointment issued to the ManagingDirector by the Company, the terms and conditions of which were approved by the Board and the Shareholders.

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The tenure of office of the Managing Director had ceased on February 19, 2006. He was reappointed for anotherperiod of five years by the Board at its Meeting held on January 25, 2006. Reappointment of the ManagingDirector on the remuneration and terms and conditions as determined by the Committee is placed before themembers in this Annual General Meeting. A Wholetime Director was also appointed by the Board at its meetingheld on January 25, 2006. The remuneration and the terms and conditions of the appointment of the WholetimeDirector as determined by the Committee are placed for approval by the members in this Annual General Meeting.The remuneration structure comprises salary, perquisites and allowances, contributions to provident fund,superannuation and gratuity funds and other perquisites. The Non-Executive Directors do not draw any remunerationfrom the Company other than sitting fees and such commission payable to such Non-Executive directors as maybe decided by the Chairman.

(B) Details of the remuneration paid to Executive Directors during the year 2005-06 are given below: -

Name of Whole All elements of Fixed Service Stock option withTime Director remuneration component and contracts details, if any and

package i.e. performance notice whether issued atsalary benefits, linked incentives period, discount as well asbonuses alongwith the severance the period over whichpension etc. performance criteria fees accrued and over(Rs. Million) (Rs. Million) which exercisable *

Mr. K.N. Subramaniam 4.40 –Managing Director(reappointed w.ef.February 20, 2006)Mr. Arvind Walia 0.32 – Pl. see Pl. seeWholetime Director note ‘a’ note ‘b’designated asPresident & ChiefOperating Officer(appointed w.e.f.January 25, 2006)

a) The agreements with the Managing Director and Wholetime Director are for five years. Either party tothe agreement is entitled to terminate the agreement by giving not less than six months notice in writingto the other party.

b) *The Company does not have stock option scheme for grant of stock options either to the ExecutiveDirector or employees.

6. Investors’/Shareholders’ Grievance Committee

The Investors’ / Shareholders’ Grievance Committee of the Board was constituted on May 14, 2001 to look into theredressal of investors’ complaints like non receipt of Annual Reports, interest payments, declared dividends, non-receipt of share certificates sent for transfer and other allied transactions. The composition of Investors’/Shareholders’ Grievance Committee and attendance at its meetings is given hereunder :

Member Position No. of meetings attended

Mr. H.R. Prasad* Chairman 3Mr. R.J. Taraporevala Member 4Mr. M.S. Sandhu Member 4

* ceases to be a member w.e.f May 2, 2006. Mr Ravi K Sinha has been appointed as the member of the Committeew.e.f. May 23, 2006.

Details of Investors’/Shareholders’ ComplaintsNumber received during the year 135Number resolved to the satisfaction of complainant 135Number pending redressal NilNumber Pending Transfers Nil

The Company has attended to most of the investors grievances/ correspondence within a period of fifteen daysfrom the date of receipt of the same, while all the rest were attended to within maximum period of 30 days.

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Name, designation and address of : Mr. Manoj TulsianCompliance Officer Company Secretary

Gabriel India Ltd.1, Sri Aurobindo MargNew Delhi-110016,Tel: 011-26564666, Fax: 011-26866040

7. General Body Meetings

Details of the location of the last three AGMs and the details of the resolutions passed or to be passed by PostalBallot.

a. Particulars of last three years Annual General Meetings

Financial year Date Time Location

2004-05 July 19, 2005 2.30 pm 29th MilestonePune-Nashik HighwayVillage KuruliTaluka KhedPune 410 501

2003-04 July 23, 2004 2.30 pm -do-2002-03 July 21, 2003 2.30 pm -do-

b. No resolutions requiring Postal Ballot as recommended under clause 49 of the Listing Agreement havebeen placed for shareholder’s approval at the meeting.

The Company has passed on Special Resolution in the year 2003-04 approving the De-listing of the equityshares of the Company from the Delhi Stock Exchange. Other than this the Company has not passed anySpecial Resolution in the last three AGM’s.

8. Notes on Directors seeking appointment / re-appointment as required under Clause 49IV(E) of the Listing Agreemententered into with Stock Exchanges.

1. Dr. Brian L. Ruddy

Dr. Brian L Ruddy is Vice President and Managing Director, Asia, for Federal-Mogul Corporation, responsible forsales, operations and financial aspects for Asia Pacific Region, including wholly owned operations, joint ventureoperations and licenses. Dr. Ruddy joined Federal-Mogul in 1998 as Business Development Director, PowertrainSystems. Prior to joining Federal-Mogul, he was Development Director for the Piston products group of T&N. Untilhis appointment Dr. Ruddy was Managing Director, Powertrain Asia Pacific. Dr. Brian L Ruddy is a Doctorate inMechanical Engineering from Leeds University and a bachelor of science degree from Southampton University,United Kingdom.

2. Mr. Jaithirth Rao

Mr. Jaithirth Rao is a seasoned veteran in Consumer and Corporate Financial Services and in TechnologyManagement. He built and developed Citibank’s Consumer businesses as the Country/Regional Manager in India,Middle East, Eastern Europe and UK. Mr. Jaithirth Rao has earlier headed Citibank’s Global Technology DevelopmentDivision and their Global Electronic Cards Division. Mr. Jaithirth Rao has testified before the US Congress one-commerce. Mr. Jaithirth Rao is a Chairman and CEO of Mphasis BFL Ltd., a leading software services companyand is serving as Director in following Public Companies : Arvind Mills Limited, Cadbury India Limited, IDFC AssetManagement Company Limited and Royal Orchid Hotels Limited.

3. Mr. C S Patel

Mr. C S Patel is a MS in Industrial Engineering from the University of Minnesota and a MBA from the University ofDetroit. He served Ford Motor Co., USA for a period of five years before returning to India. Mr. Patel has heldseveral assignments of increasing responsibility in Anand since 1974, especially as President of Human Resourcesand Business Development. Mr. Patel has spearheaded the operations of Spicer India Limited as ManagingDirector and greenfielded three Driveshaft factories and Axle Plant. Mr Patel is currently functioning as CEO ofAnand Automotive Systems and is serving as Director in the following public companies : Anand Products Limited,Haldex India Limited, Perfect Circle India Limited, Purolator India Limited, Spicer India Limited and Victor GasketsIndia Limited. He is also a member of the Audit Committee.

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4. Mr. K N Subramaniam

Mr. K. N. Subramaniam is a B. Tech from the University of Madras and holds postgraduate diploma in managementfrom Indian Institute of Management, Ahmedabad. Mr. Subramaniam held several management positions in variousAnand Companies since 1978. Mr. Subramaniam was head of marketing in Purolator India Limited and subsequentlymoved to Perfect Circle Victor Limited as Division Manager for Gasket operations. He was involved in Corporateoffice for New Projects and Joint Ventures. Mr. Subramaniam was the President of Degrémont India Limited, aJoint Venture with Degrémont S. A. France, in the area of Water and Wastewater Technology. Mr. Subramaniam isserving as a Director of the Company since 1998 and has been holding the position of Managing Director since2001. He is also a Director in the following public limited companies : Degrémont India Limited, Arvin ExhaustIndia Limited and Spicer India Limited.

5. Mr. Arvind Walia

Mr. Arvind Walia is a Chartered Accountant and holds an MBA from Punjab University, Chandigarh. In a careerspanning 21 years, Mr. Walia has held important positions in various Anand Companies, where he has contributedin great measure to the growth of the Group since 1985. Joined as Manager Commercial at Gabriel’s EngineBearing Division, from where he moved in 1989 to Corporate Finance as DGM. In 1993, Mr Walia was transferredto Anchemco at Gurgaon and was promoted to General Manager & COO of the Company in 1995. His significantcontribution has been in setting up and establishing Henkel Teroson India in 1997 as a leader in Automotivesealants as also in the Synchroniser Ring business through Chang Yun. He is instrumental in making both thebusinesses into highly successful ventures. Since then, he has been the Senior Vice president and COO of fourAnand Companies - Henkel Teroson India Ltd., Anfilco Ltd., Chang Yun India Ltd. and Anchemco Ltd.

9. Disclosures

� Disclosure on materially significant related party transactions i.e. transactions of the Company of materialnature, with its Promoters, the Directors or the Management, their subsidiaries or relatives etc. that mayhave potential conflict with the interests of the Company at large.

None of the transactions with any of the related parties were in conflict with the interests of the Company atlarge.

� Details of non-compliance by the Company, penalties, strictures imposed on the Company by StockExchanges or SEBI or any statutory authority, on any matter related to capital markets, during the last threeyears.

None.

� The Company has established the necessary mechanism in line with clause 7 of Annexure 1D of clause49 of the listing agreement for the employees to report concerns about unethical behaviour. No personhas been denied access to the Audit committee.

� Secretarial Audit:

A qualified practising Company Secretary carried out a secretarial audit to reconcile the total admittedcapital with NSDL and CDSL and the total issued and listed capital. The Secretarial Audit report confirmsthat the total issued/paid up capital is in agreement with the total number of shares in physical form and thetotal number of dematerialised shares held with NSDL and CDSL.

10. Means of Communication

� Half-yearly report sent to each household of No, as the results of the Company are publishedshareholders in the Newspapers having wide circulation.

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� Quarterly results Same as above.Any website, where displayed Yes, on www.gabrielindia.com

Whether it also displays official No.news released; andthe presentations made toInstitutional investors or to theAnalystsNewspapers in which results are 1) Indian Express - Pune edition.normally published in 2) Lok Satta - Pune edition.

3) The Economic Times—Delhi & Mumbai editions.

� Whether Management discussions Yes.& Analysis is a part of AnnualReport or not

11. General Shareholder Information

� AGM: Date, Time and Venue July 24, 2006 at 2.30 p.m. at Auditorium

Gabriel India Limited, 29th Milestone,

Pune-Nashik Highway, Village Kuruli

Taluka Khed, Pune 410501

� Financial Year April to March

� Date of Book Closure July 7, 2006 to July 24, 2006(both days inclusive)

� Dividend Payment date(s) August 4, 2006

� Listing on Stock Exchange The Bombay Stock Exchange andNational Stock Exchange of India Limited. TheCompany has got the securities delisted from theDelhi Stock Exchange as intimated by them vide theirletter No DSE/LIST/ 139 dated October 11, 2005.

� Stock Code 505714 on Bombay Stock Exchange.‘GABRIEL’ on National Stock Exchange

� Subdivision of Shares The Company has subdivided its every equity shareof Rs. 10 each (fully paid up) into 10 (Ten) equityshares of Re. 1 (one) fully paid up based on theapproval of the shareholders in the ExtraordinaryGeneral Meeting held on December 16, 2005. Therecord date for effecting the same was fixed asJanuary 6, 2006 (Friday)

� The ISIN of Gabriel India Limited INE524A01029on both NSDL and CDSL

� Market Price Data: High, Low during Please see Annexure ‘A’.each month in last financial year andperformance in comparison to Sensex

� Registrar and Transfer Agents Karvy Computershare Pvt. LtdKarvy House, 46 Avenue 4Street No. 1 Banjara HillsHyderabad - 500 034.

� Share Transfer System All the transfers received are processed andapproved by the Share Transfer Committee whichnormally meets twice in a month.

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� Distribution of shareholding and Please see Annexure ‘B’.Shareholding pattern as on March 31, 2005

� Dematerialisation of shares Complied with

� Outstanding GDRs/ADRs/Warrants or Not issued.any convertible instruments, conversiondate and likely impact on equity

� Plant Locations The Company’s plants are located at Mumbai, Nasik,Pune, Dewas, Hosur, Gurgaon, Noida, Khandsa andParwanoo.

� Address for Correspondence Shareholders’ correspondence should be addressedto the Registrars & Transfer Agents at the addressgiven above or to the Registered Office of theCompany or to the Corporate office or can beemailed to ‘[email protected]

B. NON-MANDATORY REQUIREMENTSa) Chairman of the Board

Whether Chairman of the Board is entitled to The Chairman does not maintain a separatemaintain a chairman’s office at the company’s office for the Company. Expenses incurred byexpenses and also allowed reimbursement of the Chairman on official duties for the Companyexpenses incurred in performance of his duties are met/reimbursed by the Company.

b) Shareholder Rights As the half yearly/quarterly results are publishedThe half-yearly/quarterly declaration of in English newspapers having wide circulation allfinancial performance including summary over India and in a Marathi newspaper (havingof the significant events in last six months circulation in Pune & Mumbai), the same are notshould be sent to each household of shareholders sent to the shareholders of the Company. Annual

audited financial results are taken on record by theBoard and then published in news papers asaforesaid and also communicated to the shareholdersthrough the Annual Report.

c) Remuneration Committee The Company has formed a RemunerationCommittee. Details of the same are coveredelsewhere in the Report.

d) Audit Qualification The Company is in the regime of unqualified financialstatements.

e) Training of Board Members The Company organises training of its BoardMembers from time to time.

f) Mechanism for evaluating The Company is developing a suitable process forNon-executive Board Member assessing the effectiveness of the Board and the

Committees.

g) Whistle Blower Policy The Company has a whistle Blower Policy. The sameis covered elsewhere in the report.

For and on behalf of the Board

Mumbai DEEP C. ANANDDated: May 23, 2006 Chairman

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Annexure “A”

(i) Stock Price Data

High / Low of market price of the Company’s shares traded on the Bombay Stock Exchange (BSE) and National StockExchange of India Limited (NSE), during the financial year 2005-06 is furnished below:

Period BSE NSE(Year 2005- Highest* Lowest* Highest* Lowest* 2006) (Rupees) (Rupees) (Rupees) (Rupees)

April 188.00 167.55 188.00 170.00May 257.00 175.00 258.90 176.10June 263.00 227.00 262.80 227.00July 254.00 209.00 253.80 209.00August 246.50 206.30 247.00 205.50September 272.70 230.00 252.00 230.00October 240.95 202.70 240.00 208.10November 241.00 212.30 245.00 206.00December** 308.00 29.10 306.00 28.85January** 31.90 25.10 32.35 25.10February** 29.50 24.05 29.55 24.20March** 38.90 25.40 35.50 27.00

(ii) Stock Performance

Note : 1. * Source : websites of the stock exchanges.2. **Every equity share of Re. 10/- each was subdivided into 10 equity shares of face value of Re. 1/- each

in terms of a resolution passed by the members in the Extraordinary General Meeting held onDecember 16, 2005.

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Appendix IDeclaration regarding Compliance by Board Members and Senior Management Personnel

with the Company’s Code of Conduct.

I, K N Subramaniam, being the Managing Director and a member of the Board of Directors of Gabriel India Limited (“the Company”) hereby acknowledge, confirm and certify that :

i. All the Directors have received, read and understood the Code of Conduct for Directors and Senior Management ofthe Company.

ii. All the Directors are bound by the said Code to the extent applicable to their functions as a member of the Board ofDirectors / Senior Management of the Company;

iii. Since the adoption of the Code of Conduct in the financial year 2005-2006, all the Directors have complied with theprovisions of the Code;

iv. Directors are not aware of nor are a party to any non-compliance with the said Code.

May 23, 2006 K N SubramaniamMumbai Managing Director

Annexure “B”

(i) The distribution of shareholdings as on March 31, 2006 is as follows:

No. of equity shares held No. of % No. of %Folios Shares

Upto 5000 28912 83.2 3186073 4.445001 to 10000 3170 9.1 2705573 3.7710001 to 100000 2451 7.0 6926113 9.64100001 and above 235 0.7 59004211 82.15

Grand Total 34768 100.00 71821970 100.00

(ii) Shareholding pattern as on March 31, 2006 is as follows:

Category No. of shares %Indian Promoters 28207660 39.3Collaborators 14843980 20.7Insurance cos. & banks 916190 1.3Mutual Funds & UTI 6417427 8.9FIIs & NRIs 592984 0.8Domestic Companies 2341103 3.3Resident Individuals 18502626 25.8Total 71821970 100.00

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Auditors’ Certificate on Compliance of Conditions of Corporate Governance UnderClause 49 of the Listing Agreement(s)

To the Members of Gabriel India Limited

We have examined the compliance of conditions of Corporate Governance by Gabriel India Limited, for the year ended March31, 2006, as stipulated in Clause 49 of the Listing Agreement(s) of the said Company with stock exchange(s) in India.

The compliance of conditions of Corporate Governance is the responsibility of the Company’s management. Our examinationwas carried out in accordance with the Guidance Note on Certification of Corporate Governance (as stipulated in Clause 49of the Listing Agreement), issued by the Institute of Chartered Accountants of India and was limited to procedures andimplementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. Itis neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, We certify that the Companyhas complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement(s).

We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectivenesswith which the management has conducted the affairs of the Company.

V. NIJHAWANPartner

Membership Number - F87228

For and on behalf ofPlace : Mumbai PRICE WATERHOUSE & CO.Dated: May 23, 2006 Chartered Accountants

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Management Discussion and Analysis

Overview

Your Company is a leading manufacturer of automotive components and is a major player in Shock Absorbers, Struts andFront Forks and also manufactures Engine Bearings. With a strong customer base in all the segments such as CommercialVehicles, Multi Utility Vehicles, Passenger Cars, Three-wheelers and Two-wheelers, the Company has carved out a niche foritself in this segment with a strong reputation as a quality supplier. Hence the growth of the Company is substantially relatedto the growth of the automotive sector.

Economy and Business Outlook

The year under review has been a year of events with the economy showing very strong signs of continued growth. Though theeconomy witnessed a GDP growth rate of 8.0%, the overall surge in commodity market and the tremendous interest shown bythe foreign investors in India led to a strong increase in demand in almost all the sectors and the automotive industry continuedto show robust growth. The automotive industry witnessed a major growth in two-wheeler segment which grew by 16.4% outof which the motorcycles segment grew by 19.4%. Your Company outpaced the market growth in motorcycles and grew by33%. Though the four wheeler business grew only by 7.5 %, your Company grew by 8% and strengthened its market position.Whereas Company’s exports grew marginally, the current plans will help in achieving major increases in the next three years.Exports of auto parts from India grew approximately by 30% and crossed US $ 1.8 billion mark. Easy financing schemes andcontinuous surge in quality standards and also roll out of new models with quite a number of variants in every model havematerially contributed to the growth of numbers.

The global manufacturers are looking at India as a major global sourcing hub. More and more global auto giants are eitherlooking for setting up their own facilities in India or are looking for major alliances to enjoy the benefit of cost competitiveness.These initiatives by the global manufacturers are opening up tremendous potential to the Indian automotive component suppliersto make a big leap in the years to come. Technical collaboration by most of the Indian companies with global leaders inautomotive components and global vehicle manufacturers, establishing facilities to manufacture for export besides catering tothe domestic market, has enabled the Indian automotive component industry to measure up to high quality standards andinvest in technological advancement .

The Company is continuously working towards improvement in quality standards and bringing in innovative styles ofmanufacturing to qualify as a global supplier for all the auto majors. To meet the same, the Company’s Collaborators havebeen providing active support in terms of technological advancement, training and new tools for developing and validating thenew products to meet the requirements of Indian as well as the global OEMs for their forthcoming new models and futureplatforms. The Company’s endeavour to become a world class supplier is an area of focus and therefore it has been consistentlyworking towards improving the productivity of the existing facilities and is continuously enhancing product quality standards.

Risks and Concerns

1) Business Risks– Industry Risk– Customer Concentration– Material supply and price– Technology Changes– Global competition

2) Financial Risks– Foreign Currency– Leverage

3) Legal and Statutory Risks– Contractual liabilities– Statutory compliance

4) Political Risks

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1. Business Risks

The Company continues to adopt various strategies to prevent concentration in any single business segment andcontinues to improve its presence with original equipment manufacturers, replacement market and exports for all vehi-cle segments including passenger cars, commercial vehicles and two-wheelers.

1.1 Industry Risk

The growth of this industry is primarily determined by overall growth of automotive industry. The automotiveindustry, per se , is characterised historically by periodic fluctuations in demand for vehicles, for which the Com-pany supplies products. These fluctuations are beyond the control of the Company and accurate prediction is notpossible. These fluctuations are mainly caused by economic growth, effectiveness of monsoon, entry of globalplayers, introduction of new models and on several other unforeseeable factors, such as fuel price changes andtaxation policies. In view of the domestic growth scenario and the possibility of india fast becoming the sourcinghub for global players, the automotive and automotive component industry are in a major growth mode.

The previous year saw some respite from the increasing trend of steel prices which had been a major cause ofmargin erosion as the OEMs were not willing to compensate adequately in the wake of the extremely pricecompetitive market. However, the year under review saw a sharp increase in the prices of aluminium, copper andother Non-Ferrous metals and oil for which the Company has not been adequately compensated. The pressure onmargins would continue for some time and the only way out would be rolling out technologically advancedcomponents continuously at a premium price. The Company is also focussing on the export market to protect themargins and has received the first level of success by tying up with one of the collaborators for global sourcing.

1.2 Customer Concentration

With the replacement market showing no signs of improvement, the Company has been continuously workingtowards widening of the customer base in the OE as well as the export segment. Concentration of business withfew large customers, some times may lead to pricing pressure because of higher volumes and may affect theprofitability adversely. Your Company, with an object to mitigate this risk is, constantly working to strike out abalance and diversifying customer base, by adding new customers and new products. During the year, yourCompany has added business of GM Aveo; Ford Fiesta, TVS–Star city, Victor Edge and Mono Tube Shock Absorbersand Front Forks for Apache, Yamaha Libero .

1.3 Material Supply and Price

The increasing trend of prices of non-ferrous metals continued during the year both in domestic and internationalmarkets and prices of metals like copper and aluminium saw unprecedented increase resulting in tremendouspressure on the margins. The rise in input costs like in the previous year either has not been adequately compensatedby the OEM’s or there has been a time lag between the cost increase and the price increase received from thecustomer. Most of the auto component companies have suffered similar fate . This has resulted in increase in inputcosts for most of the auto component companies, who are heavily dependent on the non-ferrous materials. YourCompany also faced the challenge of rising cost of inputs, change in product mix (increase of two wheeler businesscompared to four wheelers) resulting in reduction in margin of 2.4% during the year. Your Company does not haveany long term contract with the metal suppliers to hedge against these sharp increase in costs. Your Company isworking towards deploying sourcing strategies, like identifying alternate sources including considering import ofcertain raw materials, working with suppliers to improve productivity and other cost reduction measures to mitigatethis risk and has been successful in developing certain components with some of the international suppliers fromChina, Thailand etc which will help in cutting down the input cost as a measure to mitigate the impact of theincreasing raw material prices.

1.4 Technology Changes

Your Company is currently having Technology Licence Agreement with ArvinMeritor, USA and KYB Corporation,Japan for the manufacture of Shock Absorbers and Struts for four wheeler products and with SOQI HydraulicSystem Co. Ltd. Japan (100% subsidiary of Yamaha, Japan) for two wheeler products. Growth in the Automotiveindustry is driven by speedy design and product development and introduction of various models at frequentintervals. To retain market share by the auto component manufacturers, requirement of original equipmentmanufacturers has to be met by developing/acquiring technology to meet the design requirements of various

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models/vehicles being launched from time to time. Your Company, accordingly, has entered into technologyagreements with well established global players and technology leaders to meet the changing needs andspecifications of the OEMs.

1.5 Global Competition

Indian auto component industry is poised for a very high potential for exports over next one decade and is alsofacing competition from other Low Cost Countries (LCC) to capture this opportunity. The industry is highly competitivein case of skill based components manufacturing and moderately competitive in case of Labour intensive andsteel/cast iron intensive parts.

Your Company is also aggressively pursuing these opportunities and has got its first taste of success by getting amajor sourcing opportunity from Arvin Meritor, USA for supply of 2 Million shock absorbers per annum. YourCompany is working aggressively to ramp up to the above numbers within next three years involving newdevelopment, OEM’s approval through ArvinMeritor.

2. Financial Risks

2.1 Foreign Currency

The Company is exposed to foreign currency rate fluctuations, on account of imports, which is marginally higherthan current export earnings. However, the impact of this is not significant. However any loans in foreign currencyare fully hedged till the date of final maturity .

2.2 Leverage

Your Company, even though having not been able to reduce the debt levels in the current year has still been ableto manage the debt to equity ratio of 1:1. The increase in interest rates has put a lot of pressure on working capitaland the liquidity crisis in the financial market primarily in the last quarter resulted in delays in payments from someof the key OEMs and forced the Company to raise short term funds into the system. As the Company mainly workson JIT systems, there is limited scope of reducing inventory levels. Also higher sales have augmented the need toput in extra funds. The Company’s rating by CRISIL for Non-Convertible Debentures remained at “A-” with stableoutlook.

3. Legal and Statutory Risks

3.1 Contractual liability

Your Company is predominantly in original equipment manufacturing sector. The Company has entered into businessagreement with major OEMs for supply of components. Terms agreed pertain to include quantity, quality, price,delivery, warranty etc. The Management has taken conscious steps to restrict liabilities under the contract and tocover the risks involved. The Management has also taken sufficient insurance coverage to cover all possibleliabilities arising from warranties, product liability and product recall. Your Company currently has no litigation inrelation to contractual obligations pending against it in any court in India or elsewhere.

3.2 Statutory compliance

Your Company has a laid down procedure to monitor that all the statutory obligations are timely met. Continuousmonitoring of the same through a proper system of reporting ensures that the Company has not defaulted in thesame.

4. Political Risks

The Government, from time to time, releases policies on Automotive Industry. The trend of customs duty reduction andFree Trade Agreement with ASEAN/Thailand and other countries offers both opportunities and risks. Opportunitiesinclude importing input material at lower cost and export of finished goods. Risks include direct import by Company’scurrent customers and allocation of capacities by the Company’s supplier for exports. Your Company is working closelywith its customers in the area of new product development, technology development to mitigate the risks. Your Companyis also aggressively pursuing alternate source development to contain risks on materials supply .

Internal Control Systems and their adequacy

The Company has a well defined and an adequate system of internal control, which ensures that all assets are safeguardedand protected against loss from unauthorised use or disposition and maintaining proper accounting records and reliability of

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financial information. The Company has a well defined organisational structure with clear functional authority limits for approvalof all transactions. The Company has proper control relating to purchase of raw materials, components, plant & machineries,equipments and other assets and for sale of goods commensurate with its size and nature of its business.

The Company has a well defined delegation of power with authority for approving revenue as well as capital expenditure. TheCompany also continuously monitors its business risk control procedure through the Internal Audit process which is thenreviewed by the Audit Committee periodically, details of which have been provided in the Corporate Governance report. TheAudit Committee reviews the Audit Reports submitted by the Internal Auditors, suggestions for improvements are consideredand the Audit Committee follows up on the implementation of the corrective actions.

Human Resources/ Industrial Relations

The Company’s Human Resource philosophy is to work towards building a strong performance driven culture with greateraccountability and responsibility at all levels. Enough independence is given to the employees to show a higher level ofmotivation and inculcate new and modern methodology of work and systems. The Company views capability as a combinationof the right people in the right jobs, supported by the right processes, systems and structures. With the competition in allspheres of industry reaching unprecedented levels, the companies are continually reinventing themselves in a bid to gaincompetitive advantage. The Company’s human capital consists of a diverse pool of knowledge – a mix of youth and imaginationtempered with seasoned experience. With rapidly changing business environment, comes a need to constantly upgrade theexisting skills and meet new challenges. Training and development of employees continues to be an area of prime focus withkey personnel being sent for advanced training within the country and abroad.

The Industrial relations climate of the Company remained cordial during the year and continues to be focused towards improvingproductivity, quality and safety.

Pollution and Environmental Control

Your Company views environmental concerns with utmost priority. Your Company has been continuously investing in equipmentsand machineries to comply with the various environmental rules and regulations.

The Company takes special care of its employees in terms of improving the working condition and providing safety equipmentsas per the process requirements. Safety and health of people working in and around the premises of the Company continuesto receive the highest importance from the management. Regular training is being provided to the employees to ensure thatthe environmental norms are being met and maintained.

Cautionary Statement

Certain statements made in the Management Discussion and Analysis relating to the Company’s projections, objectives,estimates, expectations may be “forward-looking statements” within the meaning of applicable securities laws and regulations.Actual results could differ materially from such expectations whether express or implied. Important factors that could make adifference to the Company’s operations, include, among others, raw material prices , price increase from customers, governmentregulations, tax regimes, economic developments in India, natural calamities and other incidental factors.

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Auditors’ Report to the members of Gabriel India Limited

1. We have audited the attached Balance Sheet of Gabriel India Limited, as at March 31, 2006, and the related Profit andLoss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed underreference to this report. These financial statements are the responsibility of the company’s management. Our responsibilityis 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 requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report)(Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of ‘TheCompanies Act, 1956’ of India (the ‘Act’) and on the basis of such checks of the books and records of the company as weconsidered appropriate and according to the information and explanations given to us, we further report that:

i) (a) The Company is maintaining proper records showing full particulars including quantitative details and situationof fixed assets.

(b) The fixed assets are physically verified by the management according to a phased programme designed tocover all the items over a period of three years, which in our opinion, is reasonable having regard to the sizeof the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets hasbeen physically verified by the management during the year and no material discrepancies between thebook records and the physical records have been noticed.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixedassets has not been disposed of by the company during the year.

ii) (a) The inventory (excluding stocks with third parties) has been physically verified by the management duringthe year. In respect of inventory lying with third parties, these have substantially been confirmed by them. Inour opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonableand adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining properrecords of inventory. The discrepancies noticed on physical verification of inventory as compared to bookrecords were not material.

iii) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties coveredin the register maintained under Section 301 of the Act.

(b) The Company has not taken secured/unsecured loans, from companies covered in the register maintainedunder Section 301 of the Act.

iv) In our opinion and according to the information and explanations given to us, having regard to the explanation thatcertain items purchased are of special nature for which suitable alternative sources do not exist for obtainingcomparative quotations, there is an adequate internal control system commensurate with the size of the companyand the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services.Further, on the basis of our examination of the books and records of the company, and according to the informationand explanations given to us, we have neither come across nor have been informed of any continuing failure tocorrect major weaknesses in the aforesaid internal control system.

v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or

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arrangements referred to in Section 301 of the Act have been entered in the register required to be maintainedunder that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made inpursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect ofany party during the year have been made at prices which are reasonable having regard to the prevailingmarket prices at the relevant time.

vi) In our opinion and according to the information and explanations given to us, the company has complied with theprovisions of Sections 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptanceof Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information andexplanations given to us, no Order has been passed by the Company Law Board or National Company LawTribunal or Reserve Bank of India or any Court or any other Tribunal on the company in respect of the aforesaiddeposits.

vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuantto the Rules made by the Central Government of India, the maintenance of cost records has been prescribedunder clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion that prima facie, the prescribedaccounts and records have been made and maintained. We have not, however, made a detailed examination of therecords with a view to determine whether they are accurate or complete.

ix) (a) According to the information and explanations given to us and the records of the company examined by us,in our opinion, the company is generally regular in depositing the undisputed statutory dues including providentfund, investor education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth tax,service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriateauthorities.

(b) According to the information and explanations given to us and the records of the Company examined by us,the particulars of dues of income-tax, sales-tax, service tax, and cess as at March 31, 2006 which have notbeen deposited on account of a dispute, are as indicated in Note 4(b) on Schedule 20.

x) The Company has no accumulated losses as at March 31, 2006 and it has not incurred any cash losses in thefinancial year ended on that date or in the immediately preceding financial year.

xi) According to the records of the Company examined by us and the information and explanation given to us, thecompany has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at thebalance sheet date.

xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares,debentures and other securities.

xiii) The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/societies are not applicableto the company.

xiv) In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

xv) In our opinion and according to the information and explanations given to us, the terms and conditions of theguarantees given by the Company, for loans taken by others from banks or financial institutions during the year, arenot prejudicial to the interest of the company.

xvi) In our opinion, and according to the information and explanations given to us, on an overall basis, the term loanshave been applied for the purposes for which they were obtained.

xvii) On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the

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information and explanations given to us, there are no funds raised on a short-term basis which have been used forlong-term investment.

xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the registermaintained under Section 301 of the Act during the year.

xix) The Company has not issued any debentures during the year.

xx) The Company has not raised any money by public issues during the year.

xxi) During the course of our examination of the books and records of the Company, carried out in accordance with thegenerally accepted auditing practices in India, and according to the information and explanations given to us, wehave neither come across any instance of fraud on or by the company, noticed or reported during the year, norhave we been informed of such case by the management.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessaryfor the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears fromour examination of those books;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreementwith the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this reportcomply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, as on March 31, 2006 and taken on record bythe Board of Directors, none of the directors is disqualified as on March 31, 2006 from being appointed as adirector in terms of clause (g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financialstatements together with the notes thereon and attached thereto give in the prescribed manner the informationrequired by the Act and give a true and fair view in conformity with the accounting principles generally accepted inIndia:

(i) in the case of the Balance Sheet, of the state of affairs of the company as at March 31, 2006;

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

V. NIJHAWANPartner

Membership Number–F 87228For and on behalf of

Price Waterhouse & Co.Mumbai, May 23, 2006 Chartered Accountants

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31.03.06 31.03.05

Schedule Rs. Million Rs. Million Rs. Million Rs. MillionSources of FundsShareholders’ Funds

Share Capital ‘1’ 71.85 71.85Reserves & Surplus ‘2’ 922.92 994.77 891.81 963.66

Loan FundsSecured Loans ‘3’ 475.21 473.04Unsecured Loans ‘4’ 557.64 1,032.85 438.59 911.63

Deferred Tax Liabilities (Net) ‘5’ 194.79 217.39

2,222.41 2,092.68Application of FundsFixed Assets ‘6’

Gross Block 2,682.86 2,522.84Less: Depreciation 1,351.89 1,199.65

Net Block 1,330.97 1,323.19Capital Work-in-Progress 45.96 1,376.93 22.06 1,345.25

Investments ‘7’ 9.77 9.77Current Assets, Loans & Advances

Inventories ‘8’ 469.16 411.40Sundry Debtors ‘9’ 681.44 506.17Cash and Bank Balances ‘10’ 162.58 157.08Loan and Advances ‘11’ 402.54 380.05

1,715.72 1,454.70

Less: Current Liabilities and ProvisionsCurrent Liabilities ‘12’ 805.79 634.00Provisions ‘13’ 74.22 83.04

880.01 717.04

Net Current Assets 835.71 737.66

2,222.41 2,092.68

Notes to Accounts ‘20’

Balance Sheet as at March 31, 2006

This is the Balance Sheet referred The Schedules referred to above formto in our report of even date. an integral part of Profit & Loss Account

V. NijhawanPartnerMembership Number - F87228For and on behalf ofPRICE WATERHOUSE & CO.Chartered Accountants

Place: MumbaiDated: May 23, 2006

MANOJ TULSIANFinancial Controller &Company Secretary

DEEP C. ANANDChairmanK.N. SUBRAMANIAMManaging DirectorR.J. TARAPOREVALAC.S. PATELRAVI K SINHAJAITHIRTH RAOPADMINI KHARE KAICKERARVIND WALIADirectors

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31.03.06 31.03.05

Schedule Rs. Million Rs. Million Rs. Million Rs. MillionIncome

Sales 5,617.35 4,778.60Less: Excise Duty 764.92 638.53

Net Sales 4,852.43 4,140.07

Other Income ‘14’ 144.63 139.634,997.06 4,279.70

ExpenditureExcise Duty 8.78 7.59Cost of Materials ‘15’ 3,463.60 2,855.70Personnel Expenses ‘16’ 383.13 319.79Manufacturing, Administration,Selling & Distribution andOther Expenses ‘17’ 747.95 611.02Interest ‘18’ 82.71 70.03Depreciation 157.99 152.31

4,844.16 4,016.44

Profit Before Tax 152.90 263.26Provision for Taxation (Refer Note 7 on Schedule 19)- Current Tax [Including Wealth Tax Nil (Previous Year Rs. 0.05 Million)] 74.70 104.50- Previous year – 0.12- Deferred Tax (22.60) (20.24)- Fringe Benefit Tax 12.36 –

Profit After Tax 88.44 178.88

Profit Brought Forward 430.57 326.73

Profit Available for Appropriation 519.01 505.61

AppropriationsProposed Dividend 28.73 32.32Interim Dividend 21.55 17.95Corporate Dividend Tax 7.05 6.88General Reserve 8.84 17.89Profit Carried Forward 452.84 430.57

519.01 505.61Earning per Share - (Refer note 15 on Schedule 20)

- Basic/Diluted EPS (Rs.) 1.23 24.91- Paid up value per share (Rs.) 1.00 10.00

Significant Accounting Policies ‘19’Notes to Accounts ‘20’

Profit & Loss Account for the year ended March 31, 2006

This is the Profit & Loss Account referred The Schedules referred to above formto in our report of even date. an integral part of Profit & Loss Account

V. NijhawanPartnerMembership Number - F87228For and on behalf ofPRICE WATERHOUSE & CO.Chartered Accountants

Place: MumbaiDated: May 23, 2006

MANOJ TULSIANFinancial Controller &Company Secretary

DEEP C. ANANDChairmanK.N. SUBRAMANIAMManaging DirectorR.J. TARAPOREVALAC.S. PATELRAVI K SINHAJAITHIRTH RAOPADMINI KHARE KAICKERARVIND WALIADirectors

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Schedule ‘1’: Share Capital

31.03.06 31.03.05Rs. Million Rs. Million

Authorised140,000,000 (Previous Year 14,000,000) Equity Shares of Re. 1

(Previous year Rs. 10) each 140.00 140.00100,000 Cumulative Redeemable Preference

Shares of Rs. 100 each 10.00 10.00

150.00 150.00Issued, Subscribed & Paid Up Capital

71,821,970 (Previous Year 7,182,197) EquityShares of Re. 1 each fully 71.82 71.82paid up (Previous Year Rs. 10/ each)Add: Share Forfeiture 0.03 0.03

71.85 71.85

The Company has sub divided its every equity Share of Rs. 10 each (fully paid up) into 10 (Ten ) equity shares of Re.1(One) fully paid up based on the approval of the shareholders in the Extraordinary General Meeting held on 16thDecember 2005.

Notes: In prior years:(a) 1,235,000 Equity Shares of Rs. 10 each allotted as fully paid up by way of Bonus

Shares by capitalisation of Reserves.(b) 1,733,996 Equity Shares of Rs. 10 each at a premium of Rs. 20 each allotted

as fully paid up on conversion of Partly Convertible Debentures on November 30, 1991.(c) 2,675,198 Equity Shares of Rs. 10 each at a premium of Rs. 115 each allotted as fully paid up on

conversion of Partly Convertible Debentures on November 01, 1996.

Schedule ‘2’: Reserves & Surplus

31.03.06 31.03.05Rs. Million Rs. Million Rs. Million Rs. Million

Capital Reserve(Refer note 5 on Schedule 19)As Per Last Balance Sheet 1.70 1.70

Share PremiumAs Per Last Balance Sheet 343.59 343.59

General ReserveAs Per Last Balance Sheet 115.95 98.06

Add: Transferred from Profit & Loss Account 8.84 124.79 17.89 115.95

Profit & Loss Account 452.84 430.57

922.92 891.81

Schedules

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Schedule ‘3’: Secured Loans

(Refer notes 1 and 2(a) on Schedule 20) 31.03.06 31.03.05Rs. Million Rs. Million

From Banks— Rupee Term Loans 224.60 351.11

Working Capital Facilities from Banks 250.60 121.93— Interest Accured and Due 0.01 –

475.21 473.04

Schedule ‘4’: Unsecured Loans

(Refer note 2(b), 2(c), and 2(d) on Schedule 20) 31.03.06 31.03.05Rs. Million Rs. Million Rs. Million Rs. Million

Fixed Deposits 1.62 38.11Sales Tax Deferral Loans 131.75 131.21Short Term Loans and Advances– Foreign Currency Loan from Bank – 121.42– Rupee Loan from Banks 403.49 132.05– Interest Accured & due 0.64 404.13 – 253.47Other Loans and Advances– Others 20.14 15.80

557.64 438.59

Schedule ‘5’: Deferred Tax Liabilities (Net)

(Refer note 7(b) on Schedule 19 and note 16 on Schedule 20) 31.03.06 31.03.05Rs. Million Rs. Million

Deferred Tax Liability :- At beginning of the year 217.39 237.63- Adjustment for current year (22.60) (20.24)

194.79 217.39

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Schedule ‘6’: Fixed Assets

(Refer notes 2, 5, 8, 9, 11 and 12 on Schedule 19 and notes 3, 13 and 14 on Schedule 20)

(Rs. Million)

GROSS BLOCK DEPRECIATION NET BLOCK

As at Addi- Deductions/ As at Upto For the Deductions/ Upto As at As at1.04.05 tions Adjustments 31.03.06 1.04.05 Year Adjustments 31.03.06 31.03.06 31.03.05

Tangible AssetsFreehold Land 22.28 - - 22.28 - - - - 22.28 22.28Leasehold Land 25.92 - - 25.92 3.06 0.65 - 3.71 22.21 22.86Buildings 464.36 7.26 1.86 469.76 131.16 17.81 0.79 148.18 321.58 333.20Plant & Machinery 1,893.07 139.88 1.61 2,031.34 995.80 128.81 1.27 1,123.34 908.00 897.27Vehicles* 28.45 3.45 4.21 27.69 12.23 3.74 3.49 12.48 15.21 16.22Furnitures & Fixtures 53.35 4.70 0.50 57.55 26.11 3.49 0.20 29.40 28.15 27.24Intangible AssetsComputer Software 4.56 1.00 - 5.56 3.61 0.79 - 4.40 1.16 0.95Technical Knowhow 30.85 11.91 - 42.76 27.68 2.70 - 30.38 12.38 3.17

2,522.84 168.20 8.18 2,682.86 1,199.65 157.99 5.75 1,351.89 1,330.97 1,323.19

Capital Work-in-Progress(Refer Note 1 below) 45.96 22.06

Total 2,522.84 168.20 8.18 2,682.86 1,199.65 157.99 5.75 1,351.89 1,376.93 1,345.25

Total as at 31.03.05 2,428.60 103.58 9.34 2,522.84 1,055.17 152.31 7.83 1,199.65 1,323.19

* Vehicles include Assets purchased on finance lease amounting to Rs. 16.81 Million (Previous Year Rs. 16.07 Million) with a written down value of Rs. 11.16Million (Previous Year Rs. 12.55 Million) as at year end

NOTES : 1 Capital Work-in-Progress includes Capital Advances of Rs. 23.38 Million (Previous Year Rs. 5.99 Million)2. Additions to Plant and Machninery includes Rs. 0.16 Million (Previous year Rs. 0.03 Million) on account of Foreign exchange fluctuation loss

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Schedule ‘7’: Investments

(Refer Note 3 on Schedule 19) 31.03.06 31.03.05Rs. Million Rs. Million

Non-Trade—Long Term InvestmentsQuoted—at cost:

97,548 (previous year 97,548) 6.75% US64 Bonds issuedby the Administrator of the Specified Undertaking of 9.75 9.75Unit Trust of India Rs.100/- each (previous year Rs. 100/- each)fully paid up, issued in lieu of 972,484 Units of Rs.10 each fullypaid up of Unit Trust of India

800 (Previous Year 800) Equity Shares of Rs. 10(Previous Year Rs. 10) each fully paid up ofHousing Development Finance Corporation Limited 0.02 0.02

9.77 9.77Aggregate of Quoted investments :

At Book Value 9.77 9.77At Market Value 10.99 10.79

Schedule ‘8’: Inventories

(Refer Note 4 on Schedule 19) 31.03.06 31.03.05Rs. Million Rs. Million

Raw & Packing Materials 219.02 184.08Stores and Spares 30.71 26.97Work-in-Process 82.17 78.47Finished Goods 137.26 121.88

469.16 411.40

Schedule ‘9’: Sundry Debtors

31.03.06 31.03.05Rs. Million Rs. Million Rs. Million Rs. Million

UNSECUREDDebts Outstanding for over six months

Considered Good 13.45 18.32Considered Doubtful 13.66 27.11 19.23 37.55

Other DebtsConsidered Good 667.99 487.85Considered Doubtful 0.02 668.01 0.11 487.96

Less : Provision for Doubtful Debts 13.68 19.34

681.44 506.17

Schedule ‘10’: Cash and Bank Balances

(Refer Note 1(b) and 11 on Schedule 20) 31.03.06 31.03.05Rs. Million Rs. Million

Cash-in-Hand 1.42 0.80Cheques-in-Hand – 0.07With Scheduled Banks

On Current Accounts 23.83 34.87On Fixed Deposit Accounts 136.03 120.01On Margin Money Accounts 1.30 1.33

162.58 157.08

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Schedule ‘11’: Loans and Advances

(Refer note 6 on Schedule 20) 31.03.06 31.03.05Rs. Million Rs. Million Rs. Million Rs. Million

Advances recoverable in Cash or in kind or for value to be received

- Unsecured- Considered Good 336.66 337.40- Considered Doubtful 14.76 8.17Less : Provision for Doubtful Advances 14.76 336.66 8.17 337.40

Deposits with Excise Authorities 43.68 36.68Advance Tax [Net of Provision Rs. 322.01 Million 16.26 –(Previous year Rs. Nil Million)] Other current assets 5.94 5.97

402.54 380.05

Schedule ‘12’: Current Liabilities

(Refer Note 5 on Schedule 20) 31.03.06 31.03.05Rs. Million Rs. Million Rs. Million Rs. Million

Acceptances 86.04 57.54Sundry Creditors Trade:— Total outstanding dues to small scale

industrial undertakings @ 119.42 53.30— Total outstanding dues of creditors other

than small scale industrial undertakings 348.84 468.26 316.61 369.91Sundry Creditors Non Trade:— Total outstanding dues to small scale

industrial undertakings @ 0.26 0.34— Total outstanding dues of creditors other

than small scale industrial undertakings 142.51 142.77 119.00 119.34Interest accrued but not due 0.01 6.88Deposit from Customers 12.76 12.46Other Liabilities 46.43 42.79Book Overdraft 44.38 20.49Investor Education & Protection Fund shall be

credited by the following amount :Unclaimed Dividend 4.29 3.71Unpaid Matured Deposits 0.85 0.88

805.79 634.00

@ The above information has been compiled in respect of parties to the extent they could be identified as Small Scale Industrial Undertakings on the basis of information available with the Company.

Schedule ‘13’: Provisions

31.03.06 31.03.05Rs. Million Rs. Million

Proposed Dividend 28.73 32.32Proposed Corporate Dividend Tax 4.03 4.53Provision for Taxation [Net of Advance Tax Rs.Nil Million – 6.45(Previous Year Rs.228.51 Million)]Provision for Leave Encashment (Refer Note 10 on Schedule 19) 16.27 12.42 Others (Refer Note 13 on Schedule 19 and Note 12 on Schedule 20) 25.19 27.32

74.22 83.04

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Schedule ‘14’: Other Income

31.03.06 31.03.05Rs. Million Rs. Million Rs. Million Rs. Million

Income from Investments 0.62 0.72Interest on : Loans to Staff 2.27 1.25 Deposits 8.71 13.27 [Tax Deducted at Source Rs.1.92 Million

(Previous Year Rs. 2.35 Million)] Advances to Suppliers 0.66 11.64 1.62 16.14 [Tax Deducted at source Rs. 0.05 Million

(Previous Year Nil)]

Sale of Scrap 65.74 48.73Rent 5.78 5.74[Tax Deducted at Source Rs.1.14 Million

(Previous Year Rs.1.05 Million)]Insurance Claim (Refer Note 6 on Schedule 19) 1.91 1.00Sales Tax Deferral (Refer Note 7 on Schedule 20) 36.73 33.75Excess Provision/Liabilities Written back 3.95 15.86Miscellaneous Income 18.26 17.69

144.63 139.63

Schedule ‘15’: Cost of Materials31.03.06 31.03.05

Rs. Million Rs. Million Rs. Million Rs. Million

Traded Finished GoodsOpening Stock 0.62 0.50Add: Purchases 11.66 19.22

12.28 19.72Less: Closing Stock 1.63 10.65 0.62 19.10

Manufactured GoodsRaw Material, Components andPacking Materials Consumed

Opening Stock 184.08 159.07Add: Purchases 3,372.24 2,839.23

3,556.32 2,998.30

Less: Closing Stock 219.02 3,337.30 184.08 2,814.22

(Increase)/Decrease in Work-in-Processand Finished Goods

Opening Stock Work-in-Process 78.47 49.03 Finished Goods 121.26 99.96

199.73 148.99 Less: Closing Stock

Work-in-Process 82.17 78.47Finished Goods 135.63 121.26

217.80 (18.07) 199.73 (50.74)

Stores and Spares Consumed 133.72 73.12

3,463.60 2,855.70

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Schedule ‘16’: Personnel Expenses

(Refer Note 10 on Schedule 19 and Notes 31.03.06 31.03.0513 and 17 on Schedule 20) Rs. Million Rs. Million

Salaries, Wages & Bonus 294.86 242.92Contribution to Provident and Other Funds 36.11 32.25Staff Welfare 52.16 44.62

383.13 319.79

Schedule ‘17’: Manufacturing, Administration, Selling & Distribution and Other Expenses

(Refer Note 13 on Schedule 20) 31.03.06 31.03.05Rs. Million Rs. Million

Power & Fuel 122.82 108.98Rent 16.60 15.36Rates & Taxes 35.46 19.80Insurance 17.95 16.67Repairs & Maintainance—Buildings 9.58 8.84—Machinery 61.45 58.29—Others 22.37 20.68Freight 64.93 51.03Advertisement & Sales Promotion 36.90 26.94Discounts 88.95 53.34Warranty 41.57 32.36Provision for Doubtful Debts/Advances 8.40 6.78Royalty 7.99 7.02Travelling & Conveyance 72.61 66.40Printing & Stationery 8.36 8.06Legal and Professional 76.44 63.07Communication 16.18 13.95Bank Charges 3.33 3.20Loss on Assets Sold / Scrapped (Net) 1.49 0.26Foreign Exchange Fluctuations (Net) (Refer Note 8 on Schedule 19) 1.24 1.25Premium on Foreign Exchange Fluctuation 1.21 –Directors’ Fees 0.14 0.14Miscellaneous Expenses 31.98 28.60

747.95 611.02

Schedule ‘18’: Interest

31.03.06 31.03.05Rs. Million Rs. Million

Term Loans 40.49 39.66Working Capital Accounts 17.74 13.17Fixed Deposits 3.82 9.36Others 20.66 7.84

82.71 70.03

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Schedule ‘19’: Statement on Significant Accounting Policies

1. Accounting ConventionThe financial statements have been prepared in accordance with applicable accounting standards in India andin accordance with the historical cost convention.

2. Fixed Assets and Depreciation

a) Fixed Assets are stated at their original cost (net of CENVAT where applicable) including freight, duties,customs and other incidental expenses relating to acquisition and installation. Interest and other financecharges paid on loans for the acquisition of fixed assets are apportioned to the cost of fixed assets till theyare ready for use.

b) Expenditure incurred during the period of construction is carried forward as capital work-in-progress, andon completion the costs are allocated to the respective fixed assets.

c) Foreign exchange fluctuation on payment/restatement of long term liabilities related to fixed assets areadjusted against the historical cost of such assets. Depreciation on such adjusted amounts is charged overthe residual useful life of the assets.

d) Depreciation has been provided on straight-line method at the rates and in the manner specified underSchedule XIV of the Companies Act, 1956, except for hardware and software which are being depreciatedover a period of three years.

e) The leasehold land is amortised over the lease period.

f) Buildings on land taken on lease are amortised over the lease period or useful life whichever is lower.

g) Technical know-how fee is amortised over a period of 6 years or period of agreement, which ever is earlier.

h) Based on technical evaluation, tools and dies are written off over a period upto eight years.

i) VSAT communication equipment is depreciated over a period of 5 years.

3. InvestmentsLong term investments are stated at cost. Provision, if any, is made for permanent diminution in the value ofinvestments.

Current investments are stated at cost or fair value, whichever is lower.

4. InventoriesRaw material and stores and spares are valued at cost. Other inventories are valued at lower of cost or netrealisable value. Cost is arrived on a weighted average basis and includes applicable manufacturing overheads.Due allowance being made for obsolete and slow moving items based on estimated useful life.

5. Capital GrantsGrants received from the Government are retained as Capital Reserve until the conditions stipulated in therespective schemes are complied with. However, the grants related to specific assets are deducted from thegross value of such assets.

6. Revenue and Expense RecognitionRevenue from sale of goods is accounted for on the basis of despatch of goods. Sales are inclusive of exciseduty and net of sales return and trade discounts.

Claims recoverable on account of insurance are accounted for as and when the amounts recoverable can bereasonably determined.

Expenses are accounted for on an accrual basis.

7. TaxationTax expense (tax saving) is the aggregate of current year tax and deferred tax charged (credited) to the Profitand Loss Account for the year. However, in the year of transition the accumulated deferred tax liability at thebeginning of the year has been recognised with a corresponding charge to the General Reserve in accordancewith Accounting Standard-22 “Accounting for Taxes on Income” and measured at the tax rates that have beenenacted or substantially enacted by the Balance Sheet Date

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a) Current year charge

The provision for taxation is based on assessable profits of the company as determined under the IncomeTax Act, 1961. Provisions are recorded as considered appropriate for matters under appeal due todisallowances or for other reasons.

b) Deferred Tax

The Company provides for deferred tax using the liability method, based on the tax effect of timingdifferences resulting from the recognition of items in the financial statements and in estimating its currentincome tax provision.

Deferred Tax Assets arising from temporary timing differences are recognised to the extent there isreasonable certainty that the assets can be realised in future.

8. Foreign Currency TransactionsForeign currency transactions, other than those covered by forward contracts, are accounted for at the exchangerate prevailing on the transaction date. Gain / loss arising out of fluctuation in rate between transaction dateand settlement date in respect of revenue items are recognised in the Profit and Loss Account and in case offixed assets are adjusted to the carrying cost of the respective assets.

In respect of transactions covered by forward exchange contracts, other than relating to fixed assets, thedifference between the contract rate and the spot rate on the date of the transaction is amortised as expenseor income over the life of the contract.

Foreign currency assets and liabilities are restated at the exchange rate prevailing at the year end and theoverall net gain / loss is adjusted to the Profit and Loss Account, except in the case of liabilities relating to theacquisition of fixed assets which are adjusted to the carrying cost of the respective assets.

9. Research and DevelopmentEquipment purchased for research and development is capitalised when commissioned and included in thegross block of fixed assets. Revenue expenditure on research and development is charged in the period inwhich it is incurred.

10. Retirement BenefitsRegular contributions are made to Provident fund and charged to revenue.

The Company contributes to group policies with Life Insurance Corporation of India Ltd. to cover its liabilitytowards employee gratuity and superannuation.

Liability towards leave encashment has been provided for on the basis of actuarial valuation as on the date ofthe Balance Sheet.

11. Borrowing CostBorrowing Costs that are directly attributable to the acquisition, construction or production of qualifying assetsare capitalised till the month in which the asset is ready to use as part of the cost of that asset. Interest onworking capital is charged to revenue accounts.

12. LeasesLeases of Fixed assets where the Company assumes substantially all the benefits and risks of ownership areclassified as finance leases. Finance leases are capitalised at the estimated present value of the underlyinglease payments. Each lease payment is allocated between the liability and finance charges so as to achievea constant rate on the finance balance outstanding. The corresponding rental obligations, net of financecharges, are included in payables. The interest element of the finance charge is charged to the Profit andLoss Account over the lease period.

Lease rentals in respect of assets taken on “Operating Lease” are charged to the Profit and Loss Account onstraight line basis over the lease term.

13. WarrantyProvision for warranty is made as per technical evaluation.

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Schedule ‘20’: Notes forming part of Accounts

1. (a) The Term Loans from banks of Rs. 224.60 million (Previous Year Rs. 351.11 million) are secured asfollows:

i) Rs. 99.60 million (Previous year Rs. 150.00 million) from Standard Chartered Bank is secured byhypothecation of all present and future movable Plant and Machinery of the Company and PariPassu charge over Land and Buildings at Pune and Mulund.

ii) Rs. 125.00 million (Previous year Rs. 175.00 million) from State Bank India is secured by hypothecationof entire fixed assets of the company excluding Land and Buildings

iii) Rs. Nil (Previous year Rs. 26.10 million) from Standard Chartered Bank is secured by hypothecationof all present and future movable Plant and Machinery of the Company and Pari Passu charge overLand and Buildings at Pune, Nashik and Mulund.

(b) The Working capital facilities amounting to Rs. 211.40 million (Previous year Rs. 121.93 million) aresecured by hypothecation of stocks, spares and book debts and balance amounting to Rs. 39.20 million(Previous Year Rs. Nil) are secured by Fixed Deposit of Rs. 40.0 million.

2. (a) Secured Term Loan from banks due for repayment within a year are Rs. 100.40 million (Previous yearRs.126.11 million)

(b) Fixed Deposits due for repayment within a year are Rs.1.62 million (Previous year Rs. 35.74 million).

(c) Sales Tax Deferral loan due for repayment within a year are Rs. 2.62 million (Previous year Rs. 11.62million)

(d) Loans and Advances Others due for repayment within a year are Rs. 7.41 million (Previous year Rs.11.22million)

3. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.19.69

million (Previous year Rs. 23.74 million).

4. (a) Contingent Liabilities are in respect of:31.03.06 31.03.05

Rs. Million Rs. Million

(i) Bills discounted, Letters of Credit and bank guarantees 2.05 1.61(ii) Income Tax, Sales Tax and Excise duty

against which appeals are pending 108.80 78.94(iii) Claims not acknowledged as debts 5.99 8.10(iv) Others 0.82 –

(b) Particulars of dues of Sales Tax, Income Tax and Excise Duty as at March 31, 2006, which have not beendeposited on account of dispute.

Name of the Nature of dues Amount Period to which Forum where thestatute (Rs. Million) the amount relates dispute is pending

Sales Tax Act Tax Liability for ‘Form 31’ 0.18 2002-2003 Dy. Comm-Appeal(I)-Lucknow

Sales Tax Act For ‘D Forms’ & ‘F Forms’ 0.29 1999-2000 Trade tax Tribunal-UP,Bench-I, Lucknow

Sales Tax Act Late filing of return 0.13 Oct ’99, Jan ’00, Trade tax Tribunal-UP,Feb ’00 & Mar ‘00 Bench-I, Lucknow

Sales Tax Act For ‘C Forms’ & ‘F Forms’ 0.23 2000-2001 Joint Comm-Appeal-Lucknow

Sales Tax Act For ‘D Forms’ 0.07 2000-2001 Dy. Comm-Appeal(I)-Lucknow

Sales Tax Act For wrong declaration 0.14 1999-2000 Dy. Comm-Asst -Lucknowof sales

Sales Tax Act For ‘D Forms’ 0.03 2002-03 Sales Tax Office, HyderabadSales Tax Act Tax Liability for ‘Form 31’ 0.07 2000-2001, 2002-2003 Tribunal Ghaziabad.Sales Tax Act Tax Liability for ‘Form 31’ 0.58 2005-06 Appeal to be filed

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Sales Tax Act Tax on Capital goods 0.38 1996-1997 Assistant Commissioner,Dewas

Sales Tax Act For ‘C Forms’ 1.93 1997-1998 Deputy Commissioner,Indore

Sales Tax Act For ‘C Forms’ 0.05 2003-2004 Sales Tax Office, RanchiSales Tax Act For ‘C Forms’ 0.11 2002-2003 Assisstant Commissioner

Commercial TaxesSales Tax Act Sales return credit 0.09 2001-2002 Assisstant Commissioner,

notes disallowed CuttackCentral Excise Act Service tax on 2.60 Oct’ 1999 CESTAT

technical knowhowIncome Tax Act Disallowance of expenses 14.76 Assessment year Appeal to be filed with

1997-1998 High CourtIncome Tax Act Disallowance of expenses 2.89 Assessment years Income Tax Appellate

1998-1999, 2000-2001 Tribunal& 2002-2003

Income Tax Act Disallowance of expenses 83.59 Assessment year Commissioner of Income Tax2003-2004 (Appeals)

Income Tax Act Disallowance of expenses 0.68 Assessment year Assessing officer2004-2005

5. As ascertained by the Company, Sundry Creditors include an amount of Rs.119.68 million (Previous yearRs. 53.64 million) due to Small Scale Industrial Undertakings (SSI). Details of amounts due to SSI, which isoutstanding for more than 30 days are disclosed in Annexure “A”.

6. Loans and Advances include:

a) Rs. 1.76 million (Previous year Rs. 0.12 million) due from an officer of the company. Maximum amountdue during the year Rs. 1.76 million (Previous year Rs. 0.37 million).

b) Debts due from Private Limited Companies and Firms where any Director is a Director or PartnerRs. 3.37 million (Previous year Rs. 0.34 million).

7. Other Income includes an amount of Rs. 36.73 million (Previous year Rs. 33.75 million) arising from premature repayment of Rs. 13.57 million (Previous year Rs. 28.10 million) against outstanding liability ofRs. 50.30 million (Previous year Rs. 61.85 million) under sales tax deferral scheme.

8. The amount of exchange rate difference in respect of forward exchange contract to be recognised in theProfit and Loss Account for subsequent accounting periods is Rs. Nil (Previous Year Rs. 1.21 million)

9. Segmental Reporting:a) Primary Segment:

The Company operates only in one business segment viz. Auto Components and Parts.

b) Secondary Segment:The company caters mainly to the needs of Indian market and the export turnover being 3.22% of thetotal turnover of the company; there are no reportable geographical segments.

Name of Nature of dues Amount Period to which Forum where thestatute (Rs. Million) the amount relates dispute is pending

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10. In accordance with the Accounting Standard on “Related Party Disclosures” (AS 18), the disclosure in respect of transactions with theCompany’s related parties are as follows:

A. Names of related parties * and description of relationships1. Mr. K.N. Subramaniam - Key Management Personnel2. Mr Arvind Walia (w.e.f January 25, 2006) – Key Management Personnel3. Asia Investments Private Limited - Associate

* As identified and certified by the Management

B. Details of TransactionsRs. Million

Particulars Key Management Personnel Associates

1 Deposits Given - -(-) (80.0)

2 Interest Income - -(-) (9.58)

3 Reimbursement of expenses - 0.04(-) (0.06)

4 Directors’ Remuneration 4.72 -(5.58) (-)

Amount Outstanding

1 Corporate Guarantee - 96.0(-) (120.0)

2 Reimbursement of expenses - 0.01(-) (0.06)

Previous year figures have been given in brackets

11. The company has given a guarantee, supported by pledge of its fixed deposits of Rs. 96.0 million (Previous Year Rs. 120.0 million), toIndusInd Bank in respect of repayment of loans of Rs. 94.08 million (Previous year Rs. 117.60 million) (including interest or other chargesrelated thereto) taken by Asia Investments Private Limited, a shareholder of the Company.

12. The Company has the following provision in the books of account as on 31.03.2006Rs. Million

Description Balance as on Additions during Utilised/Reversed Balance as on01.04.05 the year during the year 31.03.06

Provision for Warranty 27.32 6.21 8.34 25.19

(24.93) (8.13) (5.74) (27.32)

Provision for warranty relates to the estimated (based on management’s technical evaluation) outflow in respect of warranty for productssold by the Company. Due to the very nature of such cost, it is not possible to estimate the timing/uncertainties relating to its outflow.

13. The following expenses incurred on Research and Development are included under respective account heads :Rs. Million

2005-06 2004-05

Personnel Expenses 9.22 14.20Manufacturing, Administration, Selling & Distribution and Other Expenses 10.70 9.71Depreciation 4.91 4.86Total 24.83 28.77

14. Assets on lease on or after April 1, 2001 included in fixed assets, where the company is a lessee under a finance lease

Rs. Million

Minimum Lease Future Finance Present ValuePayments due as at Charge as at 31.03.06

31.03.06

Total 9.49 1.21 8.28(11.85) (1.65) (10.20)

Not later than 1 year 4.17 0.61 3.56(4.61) (0.97) (3.64)

Later than 1 year and not later than 5 year 5.32 0.60 4.72(7.24) (0.68) (6.56)

Previous year figures have been given in brackets

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17. (a) Determination of Net Profit in accordance with Section 349 of The Companies Act, 1956 and commission payable to directors

Rs. Million2005-06 2004-05

Profit before tax as per Profit and Loss Account 152.90 263.26Add: Directors’ Remuneration 6.42 8.38

Directors’ Fees 0.14 0.14Depreciation as per books 157.99 152.31Loss on Assets Sold /Scrapped (Net) 1.49 0.26Voluntary Retirement Scheme — 1.22Provision for Doubtful Debts/Advances 8.40 174.44 6.78 169.09

Less: Deduction under Section 349 and 350Depreciation u/s 350 157.99 152.31

Net Profit under Section 349 169.35 280.04Commission payable to directors:

Whole time 2.12 3.50Non-whole time 1.70 2.80

Total 3.82 6.30

b) Directors Remuneration:Salary 1.16 0.96Company’s Contribution to Provident Fund & Superannuation Fund 0.30 0.26Perquisites 1.14 0.86Commission [See 17(a) above)] 3.82 6.30

Total 6.42 8.38

Note: The aforesaid figure is exclusive of provision for leave encashment, as separate actuarial valuation is not available.

15. Earning per share (EPS)- The numerators and denominators used to calculate Basic and Diluted Earnings per share

2005-06 2004-05– Profit attributable to Equity Shareholders (Rs. million)–(A) 88.44 178.88– Basic/Weighted average number of Equity Shares Outstanding during the year – (B) 71,821,970 7,182,197– Nominal Value of Equity Share 1.00 10.00– Basic/Diluted Earning per Share (Rs.) – (A)/(B) 1.23 24.91

16. The Company estimates deferred tax charge/(credit) using the applicable rate of taxation based on the impact of timing differencesbetween financial statements and estimated taxable income for the current year. The net deferred tax liability as at March 31, 2006 isgiven below:

Rs. Million

Deferred Tax Assets Deferred Tax LiabilitiesDepreciation — 220.11

(—) (238.08) Others 25.32 —

(20.69) (—) Total 25.32 220.11

(20.69) (238.08) Net Deferred Tax Liability — 194.79

(—) (217.39)

Previous year figures have been given in brackets

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18. (A) Particulars in respect of Goods manufactured for Sale/Consumption:

Opening Stock Sales Closing StockProduct Year Unit of

Measure Qty. Rs. Million Qty. Rs. Million Qty. Rs. Million

(i) Shock Absorbers 05-06 Nos. 217,845 53.15 10,942,304 5,270.10 182,153 46.73Struts & Front Forks 04-05 Nos. 188,955 37.11 9,779,376 4,393.22 217,845*** 53.15

(ii) Bimetal 05-06 Tonnes 65.000 6.27 – – 55.940 5.81Strips 04-05 Tonnes 91.000 7.07 62.000 4.03 65.000 6.27

(iii)Bimetal 05-06 Nos. 1,723,949 61.84 8,670,214 333.43 2,299,853 83.09Bearings 04-05 Nos. 1,771,618 55.78 8,994,120 351.00 1,723,949 61.84

(iv) Licensed Capacity*, Installed Capacity and Actual Production:

Product Year Unit of Installed ActualMeasure Capacity Production

a. Shock 05-06 Nos. 14,600,000 9,735,448Absorbers & Struts 04-05 Nos. 13,227,200 8,851,847

b. Front Forks 05-06 Nos. 2,390,000 1,171,16404-05 Nos. 2,049,960 967,341

c. Bimetal Strips 05-06 Tonnes 2,000 1,434.970**04-05 Tonnes 2,000 1,474.000**

d. Bimetal 05-06 Nos. 14,156,250 9,246,118Bearings 04-05 Nos. 13,156,250 8,946,451

Installed capacity is as per a certificate issued by the Management and is not verified by the Auditors being a Technical matter.* Licensing requirement for Automotive parts, including the Company’s products, have been dispensed with effective July 25, 1991.** Out of this production,1444.030 Tonnes was for the captive use of the Company (Previous year, 1438.000 Tonnes)*** Includes scrapped units nil (Previous year 10,922)

(B) Particulars in respect of Purchased Goods–Finished:

Product Year Opening Stock Purchases Sales Closing Stock

Qty. Value Qty. Value Qty. Value Qty. ValueNos. Rs. Million Nos. Rs. Million Nos. Rs. Million Nos. Rs. Million

Shock 05-06 1,034 0.14 16,577 2.54 15,804 3.00 1,807 0.30Absorbers 04-05 1,472 0.19 17,004 2.31 17,442 3.01 1,034 0.14Bearings 05-06 26,965 0.48 427,704 9.12 384,315 10.82 70,354 1.33

04-05 25,720 0.31 920,855 16.91 919,610 24.84 26,965 0.48Others 05-06 – – – – – – – –

04-05 – – – 1.98 – 2.50 – –

19. Consumption of Raw Materials, Components and Packing Materials:

Items Unit of 2005-06 2004-05Measure

Quantity Rs. Million Quantity Rs. MillionA Raw Materials (Basic)

Tubes Meters 16,058,851 631.20 7,824,854 509.36Bright Bars Kgs 3,278,842 161.05 2,938,284 141.03Shock Fluid Litres 1,595,066 66.59 1,419,150 55.06Non-Ferrous Metals Kgs 340,064 63.49 353,773 60.25Steel Strips Kgs 1,194,745 51.29 1,212,756 50.02Others 202.89 171.22

1176.51 986.94

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B ComponentsPressed Parts Nos 182,004,174 454.76 114,666,943 306.65Die Castings Nos. 10,258,314 333.25 5,437,237 250.93Rubber Parts Nos. 62,939,260 331.05 50,424,274 297.57Springs Nos. 42,235,019 308.13 33,561,014 288.97Turned Parts Nos. 21,074,002 113.09 15,609,601 118.13Sintered Parts Nos. 27,269,965 218.94 29,368,439 162.20Forgings Nos. 3,643,241 100.27 1,922,206 60.92Others 301.30 341.91

2,160.79 1,827.28

20. Job work charges included in consumption amount to Rs. 346.29 million (Previous Year Rs. 286.35 million).

21. Value of Imports on CIF basis:

2005-06 2004-05Rs. Million Rs. Million

i) Raw Materials 152.85 117.22ii) Components 20.11 21.84iii) Stores 23.83 18.13iv) Machinery Spares 2.52 0.69v) Capital Goods 24.81 2.53

22. Expenditure in Foreign Currency (On Cash Basis) :

2005-06 2004-05

Rs. Million Rs. Million

i) Foreign Travel 6.87 5.62ii) Technical Services 1.18 –iii) Royalty 6.37 6.69iv) Export Commission 0.73 0.89v) Professional Fees 26.30 4.74vi) Interest on Term Loan – 16.72vii) Others 0.12 0.14

23. Materials, Components and Spares Consumed:

2005-06 2004-05

Particulars Raw Materials & Spares* Raw Materials & Spares*Components Components

% Rs. Million % Rs. Million % Rs. Million % Rs. Million

i) Imported atlanded cost 5.21 173.99 15.27 22.91 5.93 166.70 21.59 21.07

ii) Indigenous 94.79 3,163.31 84.73 127.08 94.07 2,647.52 78.41 76.51

100.00 3,337.30 100.00 149.99 100.00 2,814.22 100.00 97.58

iii) *Consumption for repairs to machinery(included in the figures stated above) 16.27 24.46

Unit of 2005-06 2004-05Measure

Quantity Rs. Million Quantity Rs. Million

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24. Remittances in foreign currency on account of dividend to Non-Resident Shareholders:

2005-06 2004-05

i) Number of Shareholders 2 2ii) Number of Shares 1,484,398 1,484,398iii) Amount remitted (Rs. million) 11.13 8.91iv) Relating to year ending March ’05 & March ’04 &

Interim for 2006 Interim for 2005

25. Auditors’ Remuneration:

Particulars 2005-06 2004-05Rs. Million Rs. Million

For Audit fee 1.55 1.55For Certification & other charges 0.82 0.57Expenses reimbursed 0.27 0.20

26. Earnings in Foreign Exchange:Particulars 2005-06 2004-05

Rs. Million Rs. Million

FOB Value of Exports 156.19 143.32

27. Previous year figures have been re-grouped/reclassified wherever necessary to conform to current year’s classification.

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28. Additional information as required under Part IV of Schedule VI to the Companies Act, 1956Balance Sheet Abstract and Company’s General Business Profile

I. Registration Details

Registration No. State Code

Balance Sheet Date

Date Month Year

II. Capital Raised during the Year (Amount in Rs. Million)

Public Issue Rights Issue

Bonus Issue Private Placement

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

Total Liabilities Total Assets

Sources of Funds

Paid-Up Capital Reserves & Surplus

Secured Loans Unsecured Loans

Deferred Tax Liabilities/(Assets)

Application of FundsNet Fixed Assets Investments

Net Current Assets Miscellaneous Expenditure

Accumulated Losses

IV. Performance of the Company (Amount in Rs. Million)

Total Income Total Expenditure

Profit/(Loss) Before Tax Profit/(Loss) After Tax

Earnings Per Share in Rs. Dividend Rate %

2 5 — 1 5 7 3 5

3 1 0 3

1 1

2 2 2 2 . 4 1 2 2 2 2 . 4 1

7 1 . 8 5

4 7 5 . 2 1

9 2 2 . 9 2

5 5 7 . 6 4

8 3 5 . 7 1

1 3 7 6 . 9 3

N I L

9 . 7 7

+

1 . 2 3

1 5 2 . 9 0 + +

5 6 0 9 . 0 7

7 0

8 8 . 4 4

2 0 0 6

5 7 6 1 . 9 7

1 9 4 . 7 9

N I L

N I L

N I L

N I L

N I L

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V. Generic Names of Three Principal Products / Services of the Company (as per monetary terms)

Item Code No.(ITC Code)

Product Description

Item Code No.(ITC Code)

Product Description

Item Code No. (ITC Code)

Product Description

Signature to Schedule ‘1’ to ‘21’.

B E A R I N G S

F R O N T F O R K S

8 7 1 4 1 9 - 0 0

M C P H E R S O N S T R U T S

8 7 0 8 8 0 - 0 0

S H O C K A B S O R B E R S

8 4 8 3 3 0 - 0 0

This is the Balance Sheet referred The Schedules referred to above formto in our report of even date. an integral part of Balance Sheet.

V. NijhawanPartnerMembership Number - F87228For and on behalf ofPRICE WATERHOUSE & CO.

Place: MumbaiDated: May 23, 2006

MANOJ TULSIANFinancial Controller &Company Secretary

DEEP C. ANANDChairmanK.N. SUBRAMANIAMManaging DirectorR.J. TARAPOREVALAC.S. PATELRAVI K SINHAJAITHIRTH RAOPADMINI KHARE KAICKERARVIND WALIADirectors

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31.03.06 31.03.05Rs. Million Rs. Million Rs. Million Rs. Million

A. Cash flow from operating activities:Net profit before tax 152.90 263.26

Adjustments for:Depreciation 157.99 152.31Interest Expense 82.71 70.03Interest Income (11.64) (16.14)Income from Investment - Dividends (0.62) (0.72)Loss on Assets Sold / Scrapped (Net) 1.49 0.26Provision for leave encashment 3.85 1.22Provisions - Others (2.13) 2.41Provision for Doubtful Debts/Advances 16.64 6.78Sales Tax Deferral Income (36.73) (33.75)Excess provision written back (3.95) (1.98)Bad debts written off against provision (8.24) (2.05)

199.37 178.37Operating profit before working capital changes

Adjustments for changes in working capital :- (Increase)/Decrease in Sundry Debtors (177.09) 14.95- (Increase)/Decrease in Loans and Advances (12.82) 49.81- (Increase)/Decrease in Inventories (57.76) (95.29)- (Increase)/Decrease in Trade and Other Payables 182.06 (65.61) 47.13 16.60

Cash generated from operations 1,441.00 286.66 458.23- Direct Taxes Paid (107.80) (94.05)

Net cash from operating activities 178.86 364.18

B. Cash flow from Investing activities:

Purchase of fixed assets (168.20) (103.58)(Increase)/ Decrease Capital Work in Progress (23.90) 3.24Proceeds from Sale of fixed assets 0.94 1.25Interest Received (Revenue) 9.67 16.14Dividend Received 0.62 0.72

Net cash used in investing activities (180.87) (82.23)

Cash Flow StatementPrepared pursuant to Clause 32 of Listing Agreementfor the year ended March 31, 2006

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31.03.06 31.03.05Rs. Million Rs. Million Rs. Million Rs. Million

C. Cash flow from financing activities:Repayment of long term borrowings (153.12) (298.85)Proceeds from long term borrowings 68.24 242.19(Repayment)/Proceeds of Fixed Deposit (36.52) (93.42)Increase/(Decrease) in Working Capital facilities (Net) 128.67 (51.13)Availment of short term borrowings (Net) 150.02 176.97Interest Paid (88.94) (75.82)Dividend Paid (53.29) (40.00)Corporate Dividend Tax Paid (7.55) (5.57)

Net cash from/(used) in financing activities 7.51 (145.63)

Net Increase in Cash & Cash Equivalents 5.50 136.32

Cash and cash equivalents as at Opening 157.08 20.76

Cash and cash equivalents as at Closing 162.58 157.08

Cash and cash equivalents includesCash-in-Hand 1.42 0.80Cheques-in-Hand – 0.07With Scheduled Banks On Current Accounts 23.83 34.87 On Fixed Deposit Accounts 136.03 120.01 On Margin Money Accounts 1.30 1.33

162.58 157.08Notes :

1. The above Cash flow statement has been prepared under the indirect method set out in AS-3 issued by the Institute ofChartered Accountants of India. 28.73

2. Figures in brackets indicate cash outgo.3. Previous period figures have been regrouped and recast wherever necessary to conform to the current period classification.4. Cash and cash equivalents as at March 31, 2006 include fixed deposits and margin money with banks of Rs.141.59 million

(Previous year Rs. 125.04 Million) not available for use by the company. (Refer notes 1(b) and 11 on Schedule 20)

This is the Cash Flow Statement referred The Schedules referred to above formto in our report of even date. an integral part of Balance Sheet.

V. NijhawanPartnerMembership Number - F87228For and on behalf ofPRICE WATERHOUSE & CO.Chartered Accountants

Place: MumbaiDated: May 23, 2006

MANOJ TULSIANFinancial Controller &Company Secretary

DEEP C. ANANDChairmanK.N. SUBRAMANIAMManaging DirectorR.J. TARAPOREVALAC.S. PATELRAVI K SINHAJAITHIRTH RAOPADMINI KHARE KAICKERARVIND WALIADirectors

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AMOUNTS DUE TO SMALL SCALE INDUSTRIES UNDERTAKINGS OUTSTANDING FOR OVER 30 DAYS

1 AARESS ENTERPRISES 0.42

2 ANIRAJ ENGG.& CONSULTANTS 1.06

3 ANJAL ENGINEERING 0.47

4 ANSH ENGINEERS 0.43

5 ARJUN AUTO PVT LTD 0.32

6 ASHAPURA RUBBER UDYOG 2.02

7 B C L SPRINGS 0.05

8 BIJOU ENTERPRISES 0.01

9 BRAHANS RUBBER PVT LTD 0.50

10 BYMER ELASTOMERS 1.26

11 CAMATA ENTERPRISES 1.61

12 CHAMUNDI DIE CAST PVT LTD 3.30

13 DEEKAY ENTERPRISES 0.18

14 DEEP ENGG. & REFRIGERATION 0.27

15 DELITE ENTERPRISES 3.92

16 DELTA MANUFACTURING CO 2.93

17 DEVKI AUTO INDUSTRIES PVT LTD 0.66

18 DEWAS HYDROQUIPS PVT.LTD. 0.02

19 DHAM FASTNERS 0.08

20 DITISHA ENGINEERING PVT LTD 0.59

21 ELITE PACKERS & DISTRIBUTORS 0.01

22 ESDEE ENGINEERING WORKS 0.45

23 ESPEE ENGINEERS 0.04

24 FIBRO - FAB, INDORE 0.09

25 FLEXIBLE PACKING INDUSTRIES 0.56

26 G B INDUSTRIES 0.04

27 G B RUBBER PRODUCTS 0.03

28 G.B.FORGE & FASTENERS 7.48

29 GLOBAL PACKAGING 1.34

30 GOLDY PRECISION STAMPINGS 5.37

31 GOLDY PRESS TOOL PVT LTD 1.43

32 GOMANTAK PRESS TOOLS PVT LTD 3.81

33 GOWELL RUBBER INDUSTRIES 2.93

34 GRAUER & WEIL (INDIA) LTD 7.54

35 GURUDEV SPRINGS 0.12

36 HARYANA PLASTICS INDUSTRIES 0.09

37 HYPERTECH ELASTOMERS 0.87

38 IMANES PVT LTD 0.54

39 INDUSTRIAL PLASTIC PACKERS 0.02

40 INNOVA RUBBERS PVT LTD 1.15

41 INTERNATIONAL ENGINEERS 0.28

42 JAYANT ENTERPRISES 0.36

43 K C IRON & STEELS PVT LTD 0.01

44 KAMAL RUBPLAST INDUS PVT LTD 0.58

45 KETAN INDUSTRIES 0.21

52 KIRON INDUSTRIES 0.06

55 KIRON INDUSTRIES 0.01

58 KUN-CHEM PRETREATMENT PVT LTD 0.89

59 KUNDAN INDUSTRIES LTD 2.53

60 LAKSHMI PRASANNA PRECITEC 0.61

61 LAXMI PACKING INDUSTRIES 0.01

62 LEO ENGINEERS 0.04

63 LOGWELL FORGE LTD 0.02

64 LUCKY ENTERPRISES 0.04

65 M K INDUSTRIES 0.09

66 M V ENGG INDUSTRIES 0.43

67 M.S.INDUSTRIAL COMPONENTS 0.64

68 MACKS INDUSTRIES 0.19

69 MANJREKAR INDUSTRIES 0.81

S. NAME OF THE SSI AMOUNT OUTSTANDINGNo. Rs. MILLION

S. NAME OF THE SSI AMOUNT OUTSTANDINGNo. Rs. MILLION

Annexure - A

70 MARPOL CHEMICAL LTD 0.39

71 MARPOL PVT LTD 0.70

72 METAL ALLOYS (INDIA) 7.77

73 METCUT TOOLINGS PVT. LTD. 0.84

74 MFPL PRODUCTS LTD 0.33

75 MICRON INDUSTRIES 0.16

76 MICRON SURFACE TREATERS 0.24

77 MINI INDUSTRIES 0.34

78 MOLDED DIMENSIONS 0.92

79 MOPESU ENGINEERS 0.24

80 N P ENTERPRISES 2.02

81 NASHIK AUTOTECH PVT LTD 4.50

82 NITESH UDYOG 0.49

83 O.K.AUTO COMPONENTS PVT LTD 1.25

84 PACE TECHNIQUES PVT LTD 0.03

85 PACO RUBBER INDUSTRIES PVT LTD 0.99

86 PANKAJ INDUSTRIES 0.14

87 POLITE METALS PVT LTD 0.07

88 POLY FLUORO LTD. 0.11

89 POLY PACK 0.12

90 POOJA ENTERPRISES 0.02

91 POOJA FORGE PVT LTD 0.17

92 PRAGATI ENGINEERING COMPANY 1.19

93 PRAGEET ENGINEERS 0.23

94 PRAXAIR INDIA PVT LTD 0.06

95 PREETI ENGG WORKS 0.85

96 PRINTEK 0.08

97 RAMESH AND COMPANY 0.03

98 RAVI PACKAGES 0.98

99 REVA ENTERPRISES 0.56

100 REVA TRANSMISSIONS 3.11

101 RIGHT TIGHT FASTNERS P. LT 0.16

102 ROLLON BEARING PVT LTD 0.13

103 S R ENTERPRISES 0.13

104 S S INDUSTRIES 0.01

105 S V ENTERPRISES 0.20

106 SAH PETROLEUMS LIMITED 0.55

107 SAI COATERS AND FABRICATORS 0.82

108 SAI ENGINEERS 1.27

109 SANGEETA PLASTIC & ENGG 0.02

110 SARGO TOOLS 0.08

111 SEALTITE DICHTUNGS PVT LT 3.38

112 SHIV OM OIL TRADERS 0.03

113 SHREE DURGA UDYOG 0.82

120 SPECTRUM ALLLIED 0.04

123 SUPERFLEX RUBBERS 0.59

126 THAKUR INDUSTRIES 0.11

127 TURN -O-PRESS INDUSTRIES 0.01

128 U K ENGINEERING WORKS 0.76

129 U M S ENGINEERING WORKS 0.21

130 UMANG ENGINEERING 0.01

131 V K ENTERPRISES 0.04

132 VAISHANAVI AUTO PVT LTD 6.73

133 VIJAY ENTREPRISES 0.05

134 VYANKTESH PLASTICS & PACKAGINGS 0.24

135 YALE INDUSTRIES 0.01

TOTAL 115.32

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Annexure to Directors’ Report

Information required 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 March 31, 2006

Name Age Remuneration Designation Nature of Duties Qualification Experience Date of Last Employement HeldYears Rs. Mill Years Joining Designation Name of Employer

Mr. K.N. Subramaniam 52 4.40 Managing Director Chief Executive B.Tech., P.G.D.B.M. 27 Feb’2001 President Perfect Circle Victor Ltd.Officer IIM, Ahmedabad

Mr P N Bhargava* 58 0.73 Vice President Head After market B.Sc. MBA 34 May’1992 General Perfect Circle Victor Ltd.(Marketing) Manager

Mr J Narayanan* 41 3.20 RCD Operations Operations B.Tech. IIT, P.G.D.B.M. 15 May’2003 General General MotorsVice President IIM, Ahmedabad Manager

New BusinessDevelopment

Mr Arvind Walia 52 2.93 President & Chief Operations ACA. MBA 26 June’1985 Deputy Escorts LimitedOperating Officer Manager

FinanceMr Arvind Nanda 53 2.81 Vice President Operations B.E. (Production 25 Sep’2004 Joint The Indian

(Engine Bearings) (Engine Bearings) Engineer) Managing Seamless GroupDirector

* In employment for part of the year.

Notes : (1) The nature of employment is contractual. (2) Remuneration as shown above includes salary, allowances, commission, leave travel allowance, Company’s Contribution to Provident Fund and Superannuation Fund,

expenditure incurred by the Company on accomodation, transport, insurance, medical, club membership, Gratuity paid and contribution to Gratuity Fund on the basis ofactuarial valuation as separate figures are not available. Wherever the actual costs are not ascertainable, the monetory value of the prequisites as per Income Tax Rules,1962 has been considered.

For and on behalf of the Board

Mumbai Deep C AnandDated : May 23, 2006 Chairman

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