Annual Report 2007 - ABC Bearings Mahindra Bank ... dividend warrants for the financial years 2003-04 to 2005-06 are ... to present the Forty-sixth Annual Report with the Audited Statement

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CMYK

CMYK

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BOARD OF DIRECTORS S.M. Patel - Chairman

P.M. Patel - Managing Director

T.M. Patel - Executive Director

C.U. Shah

Y.H. Malegam

S.K. Diwanji

V.C. Vaidya

Jal R. Patel

C.E.O. B. N. Vidholia

COMPANY SECRETARY S.B. Desai

AUDITORS Parikh & ShahChartered Accountants

COST AUDITORS B.J.D Nanabhoy & Co.Cost Accountants

SOLICITORS Desai & DiwanjiAdvocates & Solicitors

BANKERS Bank of Baroda

Corporation Bank

UTI Bank Ltd.

Kotak Mahindra Bank Ltd.

The Honkong and Shanghai Banking Corporation Ltd.

REGISTERED OFFICE 402-B, Poonam Chambers,Dr. Annie Besant Road, Worli, Mumbai 400 018.Phone: 022–24964500, 24964501, 56608851Fax : 022-24950527 E-mail: [email protected]

REGISTRARS & Bigshare Services Pvt. Ltd.TRANSFER AGENTS E-2, Ansa Industrial Estate, Sakivihar Road, Saki Naka,

Andheri (E), Mumbai 400 072. Tel.: 022-28470652/28470653Fax: 022-28475207 E-mail: [email protected]

WORKS 1. Plot No.1-B, GIDC Industrial Estate,Bharuch - 392 015, Gujarat State.Phone: 02642– 248222/3/4, 246353Fax : 02642– 248221, 247591E-mail: [email protected]

2. Plot No.109-B, GIDC Industrial Estate,Bharuch - 392 015, Gujarat State.

3. Pandit Jawaharlal Nehru Marg, Lonavla 410 401Maharashtra State.

CONTENTS PAGE NO.

Notice....................................................................................................................................................................... 2

Directors’ Report .................................................................................................................................................... 5

10 Years’ Highlights ............................................................................................................................................... 7

Corporate Governance Report .............................................................................................................................. 8

Management Discussion & Analysis ..................................................................................................................... 15

Auditors’ Report ...................................................................................................................................................... 16

Balance Sheet ........................................................................................................................................................ 18

Profit and Loss Account ......................................................................................................................................... 19

Schedules 1 to 16 ................................................................................................................................................... 20 - 29

Cash Flow Statement ............................................................................................................................................. 30

Balance Sheet Abstract and Company’s General Business Profile ................................................................... 31

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ABC Bearings Limited

NOTICE

NOTICE is hereby given that the Forty-sixth Annual General Meeting of the Members of ABC Bearings Limited will beheld on Tuesday, the 24th July, 2007 at 4.30 p.m. at Hall of Culture, Nehru Centre, Dr. Annie Besant Road, Worli,Mumbai – 400 018, to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the Audited Balance Sheet of the Company as at 31st March, 2007 and the Profit andLoss Account for the year ended on that date and the Reports of the Directors and the Auditors thereon.

2. To declare dividend on Equity Shares.

3. To appoint a Director in place of Mr. C.U. Shah, who retires by rotation and being eligible, offers himself forre-appointment.

4. To appoint a Director in place of Mr. Y.H. Malegam, who retires by rotation and being eligible, offers himself forre-appointment.

5. To appoint Auditors and to fix their remuneration.

SPECIAL BUSINESS:

6. To consider and, if thought fit, to pass with or without modifications, the following resolution as an ORDINARYRESOLUTION:-

“RESOLVED THAT pursuant to provisions of Sections 198, 269, 309, 310 and other applicable provisions, if any, ofthe Companies Act, 1956, the Company hereby approves the re-appointment of Mr. T.M. Patel as Executive Directorof the Company for a period of five years with effect from 1st February, 2008, on the terms and conditions includingremuneration as are set out in the draft Agreement to be entered into by the Company with him, which agreement ishereby specifically sanctioned with authority to the Board of Directors to alter and vary the terms and conditions ofthe said appointment and/or Agreement, in accordance with Schedule XIII to the Companies Act, 1956, and/or anyamendments and/or modifications including any guidelines or notifications on managerial remuneration which maybe issued or any rules that may be prescribed by the Central Government thereunder from time to time and acceptableto Mr. T.M. Patel or as may be varied by the General Meeting.”

“RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to vary and/oralter and/or modify the terms and conditions relating to remuneration, commission payable and perquisites to beprovided for Mr. T.M. Patel as Executive Director of the Company in accordance with any change that may be effectedfrom time to time in Schedule XIII to the Companies Act, 1956, if any, any amendments and/or modifications includingany guidelines or modifications as may be made by the Central Government from time to time.”

“RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to take such stepsas may be necessary to give effect to this resolution.”

NOTES:

1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead ofhimself and the proxy need not be a member of the Company. The instrument of proxy should, however be depositedat the registered office of the Company not less than forty-eight hours before the commencement of the meeting.

2. An Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956, relating to the Special Businessto be transacted at the meeting is annexed hereto.

3. The Register of Members and Share Transfer Books of the Company will be closed from Tuesday, the 17th July,2007 to Tuesday, the 24th July, 2007 (both days inclusive).

4. i) Pursuant to Section 205A of the Companies Act, 1956, the unclaimed dividend upto the financial year ended31st March, 1998 has been transferred to Investor Education and Protection Fund (IEPF) established underSection 205C of the Companies Act, 1956.

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ii) Those members who have not encashed the dividend warrants for the financial years 2003-04 to 2005-06 arerequested to return the time barred dividend warrants to the Company’s registered office at 402-B, PoonamChambers, Dr. Annie Besant Road, Worli, Mumbai – 400018 for issue of duplicate dividend warrant.

5. As per SEBI’s Notification dated 16th February, 2000, the equity shares of the Company have been compulsorilydematerialised and sale/purchase of the same is required to take place in dematerialised form only. You are advisedto get your shares dematerialised through NSDL or CDSL. They have allotted ISIN Number INE 779A01011. Membersare requested in their interest, to please return the physical certificates through their Depository Participants (DP).

6. The Securities and Exchange Board of India has made it mandatory for all companies to use the bank accountdetails furnished by the depositories/members for depositing dividend or payment through Electronic Clearing Service(ECS) to investors wherever ECS and bank details are available, for distribution of dividend.

7. Members seeking any information with regard to Accounts are requested to write to the Company at least 10 days inadvance so as to enable the Company to keep the information ready.

8. Members are requested to send all future correspondence in respect of their change of address, transfer of shares orany other query, directly to the Share Transfer Agents at the following address: -

BIGSHARE SERVICES PVT. LTD. Tel.: 022-28470652|28470653E-2, ANSA INDUSTRIAL ESTATE, Fax: 022-28475207SAKIVIHAR ROAD, SAKI NAKA, E-mail: [email protected] (E), MUMBAI-400 072. Website: www.bigshareonline.com

9. Members are requested to quote their Folio/DP ID Number(s) in all correspondence with the Company’s Share TransferAgents.

10. Members/Proxy should bring the attendance slip duly filled-in for attending the meeting.

11. Members are requested to bring their copy of Annual Report to the Meeting.

By Order of the Board of Directors

Registered Office:

402-B, Poonam Chambers,Dr. Annie Besant Road,Worli, Mumbai – 400 018. S.B. Desai

Company Secretary

Date: 11th May, 2007.

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EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIESACT, 1956.

Item No.6:

The Directors have at their meeting held on 11th May, 2007, re-appointed Mr. T.M. Patel as Executive Director, for a furtherperiod of 5 years with effect from 1st February, 2008, on the following terms and conditions:

a) Salary: Rs.4,90,000/- (Rupees Four Lacs Ninety Thousand Only) per month from 1st February, 2008, with annualincrement as the Board of Directors may decide.

b) Commission: As may be decided by the Board of Directors at the end of each year calculated with reference to thenet profit of the Company during the financial year, subject to overall ceiling as prescribed in Sections 198 and 309of the Companies Act, 1956.

c) Perquisites & Allowances: In addition to salary, the Executive Director shall be entitled to perquisites and benefitslike accommodation (furnished or otherwise) or House Rent Allowance in lieu thereof, maintenance and upkeep,monthly outgoings, cost of repairs, furnishings, payment of actual expenses for gas, electricity, water, reimbursementof actual expenditure on medical treatment for self and family, leave travel for self and family, club fees, medical/accident insurance, and such other perquisites subject to overall ceiling of remuneration stipulated in Sections 198and 309 of the Companies Act, 1956.

Minimum Remuneration: Notwithstanding anything herein contained, where, in any financial year during the currency oftenure of the Executive Director, the Company has no profits or the profits are inadequate, the Company will payremuneration by way of salary and perquisites as stated above but shall not exceed the limits prescribed under ScheduleXIII to the Companies Act, 1956 and other provisions thereof or any amendments, variations, modifications or re-enactment.

All other terms and conditions remain unchanged.

The Executive Director shall not be paid any sitting fees for attending meetings of the Board of Directors or Committeesthereof.

The particulars set out above may be treated as an abstract of the Agreement, proposed to be entered into between theCompany and Mr. T.M. Patel under the provisions of Section 302(2) of the Companies Act, 1956.

None of the Directors of the Company is in any way deemed to be concerned or interested in the aforesaid resolutionexcept Mr. T.M. Patel himself, Mr. S.M. Patel and Mr. P.M. Patel being brothers and as such related to each other.

Mr. T.M. Patel shall not be subject to retirement by rotation during his tenure in office as Executive Director of the Company,in accordance with the provisions of the Articles of Association of the Company.

The Board of Directors recommends the resolution for approval of the members.

The draft Agreement, referred to above, to be entered into with Mr. T.M. Patel is available for inspection by the members ofthe Company at the Registered Office of the Company between 10.00 a.m. and 1.00 p.m. on all working days, exceptSaturdays till the date of the Annual General Meeting.

By Order of the Board of Directors

Place: Mumbai S.B. DesaiDate: 11th May, 2007. Company Secretary

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DIRECTORS’ REPORT

To the Members,

Your Directors are pleased to present the Forty-sixth AnnualReport with the Audited Statement of Accounts for the yearended 31st March, 2007.

FINANCIAL RESULTS:

Year ended Year ended31.03.2007 31.03.2006Rs. in lacs Rs. in lacs

Gross Profit before Interest, 4257.34 3267.73Depreciation and TaxLess: Interest & Finance 382.51 269.36

ChargesDepreciation 801.89 684.15

Profit before Tax 3072.94 2314.22Less: Provision for tax

Fringe Benefit Tax (21.40) (19.15)Current Tax (1175.00) (960.00)Deferred tax Credit 136.57 235.62

Profit after Tax 2013.11 1570.69Add: Balance brought forward 508.15 364.26

from previous yearAmount available for appropriations 2521.26 1934.95

Appropriations:Proposed Dividend 462.00 462.00Tax on proposed dividend 78.52 64.80Transfer to General Reserves 1450.00 900.00Balance carried to Balance Sheet 530.74 508.15

2521.26 1934.95

OPERATIONS:

Your Company’s results for the year ended 31st March, 2007showed a remarkable increase with profit after tax standingat Rs. 2013.11 lacs as against Rs.1570.69 lacs during thecorresponding period of the previous year. Exportsincreased from Rs.39.61 lacs during F.Y 2005-06 toRs.95.15 lacs during the year under report.

Your company’s largest dependence is on Medium andHeavy Commercial Vehicles (M/HCV), where the growth was26%, though the derived demand of bearings was relativelylesser due to product mix change. The Tractor industryproduction growth was 25%. The resultant derived demandof your company’s products grew by about 18% andaccordingly your company’s sales grew in line with thedemand growth. Improved production and productivity andcost control helped the Company to achieve a healthy bottomline. The Company’s performance was backed by strongsupport from OEMs, after market and also operationalefficiency and good planning.

DIVIDEND:

The Directors have recommended a dividend of Rs.4/- perEquity Share on 1,15,50,000 Equity Shares of Rs.10/- eachfor the financial year ended 31st March 2007, which, ifapproved at the forthcoming Annual General Meeting, will

be paid to (i) all those Equity Shareholders whose namesappear on the Register of Members as on 24th July, 2007and (ii) to those whose names as beneficial owners arefurnished by National Securities Depository Limited andCentral Depository Services (India) Limited as on that date.

The dividend pay out for the year under review has beenformulated in accordance with the Company’s policy ofstriving to pay stable dividend linked to long termperformance, keeping in view the Company’s need forcapital, its growth plans and the intent to finance such plansthrough internal accruals to the maximum. Your Directorsbelieve that this would increase shareholder value andeventually lead to a higher return threshold.

COLLABORATION:

NSK Japan, who are your Company’s technology partner,continue to assist significantly in updating processes andquality, in line with international standards.

JOINT VENTURE COMPANY:

On 6th March, 2007, your Company has signed a JointVenture Agreement with NSK Ltd., Japan, our TechnicalCollaborator since 1998 to form a Joint Venture Companyviz. NSK-ABC Bearings Limited, to produce bearings in orderto meet the demands of the automotive industry. Thisprovides new opportunities to increase sales to our existingcustomers for those ranges of bearings, which are notmanufactured by us. For NSK, this is an opportunity forincreasing their sales to transplant customers of Japaneseand Korean origin in India.

QUALITY CERTIFICATION:

During the year, the company was certified for ISO14001:2004, which makes your company environmentalfriendly. Most of the customers have awarded self-certification to the Company for its products for Direct OnlineSupply.

DIRECTORS’ RESPONSIBILITY STATEMENT:

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

i. in the preparation of annual accounts, the applicableaccounting standards have been followed along withproper explanation relating to material departures, ifany.

ii. such accounting policies have been selected andapplied consistently and the judgments and estimatesmade are reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company atthe end of the financial year and of the Profit or Lossof the Company for that year.

iii. proper and sufficient care has been taken for themaintenance of adequate accounting records inaccordance with the provisions of the Companies Act,1956 for safeguarding the assets of the Company andfor preventing and detecting fraud and otherirregularities.

iv. the annual accounts have been prepared on a goingconcern basis.

FIXED DEPOSITS:

Deposits amounting to Rs.0.12 lacs matured on or before31st March, 2007, were not claimed by the depositors as onthat date.

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DIRECTORS:

Mr. C.U. Shah and Mr. Y.H. Malegam retire by rotation andbeing eligible, offer themselves for reappointment.Necessary resolutions for their reappointment are beingplaced before the members for their approval.

CORPORATE GOVERNANCE:

Your Company has complied with the requirements of theCode of Corporate Governance in accordance with Clause49 of the Listing Agreement with BSE. A separate report onCorporate Governance along with Auditors’ certificate on itscompliance is attached to this Report. ManagementDiscussion and Analysis, as prescribed by the ListingAgreement, also forms a part of the Annual Report.

REPORT ON ENERGY CONSERVATION AND RESEARCHAND DEVELOPMENT ACTIVITIES:

Information relating to Energy Conservation, ForeignExchange Earned and Spent and Research andDevelopment activities undertaken by the Company inaccordance with the provisions of Section 217(1)(e) of theCompanies Act, 1956, read with Companies (Disclosure ofParticulars in the Report of the Board of Directors) Rules,1988, is given in the Annexure to the Directors’ Report.

AUDITORS:

M/s. Parikh & Shah, Chartered Accountants, StatutoryAuditors of the Company, hold office until the conclusion ofthe forthcoming Annual General Meeting and being eligibleoffer themselves for re-appointment. The Company hasreceived confirmation that their appointment, if made, willbe within the limits prescribed under Section 224(1B) of theCompanies Act, 1956.

COST AUDITORS:

In pursuance of Section 233-B of the Companies Act, 1956,your Directors have appointed M/s. B. J. D. Nanabhoy & Co.,Cost Accountants, as the Cost Auditors to conduct cost auditof the product ‘Bearing’ for the year 2007-08, subject to theapproval of the Central Government. The Company hasreceived confirmation that their appointment, if made, willbe within the limits prescribed under Section 224(1B) of theCompanies Act, 1956.

PARTICULARS RELATING TO EMPLOYEES:

Information required under Section 217(2A) of theCompanies Act, 1956, read with the Companies (Particularsof Employees) Rules, 1975 is given in the Annexure formingpart of the Report. However, as per the provisions of Section219(1)(b)(iv), the Report and Accounts are being sent to allShareholders of the Company excluding the Statement ofParticulars of Employees. Any shareholder interested inobtaining such particulars may inspect the same at theRegistered Office of the Company or write to the Companyfor a copy.

ACKNOWLEDGEMENT:

The Directors wish to place on record their deep sense ofappreciation for the committed services of the employees ofthe Company at all levels. The Directors also express theirsincere appreciation for the assistance and co-operationreceived from Banks, Customers and Dealers, during theyear.

For and on behalf of the Board

Place: Mumbai S. M. PATELDate: 11th May, 2007. Chairman

ANNEXURE TO DIRECTORS’ REPORT

Particulars under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.

A. CONSERVATION OF ENERGY:

Efforts for conservation of energy continued during the year are listed below:1. Maintained overall power factor of the factory to 0.98 and above resulting into substantial rebate from GEB.2. Energy saving has taken place by replacing the fluorescent fixtures by metal elide tube fixtures.

3. Controlling of air leakages and optimum utilization of compressor resulted in energy saving.4. Installed cooling towers thus reducing the process cooling load which resulted into energy saving.5. Better insulation of furnaces reduced heat losses.

B. TECHNOLOGY ABSORPTION:

1. We are continuously and constantly supported by NSK Japan for keeping updated technological developments.

2. Flange honing machines are installed on the line to reduce the friction, in turn the life of the bearings hasincreased.

3. Special Cylindrical roller bearing developed to be exported for planetary gear application

4. NSK actively participating in bearing design activity and supporting in Technology centre

c. FOREIGN EXCHANGE EARNINGS AND OUTGO:

Earnings : Rs.95.15 lacs

Outgo : Rs.1923.26 lacs.


Place: Mumbai S. M. PATELDate: 11th May, 2007. Chairman

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10 YEARS’ HIGHLIGHTSRupees in Lacs

PARTICULARS 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Sales & Other Income 8030.53 7367.20 10732.50 11408.92 7717.56 8620.60 11200.74 15264.22 18255.23 21591.51

Materials Consumed 2926.95 3329.07 4078.40 5305.62 3349.51 3451.84 4963.87 6790.84 8239.07 9235.20

Excise Duty 901.51 885.48 1708.77 1259.41 1031.07 1138.58 1464.84 2019.08 2413.71 3000.90

Employee Cost 1032.49 1137.74 1441.48 1357.46 1108.07 1067.36 853.09 1069.49 1186.26 1122.80

Interest & Finance Charges 946.70 1036.71 861.15 1053.48 736.87 608.24 342.00 280.96 269.36 382.51

Depreciation 533.57 484.88 597.83 535.92 408.72 546.69 676.85 630.19 684.15 801.89

Other Expenses 1606.87 1496.63 1820.97 1532.18 1365.52 1590.02 1701.05 2366.32 2749.38 3547.19

Profit / (Loss) Before Tax & 82.44 -1003.31 223.90 364.85 -282.20 217.87 1199.04 2107.34 2713.30 3501.02Exceptional items

Exceptional Items – – – – – – 222.75 222.75 399.08 428.08

Diminution in value of – – – – 293.80 – – – – –Investments

Provision for Current Tax 9.00 – 7.90 35.00 – 10.56 91.00 910.00 979.15 1,196.40

Provision for Deferred – – – – -100.46 -61.41 -270.72 177.64 235.62 136.57Tax (Cr)

Profit / (Loss) After Tax & 73.44 -1003.31 216.00 329.85 -475.54 145.90 621.86 1152.23 1570.69 2013.11Exceptional items

Prior Period Adjustment (net) – – – – 58.54 – – – – –

Equity Dividend Rs. 63.57 – – – – – 173.25 346.50 462.00 462.00

Equity Dividend % 10.00 – – – – – 15 30 40 40

Retained Earnings 9.87 -1003.31 216.00 329.85 -475.54 145.90 426.41 757.13 1043.90 1472.59

Gross Fixed Assets 11459.33 11499.26 11655.99 8683.15 8821.30 8865.47 9054.62 9168.41 10183.96 11373.24

Net Fixed Assets 7158.03 6834.21 6450.77 4546.46 4349.79 3853.18 3405.68 2970.69 3378.52 3825.21

Investments 183.22 183.02 183.02 383.02 22.91 17.46 21.73 21.73 139.05 21.73

Net Current Assets 4066.27 3354.38 4192.76 4002.45 3241.53 3152.31 3429.45 4042.36 4433.83 6262.88

Deferred Revenue Exp. – – – – 160.32 663.23 440.48 217.74 834.37 406.28

Total Assets (Net) 11407.52 10371.61 10826.55 8931.93 7134.05 6984.27 6324.71 6457.53 8785.77 10516.10

Share Capital - Equity 577.89 577.89 1155.00 1155.00 1155.00 1155.00 1155.00 1155.00 1155.00 1155.00

Reserves and Surplus 2980.98 1977.67 2193.67 2523.52 1248.48 1394.38 1820.79 2577.92 3621.82 5094.41

Net Worth 3558.87 2555.56 3348.67 3678.52 2403.48 2549.38 2975.79 3732.92 4776.82 6249.41

Borrowings 7848.65 7816.05 7477.88 5253.41 4730.57 4434.89 3348.92 2724.61 3449.58 3843.89

Total Funds Employed 11407.52 10371.61 10826.55 8931.93 7134.05 6984.27 6324.71 6457.53 8785.77 10516.10

Earnings per Share 1.27 -17.36 2.52 2.86 -4.62 1.26 5.38 9.98 13.60 17.43

Book value per Share 61.58 44.22 28.99 31.85 20.81 22.07 25.76 32.32 41.36 54.11

Debt: Equity 2.21 3.06 2.23 1.43 2.11 2.35 1.32 0.78 0.88 0.66

Turnover/Inventory (Times) 2.50 3.09 3.33 6.84 5.78 6.00 6.86 6.82 6.24 6.45

Turnover/Net Block 1.12 1.08 1.66 2.51 1.77 2.24 3.29 5.14 5.40 5.64

Current Assets / Current 3.23 2.73 2.85 3.09 3.35 3.02 2.80 2.96 2.62 3.03Liabilities

Number of Shareholders 7302 7397 7820 8764 8603 8298 7870 7161 7097 7401

No. of Employees 1358 1394 1341 1198 878 567 526 509 314 331

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CORPORATE GOVERNANCE REPORT:

COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE:

Your Company has a basic philosophy of achieving excellence aimed at increasing value for all stakeholders andunderstands the right to information of its shareholders with respect to the performance of the Company.

Since inception, your Company has been committed to the practice of good corporate governance. Pursuant to Clause 49(including revision thereof) of the Listing Agreement, a detailed report on compliance by the Company is given here below:

BOARD OF DIRECTORS:

The Board of Directors comprises a fair number of independent, professionally competent and acclaimed Non-executiveDirectors. The Company has a Non-executive Chairman, with the number of Independent Directors being more than 50%and the number of Non-executive Directors being more than two-third of the total number of Directors.

As stipulated, none of the Directors on the Board is a Member on more than 10 Committees and Chairman of more than 5Committees. Particulars in respect of their various Directorships, Chairmanships and Memberships of Board/Committeesand attendance at Board/General Meeting of the Company are given here below:

Name of the Director Executive/Non-Executive/ No. of outside Membership Chairmanship No. of WhetherIndependent Directorships in held in held in Board attended

Public Committee Committee Meetings last AGMCompanies of Directors of Directors attended Yes/No

Mr. S.M. Patel Non-Executive – Chairman 2 3 1 4 Yes

Mr. Y.H. Malegam Non-Executive – Independent 10 3 4 3 No

Mr. S.K. Diwanji Non-Executive – Independent 6 3 1 4 No

Mr. V.C. Vaidya Non-Executive – Independent 5 3 2 5 Yes

Mr. C.U. Shah Non-Executive – Independent - - - - No

Mr. T.M. Patel Executive Director 2 4 1 5 Yes

Mr. P.M. Patel Managing Director 2 3 - 5 Yes

Mr. Jal R. Patel Non-Executive – Independent 4 4 2 4 Yes

During the financial year 2006-07, five Board meetings were held on the following dates i.e. on 19th May, 2006, 22nd June,2006, 24th July, 2006, 19th October, 2006 and 19th January, 2007 and the Annual General Meeting was held on 10th August,2006.

CODE OF CONDUCT:

The Board of Directors has adopted the Code of Business conduct and Ethic for Directors and Senior Management. Thesaid Code has been communicated to the Directors and members of the Senior Management. The Code has also beenposted on the Company’s website – www.abcbearings.com

The Code has been circulated to all the members of the Board and Senior Management and the compliance of the samehas been affirmed by them. A declaration signed by the Managing Director is given below:

I hereby confirm that:

The Company has obtained from all the members of the Board and Senior Management, affirmation that they have compliedwith the Code of Business Conduct and Ethics for Directors and Senior Management in respect of Financial Year 2006-2007.

P.M. PatelManaging Director

AUDIT COMMITTEE:

The Audit Committee of the Company has such powers as are detailed under Section 292A of the Companies Act, 1956,and also as are detailed in terms of Clause 49 of the Listing Agreement.

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The responsibilities of the Audit Committee include inter-alia, overseeing the financial reporting process to ensure properdisclosure of financial statements, recommending appointment/removal of external auditors and fixing their remuneration,reviewing the quarterly, half yearly and annual financial statements before submission to the Board, reviewing the adequacyof the internal audit functions, ensuring compliance of internal control systems and discussing the scope of audit withexternal auditors. The Company has adopted a separate Charter for Audit Committee.

The composition of the Audit Committee is as under:

Name of the Director Category No. of Audit CommitteeMeetings attended

Mr. Jal R. Patel Independent Non-executive Director (Chairman) 4

Mr. V.C. Vaidya Independent Non-executive Director (Member) 5

Mr. S.M. Patel Non-executive Director (Member) 4

Mr. S.K. Diwanji Independent Non-executive Director (Member) 4

During the Financial year 2006-07, five Audit Committee Meetings were held on the following dates i.e. on 19th May, 2006,22nd June, 2006, 24th July, 2006, 19th October, 2006 and 19th January, 2007.

REMUNERATION COMMITTEE:

The general scope of work entrusted to the Remuneration Committee includes recommendation of remuneration packagesfor the Managing/Executive Directors and review thereof, based on performance and achievements, within the provisionsof the Companies Act, 1956 and amendments thereto.

The composition of the Remuneration Committee is as under:

Name of the Director Category No. of CommitteeMeetings Attended

Mr. S.K. Diwanji Independent Non-executive Director (Chairman) 1

Mr. V.C. Vaidya Independent Non-executive Director (Member) 1

Mr. S.M. Patel Non-Executive Director (Member) 1

Mr. C.U. Shah Independent Non-executive Director (Member) -

Mr. Jal R. Patel Independent Non-executive Director (Member) 1

The Remuneration Committee met once during the financial year 2006-07.

The remuneration of Managing Director was reviewed and recommended by Remuneration Committee. The same wasapproved by the Board of Directors and confirmed by the Shareholders at the Annual General Meeting as per agreemententered into between Managing Director and Company. The remuneration structure of the Managing/Executive Directorsconsists of salary, perquisites, contribution to Provident Fund, Superannuation and Gratuity as per the present trend in theindustry. The tenure of re-appointment of the Managing/Executive Directors/details of salary and perquisites and contributionto Provident Fund and Superannuation paid for the financial year ended 31st March, 2007 are as given below:

Name Tenure Salary Perquisites Commission Contribution Total(Rupees) (Rupees) (Rupees) to Provident (Rupees)

Fund/Superannuation

(Rupees)

Mr. P.M. Patel Reappointed for a 5331000 369973 12476850 1439370 19617193period of 5 years from01.08.2006

Mr. T.M. Patel 5 years from 3847800 313838 12023150 1038906 1722369401.02.2003

The revision of sitting fees was approved by the Board of Directors at their meeting held on 22nd June, 2006. Accordingly,the Non-Executive Directors are paid sitting fee @ Rs.15,000/- for attending Board Meeting, Rs.10,000/- for attending AuditCommittee Meeting and for attending Remuneration Committee Meeting @ Rs.7,500/-. The Non-Executive Directors arealso paid commission not exceeding 1% of the net profits of the Company in such proportion as may be decided by theBoard.

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The total amount of sitting fees paid during the year was Rs.3,65,000/-. The details of sitting fees paid to the Non-ExecutiveDirectors during the year under report and their shareholding in the company, are as given below:

Name of the Non-Executive Sitting Fees paid during No. of shares heldDirector the period 01.04.2006 to As on 31st March,

31.03.2007 (Rs.) 2007 (Nos.)

Mr. S.M. Patel 87500.00 —

Mr. Y.H. Malegam 35000.00 7,445

Mr. S.K. Diwanji 72500.00 10,650

Mr. C.U. Shah — 10,000

Mr. Jal R. Patel 72500.00 600

Mr. V.C. Vaidya 97500.00 —

As decided by the Board, commission payable to Non-Executive Director, Mr. S.M. Patel is Rs.39.45 lacs.

SHAREHOLDERS’/INVESTORS’ GRIEVANCE COMMITTEE:

The composition of the Transfer-Cum-Shareholders’/Investors’ Grievance Committee is as under:

Name of the Director Category No. of CommitteeMeetings attended

Mr. S.M. Patel Non-executive Director (Chairman) 22

Mr. P.M. Patel Managing Director (Member) 20

Mr. T.M. Patel Executive Director (Member) 5

The Transfer-Cum-Shareholders’/Investors’ Grievance Committee is vigilant in the redressal of all investors’ grievances.The powers of approving the issue of duplicate certificates and all matters connected with securities’ transfers, transmissions,sub-divisions, consolidations etc. have been delegated by the Board to the Registrar & Transfer Agents of the Company,subject to placing of a periodic summary statement, depicting transfer, transmission, etc. of securities of the Company, atevery meeting of the Transfer-Cum-Shareholders’/Investors’ Grievance Committee.

The Transfer-Cum-Shareholders’/Investors’ Grievance Committee of the Company held its meetings on the following datesduring the year, viz: on 14th April, 2006, 2nd May, 2006, 17th May, 2006, 31st May, 2006, 14th June, 2006, 30th June, 2006,14th July, 2006, 3rd August, 2006, 18th August, 2006, 1st September, 2006, 30th September, 2006, 16th October, 2006, 31st

October, 2006, 15th November, 2006, 30th November, 2006, 15th December, 2006, 1st January, 2007, 13th January, 2007,29th January, 2007, 14th February, 2007, 28th February, 2007, 15th March, 2007 and 31st March, 2007.

Mr. S.B. Desai, Company Secretary, is the Compliance Officer. All complaints received from shareholders/investors havebeen generally resolved to the satisfaction of the complainants.

Investor queries/complaints handled during the year under report were as follows:

Nature of queries/complaints No. of letters Received

Relating to change of address 50

Relating to non receipt of shares after transfer 4

Relating to advice procedure for name deletion 9

Relating to non receipt of dividend warrant 11

Letter informing stop transfer 2

Relating to non receipt of annual reports 7

Relating to non receipt of demat rejected share certificates 2

Relating to non receipt of demat credit 3

Relating to miscellaneous letters 10

Bank Mandate 1

Duplicate Request received 16

Consolidation request received 2

Total 117

All the queries/complaints were attended to promptly and resolved within 30 days.

11

All valid share transfers, received during the year ended 31st March, 2007, have been acted upon and there were no sharetransfers pending as on 31st March, 2007.

GENERAL BODY MEETINGS:

Location and time where the last three Annual General Meetings were held are as under:

Financial Year Date Location of the Meeting Time

2003-2004 20th July, 2004 Walchand Hirachand Hall, Indian Merchants’ Chamber 4.30 p.m.Building, 76, Veer Nariman Road, Churchgate,Mumbai – 400 020.

2004-2005 19th July, 2005 Walchand Hirachand Hall, Indian Merchants’ Chamber 4.30 p.m.Building, 76, Veer Nariman Road, Churchgate,Mumbai – 400 020.

2005-2006 10th August, 2006 Walchand Hirachand Hall, Indian Merchants’ Chamber 4.00 p.m.Building, 76, Veer Nariman Road, Churchgate,Mumbai – 400 020.

The Company has passed Special Resolutions at the Annual General Meetings of the above three years.

No Special Resolution requiring Postal Ballot as required by the Companies (Passing of the Resolution by Postal Ballot)Rules, 2001/Clause 49 of the Listing Agreement has been placed for Shareholders’ approval at the last Annual GeneralMeeting nor is any resolution proposed to be taken up through postal ballot at the ensuing Annual General Meeting.

DISCLOSURES REGARDING APPOINTMENT OR RE-APPOINTMENT OF DIRECTORS:

1. Mr. C.U. Shah, aged 89 years, joined the Board of the Company on 17th October, 1961. He is not a Director in anyother public limited company. He is a member of the Remuneration Committee of the Company.

2. Mr. Y.H. Malegam, aged 73 years, is a Practising Chartered Accountant and has been on panels of various committeesof the Central Government. He joined the Board of the Company on 17th October 1961 as an Alternate Director andcontinued as such until 29th July, 1987, when he was appointed as Director on the Board of the Company. He is alsoa Director of the following public limited companies:

Name of the Company Designation/Membership ofBoard/Committees

Cabot India Limited Director/Member of Audit Committee

The Clearing Corporation of India Ltd. Director

Hindustan Construction Co. Ltd. Director

FirstSource Solutions Ltd. Director/Chairman of Audit Committee

National Securities Clearing Corp. Ltd. Director

National Stock Exchange of India Ltd. Director/Member of Audit Committee

Nicholas Piramal India Ltd. Director/Member of Audit Committee

Siemens Limited Director/Chairman of Audit Committee/Member of RemunerationCommittee

Tata Coffee Limited Director/Chairman of Audit Committee/Member of RemunerationCommittee

Tata Tea Limited Director/Chairman of Audit Committee

3. Mr. T.M. Patel, aged 53 years, is the Executive Director of the Company. After graduating as a B.S. from U.S.A., hewas employed overseas before assuming charge of the Company’s plant at Bharuch. He has been associated withthe Bearings Industry more than two decades. He is also a Director of the following public limited companies:-

Name of the Company Designation/Membership ofBoard/Committees

Shri Dinesh Mills Ltd. Director/Member of Audit Committee/Member of Remuneration Committee/Member of Investor Grievance Committee

Mipco Seamless Rings (Gujarat) Ltd. Chairman/Member of Audit Committee/Chairman of Transfer-cum-Shareholders’/Investors Grievance Committee/Member of RemunerationCommittee.

DISCLOSURES:

During the year 2006-07, the Company had no materially significant related party transaction, which is considered to havepotential conflict with the interests of the Company at large.

12


There has not been any non-compliance, penalties or strictures imposed on the Company by the Stock Exchange, SEBI orany other statutory authority, on any matter relating to the capital markets, during the last three years.

The Company has complied with all mandatory requirements and it is in the process of compliance with various non-mandatory requirements.

MEANS OF COMMUNICATION:

The Board of Directors of the Company approves and takes on record the unaudited financial results of the Companywithin one month of the close of the quarter/half year and announces forthwith the results to the Stock Exchange, wherethe shares of the Company are listed, as also the same are published within 48 hours in two newspapers as prescribed.As the Company publishes the audited annual results within the stipulated period of three months, as required by theListing Agreement with the Stock Exchange, the unaudited results for the last quarter of the financial year are not published.

The Company’s results, official news releases and presentation to analysts are displayed on the Company’s website, i.ewww.abcbearings.com.

Management Discussion and Analysis Report forms part of this Annual Report.

GENERAL SHAREHOLDER INFORMATION:

Annual General MeetingDate : 24th July, 2007.

Time : 4.30 p.m.Venue : Hall of Culture, Nehru Centre, Dr. Annie Besant Road, Worli, Mumbai – 400 018.

Financial Year:

The Company follows April-March as its financial year. The results for every quarter are declared in the month followingthe quarter except for the quarter January-March, for which the audited results are declared in May/June as permittedunder the Listing Agreement.

Date of Book Closure

17th July, 2007 to 24th July, 2007 (both days inclusive)

Dividend Payment Date

After 24th July, 2007.

Listing on Stock Exchanges

The Company’s shares are listed on Bombay Stock Exchange Limited, Mumbai.

Stock Code

Bombay Stock Exchange Limited, Mumbai (BSE) - 505665Demat International Security Identification Number (ISIN)in NSDL & CDSL for Equity Shares - INE 779A01011

Stock Price Data

Bombay Stock Exchange Limited, Mumbai (BSE)

Month High (Rs.) Low (Rs.)

April, 2006 145.35 121.10

May, 2006 147.80 112.05June, 2006 125.80 90.00July, 2006 120.00 104.00

August, 2006 144.00 114.70September, 2006 165.50 129.05October, 2006 182.50 160.00

November, 2006 166.00 147.00December, 2006 161.95 140.00January, 2007 189.75 147.25

February, 2007 175.90 150.00March, 2007 178.00 133.15

13

ABC SHARE PRICE - VS BSE SENSEX IN 2006-2007

5060708090

100110120130140150160170180190200

Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar

AB

C S

HA

RE

PR

ICE

8000

9000

10000

11000

12000

13000

14000

15000

BSE

SE

NSE

X

ABC Share Price BSE Sensex in 2006 - 2007

Distribution of Shareholding:

Categories of Shareholding as on 31st March, 2007.

Category SharesNumber % to Total

Promoters 3609666 31.26

Mutual Funds & UTI 59430 0.52

Banks, Financial Institutions, 1036071 8.96Insurance Companies

Foreign Institutional Investors 242619 2.11

Private Corporate Bodies 432365 3.75

Indian Public 3286023 28.45

NRIs/OCBs 2877451 24.90

Others (Shares in Transit) 6375 0.05

Total 1,15,50,000 100.00

Performance in comparison to BSE Sensex

Distribution of Shareholding as on 31st March 2007.

Range Shareholders Shares

Number % to Total Number % to Total

1 - 50 2235 30.20 60675 0.53

51 - 100 1565 21.14 134166 1.16

101 - 300 1876 25.35 369135 3.19

301 - 500 637 8.61 278202 2.41

501 - 1000 569 7.69 443621 3.84

1001 - 5000 420 5.67 922989 7.99

5001 and above 99 1.34 9341212 80.88

Total 7401 100.00 1,15,50,000 100.00

Registrars and Transfer Agents

Bigshare Services Pvt. Ltd.E-2, Ansa Industrial Estate, Sakivihar Road,Saki Naka, Andheri (E), Mumbai 400 072.Tel.: 022-28470652/28470653Fax: 022-28475207E-mail: [email protected]: www.bigshareonline.com

14


Auditors’ Certificate regarding compliance of Corporate Governance

To the Members of ABC Bearings Limited

We have examined the compliance of the conditions of Corporate Governance by ABC Bearings Limited for the year ended31st March, 2007, as stipulated in Clause 49 of the Listing Agreement of the said company with Stock Exchange.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination waslimited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditionsof Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

We have conducted our review on the basis of the relevant records and documents maintained by the Company. Basedon such review and as per the information and explanations given to us by the Company, in our opinion, the Company hascomplied with the conditions of Corporate Governance, as stipulated in Clause 49 of the said Listing Agreement.

We state that as per the records maintained by the company there were no investor grievances remaining unattended/pending for more than 30 days.

We further state that such compliance is neither an assurance as to the future viability of the company nor the efficiency oreffectiveness with which the management has conducted the affairs of the company.

For PARIKH & SHAHChartered Accountants

Mumbai, 11th May, 2007. H.K. DESAIPartner

Share Transfer System

A Share Transfer Committee of Directors has been constituted by the Board. The Committee attends to share transferformalities at least twice in a month. Transfer of shares are processed and registered within the stipulated time, providedall the documents are valid and complete in all respects. The Board of Directors has appointed the Company Secretary asCompliance Officer of the Company to monitor the share transfer process. Share transfers approved by the Committee areplaced at the Board Meeting from time to time. As on 31.03.2007 no shares were pending for transfer for more than 15days.

Dematerialisation of Shares and Liquidity: 93.27% equity shares of the Company have been dematerialised as on 31st

March, 2007.

Outstanding GDRs/ADRs/Warrants or any Convertible instruments, conversion date and likely impact on equity:

Company has not issued any GDRs/ADRs/Warrants or any Convertible Instruments.

Plant Locations

1. Bharuch, Gujarat State. 2. Lonavla, Maharashtra State.

Address for Correspondence

Shareholders may correspond on all matters relating to transfer/dematerialisation of shares, payment of dividend, and anyother query relating to shares of the Company with Registrars and Share Transfer Agents, at the address given below:

M/s. Bigshare Services Pvt. Ltd.E-2, Ansa Industrial Estate, Sakivihar Road,Saki Naka, Andheri (E), Mumbai 400 072.Tel.: 022-28470652/28470653 Fax: 022-28475207E-mail: [email protected]: www.bigshareonline.com

Shareholders would have to correspond with the respective Depository Participants for shares held in demat mode.


Place: Mumbai S.M.PATEL

Date: 11th May, 2007. Chairman

15

MANAGEMENT DISCUSSION AND ANALYSIS:

a) Industry Structure and Developments

Domestic market comprises of ten major players in theorganised sector and innumerable units in theunorganised sector. Annual bearing demand in India isestimated at Rs.5000 crores, of which about one thirdis met by imports and the rest is met through indigenousproduction. The sales of organised bearing industry inIndia, including exports are estimated at Rs.2500 crores.The bearing industry experienced an overall growth of19%.

Bearing industry covers both ball and roller bearings.Bearings are precision products requiring sophisticatedmachinery and the industry is characterised by highcapital costs and intensive technology & skillrequirements. Almost all the major international bearingmanufacturers are represented in India by way oftechnical and/or financial collaborations.

Bearing industry is subject to fluctuations in its userindustries viz: automobiles, general engineering,railways, electrical applications, pumps, fans andagricultural machineries. Its growth, though, ispredominantly dependant upon its major user –automobile industry. During the year under report therehas been a good growth in the automobile industry. Thedemand of commercial vehicles was buoyant at 26%and tractor industry also grew at 25%. The sales growthof 2 wheeler industry, specially motorcycle has nowstabilised. The performance of bearing industry duringthe year under report has been commendable.

b) Opportunities and Threats

Indian economy has performed well. The GDP growthindications are encouraging and will provideopportunities for increase in production and optimumcapacity utilisation. With expected increase in output ofcommercial vehicles and tractors, the industry demandis likely to be good.

The counterfeiting of bearings is the biggest threat tothe industry since these spurious bearings affect thebusiness and brand image. Your Company is takingsteps to curtail spurious trade by improved packaging,creating awareness and other necessary action.Necessary action has also been taken at industry levelto check the menace of counterfeit, which has increasedover last few years.

c) Segment-wise-performance

The Company has only one segment of activity namely‘Bearings’ as defined by AS-17 issued by the Instituteof Chartered Accountants of India.

d) Outlook

There has been good growth in automobile industry,which has given fil l ip to bearing industry so far.However, the recent trends are not very encouragingespecially for Commercial Vehicles and Tractorsindustry. If the trend continues it will have adverseimpact on the growth of the bearing industry. However,it is expected that some corrective actions in Governmentpolicies, in due course, will improve the situation in thesecond half of the year.

e) Risks and concern

The performance of your Company is highly dependenton the automotive sector, particularly the CommercialVehicle and Tractor segments. The checkered fortunesof the past of these, if it repeats, could adversely affectthe business. The working capital requirements in ourindustry are relatively high. Pricing pressure, increasedcredit periods and increased discounts threaten toimpede trade. Pressure on margins on account of stiffcompetition in the bearing market is inevitable. Effortsare being made to improve exports and strengthen localdealer network to reduce dependences on automotiveOEMs. Steel price increases and its availability is amatter of concern for the entire bearing industry

f) Internal control systems and their adequacy

The Company has in place an effective and independentinternal control system covering all areas of operations.The transactions are authorised by authorised persons.A firm of Chartered Accountants, staffed with qualifiedand experienced persons, have been engaged toconduct the Internal Audit of the Company. A regularreview is done in respect of the financial and operatingcontrols at various locations of the Company. The AuditCommittee at its periodic meetings, reviewsobservations and recommendations contained inInternal Audit Reports, where both Statutory as well asInternal Auditors participate. Independent opinions areexpressed on issues of concern and the consequentialcorrective actions are reviewed by the Audit Committee.

g) Financial performance with respect to operations

The overall business situation of the Company showeda marked improvement during the year under report vis-à-vis the last couple of years. During F.Y. 2006-07, netsales grew from Rs.151.96 crores in F.Y. 2005-06 toRs.182.14 crores, an increase of 20% of Net sales.Greater operation efficiency, strong position in OEMmarket, innovative products and good planning hasresulted in improved performance of the Company.

h) Human Resources and Industrial Relations

The Company firmly believes that the HumanResources are the valuable assets for growth andsuccess. Satisfaction and morale of the employeesremained high throughout the year. Industrial relationscontinued to be cordial.

The performance linked bonus and rewards wereinstituted, which not only helped improve productivity butalso brought the culture of healthy competitiveperformance within the organisation. The gap betweenexisting and desired skills has been filled up in theemployees through training and development. Trainingof employees at collaborators plants helped inunderstanding and absorbing new technology.


Place : Mumbai S.M. PATELDate: 11th May, 2007. Chairman

16


Auditors’ ReportTo

The Members ofABC Bearings Limited

We have audited the attached Balance Sheet of ABC BearingsLimited as at 31st March, 2007 and also the Profit and LossAccount and the Cash Flow Statement for the year ended on thatdate annexed thereto. These financial statements are theresponsibility of the Company’s management. Our responsibility isto express an opinion on these financial statements based on ouraudit.

We conducted our audit in accordance with auditing standardsgenerally accepted in India, which requires that we plan andperform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements, and alsoincludes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit providesa reasonable basis for our opinion.

As required by the Companies (Auditor’s Report) Order, 2003issued by the Central Government of India in terms of Sub-section(4A) of section 227 of the Companies Act, 1956 and on the basisof such checks of books and records of the Company asconsidered appropriate and as per the information and explanationsgiven to us, we enclose in the Annexure a statement on the mattersspecified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, wereport that:

1. we have obtained all the information and explanations, whichto the best of our knowledge and belief, were necessary, forthe purpose of our audit;

2. in our opinion, proper books of account as required by lawhave been kept by the Company so far as appears from ourexamination of those books;

3. the Balance Sheet, Profit and Loss Account and Cash FlowStatement dealt with by this report are in agreement with thebooks of account of the Company;

4. in our opinion, the Balance Sheet, Profit and Loss Accountand Cash Flow Statement dealt with by this report comply withthe Accounting Standards referred to in sub-section (3C) ofSection 211 of the Companies Act, 1956;

5. on the basis of written representations received from theDirectors and taken on record by the Board of Directors, wereport that none of the Directors is disqualified as on 31stMarch, 2007 from being appointed as a Director in terms ofSection 274(1)(g) of the Companies Act, 1956;

6. in our opinion and to the best of our information and accordingto the explanations given to us, the said accounts read withthe notes thereon give the information required by theCompanies Act, 1956 in the manner so required and give atrue and fair view in conformity with the accounting principlesgenerally accepted in India;

a. in the case of the Balance Sheet, of the state of affairs ofthe Company as at 31st March, 2007;

b. in the case of the Profit and Loss Account, of the Profitfor the year ended on that date; and

c. in the case of Cash Flow Statement, of the cash flowsfor the year ended on that date.

For PARIKH & SHAH

Chartered Accountants

H.K. DesaiPartner

Place : Mumbai, Membership No.13719Date : 11th May, 2007.

Re: ABC Bearings Limited

ANNEXURE TO AUDITORS’ REPORT ON THE ACCOUNTS FORTHE YEAR ENDED 31ST MARCH 2007

1. a) The Company has maintained proper records showingfull particulars including quantitative details and locationof all its fixed assets.

b) We are informed that the Company has programmeof physical verification of all the fixed assets over aperiod of three years. Accordingly, the physicalverification of part of the fixed assets has been carriedout by the Management during the year and no materialdiscrepancies have been noticed on such verification.

c) Fixed assets disposed off during the year were notsubstantial and therefore do not affect the goingconcern status of the Company.

2 a) The inventory has been physically verified atreasonable intervals during the year by theManagement except stocks with third parties for whichconfirmations are obtained.

b) In our opinion the procedures of physical verificationfollowed by the Management are reasonable andadequate in relation to the size of the Company andthe nature of its business.

c) The Company has maintained proper records ofinventory. The discrepancies noticed on physicalverification, between physical stocks and booksrecords, were not material in relation to the operationsof the company and have been properly dealt with inthe books of account.

3 a) The Company has not granted any loans, secured orunsecured to companies, firms or other partiescovered in the register maintained under Section 301of the Companies Act, 1956.

b) The Company has not taken any loans, secured orunsecured from companies, firms or other partiescovered in the register maintained under Section 301of the Companies Act, 1956.

4 According to the information and explanations given to us,there are, in our opinion, adequate internal control systemscommensurate with the size of the Company and nature ofthe business for the purchase of inventory, fixed assets andfor sale of goods. No major weaknesses are noticed in thecourse of our audit in this behalf.

5 In our opinion, and according to the information andexplanations given to us, there are no contracts andarrangements the particulars of which need to be enteredinto the register maintained under Section 301 of theCompanies Act, 1956.

6 In our opinion and according to the information andexplanations given to us, the Company has complied withthe provisions of Sections 58A and 58AA of the CompaniesAct, 1956 and the Companies (Acceptance of Deposits)Rules, 1975 with regard to the deposits accepted from thepublic. As informed to us, no order has been passed by theCompany Law Board in this behalf.

7 In our opinion the Company has an internal audit systemcommensurate with the size and nature of its business.

8 We have broadly reviewed the books of Accounts maintainedby the Company pursuant to the order made by the CentralGovernment for the maintenance of cost records underSection 209(1)(d) of the Companies Act, 1956 and are ofthe opinion that prima facie the prescribed accounts and

17

records have been maintained. We have not, however, madea detailed examination of the records with a view todetermining whether they are accurate or complete.

9 a) On the basis of our examination of the books ofaccount and other relevant records, the Company hasbeen generally regular in depositing with appropriateauthorities undisputed statutory dues includingprovident fund, investor education and protection fund,

income-tax, sales-tax, wealth-tax, service tax, customduty, excise-duty, cess and other material statutorydues applicable to it and no such dues wereoutstanding as at 31-03-2007 for a period of more thansix months from the date they become payable.

b) According to information and explanation given to usthe disputed dues in respect of Sales Tax, Excise dutyand Income tax that have not been deposited by theCompany are as follows:

Name ofStatute Nature of Amount Period to which Forum where the dispute is pendingDues (Rs. in lacs) it relates

State and Central Sales Tax 14.20 1992-93 Maharashtra Sales Tax Tribunal,Sales Tax Acts Mumbai

2.29 1999-00 Deputy Commissioner of Sales TaxAppeals, Worli Division, Mumbai.,

1.98 2000-01 Jt. Commissioner of Sales Tax (Appeal)Worli Division, Mumbai

14.13 2001-02 Appeal being preferred.

The Central Excise Excise Duty 0.24 1983-84 CEGAT, Mumbai

Act 1944 0.94 1990-91 CEGAT, Mumbai

3.08 1998-99 CEGAT, Mumbai

Income Tax Act, Income Tax 0.35 2000-01 Income Tax Appellate Tribunal,1961 Mumbai.

Income Tax Income Tax 21.03 2002-03 Commissioner of Income Tax (Appeal),468.91 2004-05 Mumbai.

10. The Company does not have any accumulated losses at theend of the financial year and has not incurred cash lossesin the financial year covered by our audit and the immediatelypreceding financial year.

11. According to the records of the Company examined by usand on the basis of information and explanations given tous, the Company has not defaulted in repayment of dues tobanks during the year. The Company has not taken anyloans from financial institutions and has not issued debenturesduring the year.

12. As the company has not granted loans and advances onthe basis of security by way of pledge of shares, debenturesand other securities clause 4(xii) of the order is not applicable.

13. The company is not a chit fund/nidhi/mutual benefit fund/society. Accordingly the provisions of the clause 4(xiii) of theOrder are not applicable.

14. As the Company is not dealing or trading in shares,securities, debentures and other investments, paragraph4(xiv) of the Order is not applicable.

15. According to the information and explanations given to us,the Company has not given any guarantee for loans takenby others from banks or financial institutions.

16. The term loans have been applied for the purpose for whichthey were obtained.

17. On the basis of examination of the Accounts and as perinformation and explanation given in our opinion the fundsraised on short term basis have prima facie not been usedfor long term investments.

18. The Company has not made any preferential allotment ofshares to any parties and companies covered under theregister maintained u/s.301 of the Companies Act, 1956during the year.

19. No security or charge is required to be created since thecompany has not issued any Debentures.

20. The Company has not raised any money by public issueduring the year.

21. On the basis of examination of books of account and otherrelevant records in the course of our audit and informationand explanation given to us no fraud on or by the Companyhas been noticed or reported during the year.

For PARIKH & SHAHChartered Accountants

H.K. DesaiPartner

Place : Mumbai, Membership No.13719Date : 11th May, 2007.

18


As at 31st As at 31stMarch,2007 March,2006

Rupees Rupees RupeesSchedules in lacs in lacs in lacs

SOURCES OF FUNDS :

1 SHAREHOLDERS’ FUNDS

Share Capital 1 1,155.00 1,155.00

Reserves and Surplus 2 5094.41 3,621.82

6,249.41 4,776.82

2 LOAN FUNDS

Secured 3 3,843.77 3,412.34

Unsecured 3 0.12 37.24

3,843.89 3449.58

3 DEFERRED TAX LIABILITY 4 422.80 559.37

TOTAL FUNDS EMPLOYED 10,516.10 8,785.77

APPLICATION OF FUNDS

4 FIXED ASSETS 5 3,825.21 3,378.52

5 INVESTMENTS 6 21.73 139.05

6 CURRENT ASSETS, LOANS & ADVANCES

Inventories 7 3,346.41 2,923.97

Debtors 8 4,170.40 3,215.65

Cash and Bank Balances 9 828.86 275.56

Loans and Advances 10 994.77 747.01

9,340.44 7162.19

7 Less: CURRENT LIABILITIES & PROVISIONS 11

Current Liabilities 2,501.92 2,125.42

Provisions 575.64 602.94

3077.56 2,728.36

8 NET CURRENT ASSETS 6262.88 4,433.83

9 MISCELLANEOUS EXPENDITURE

(to the extent not written off ‘or’ adjusted)

Deferred Revenue Expenditure 406.28 834.37

TOTAL ASSETS 10,516.10 8,785.77

SIGNIFICANT ACCOUNTING POLICIES ANDNOTES TO ACCOUNTS 16

Balance Sheet as at 31st March, 2007

This is the Balance Sheet referred For and on behalf of the Boardto in our report of even date.

For PARIKH & SHAH S.M. PATELChartered Accountants Chairman

H.K .DESAI S.B. DESAI P.M. PATELPartner Company Secretary Managing Director

Mumbai, 11th May, 2007 Mumbai, 11th May, 2007

19

Profit and Loss Account for the year ended 31st March, 2007For the year For the yearended 31st ended 31st

March,2007 March,2006Rupees Rupees

Schedules in lacs in lacs

1 INCOME

Sales - Gross 21,214.60 17,609.74

Less: Excise Duty 3,000.90 2413.71

Sales - Net 18,213.70 15,196.03

Other Income 12 376.91 645.49

18,590.61 15,841.52

2 INCREASE/(DECREASE) IN STOCKS 13 665.60 422.03

19,256.21 16,263.55

3 EXPENDITURE

Manufacturing & Other Expenses 14 14,570.79 12,596.74

Depreciation 801.89 684.15

Interest & Finance Charges 15 382.51 269.36

15,755.19 13,550.25

4 PROFIT BEFORE EXCEPTIONAL ITEM & TAX 3501.02 2,713.30

5 EXCEPTIONAL ITEMS ( NOTE NO. B-4 ) 428.08 399.08

6 PROFIT AFTER EXCEPTIONAL ITEM & BEFORE TAX 3,072.94 2,314.22

7 PROVISION FOR TAX

Income tax (1,175.00) (960.00)

Fringe Benefit Tax (21.40) (19.15)

Deferred tax credit 136.57 235.62

8 PROFIT AFTER TAX 2013.11 1,570.69

9 BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR 508.15 364.26

10 AMOUNT AVAILABLE FOR APPROPRIATIONS 2,521.26 1,934.95

11 APPROPRIATIONS

a) Proposed Dividend 462.00 462.00

b) Tax on proposed dividend 78.52 64.80

c) Transfer to General Reserve 1,450.00 900.00

d) Balance carried to Balance Sheet 530.74 508.15

2,521.26 1,934.95

This is the Profit & Loss Accounts referred For and on behalf of the Boardto in our report of even date.




20


Schedules forming part of the Balance SheetAs at 31st As at 31st

March,2007 March,2006Rupees Rupees Rupeesin lacs in lacs in lacs

1 SHARE CAPITAL

AUTHORISED

1,20,00,000 Equity Shares of Rs.10/-each 1200.00 1200.00

ISSUED AND SUBSCRIBED

1,15,50,000 Equity Shares of Rs.10/-each fully paid -up(of the above 26,59,095 shares of Rs.10/- eachwere allotted as fully paid-up Bonus Shares bycapitalisation of Reserves and Share PremiumAccount) 1155.00 1155.00

2 RESERVES AND SURPLUS :

a) SHARE PREMIUM ACCOUNTAs per last Balance Sheet 152.14 152.14

b) CASH SUBSIDY RESERVEAs per last Balance Sheet 40.00 40.00

c) GENERAL RESERVEAs per last Balance Sheet 2921.53 2021.53

Transfer from Profit and Loss Account 1450.00 900.00

4371.53 2921.53

d) SURPLUS

As per Profit & Loss Account 530.74 508.15

5094.41 3621.82

Notes

3 LOAN FUNDS

SECURED

From Banks:

a) Cash Credit (‘(Including Working capital 1a 2381.08 839.44 Demand Loan)

b) Term Loan 1b 1099.30 1930.00

c) Term Loan ( for Vehicles ) 1c 53.39 32.90

From Others:

d) Term Loan 1d 310.00 610.00

3843.77 3412.34

UNSECURED

Sales Tax under Deferment Schemes 2 – 37.12

Fixed Deposits 0.12 0.12

0.12 37.24

3843.89 3449.58

NOTES :

1 a. Secured by hypothecation of stock-in-trade and book debts and second charge on Fixed Assets of the Company.

b. Secured by first charge on plant and machinery acquired under the Loan and term Deposit with the Bank.

c. Secured by hypothecation of vehicles acquired under the loan.

d. Secured by first charge on certain plant and machinery.

2. Sales tax deferement availed at Lonavla under Incentive Scheme of the State Government has been settled duringthe year.

21

Schedules forming part of the Balance Sheet

DEFERRED (CHARGE) DEFERREDTAX ASSET/ /CREDIT TAX ASSET/(LIABILITY) FOR THE (LIABILITY)

As at 1st CURRENT As at 31stApril,2006 YEAR March, 2007

Rupees Rupees Rupees4 DEFERRED TAX LIABILITY in lacs in lacs in lacs

Difference between book & tax Depreciation (629.18) 90.77 (538.41)Expenses allowable for Tax purpose when paid 2.12 0.52 2.64Provision for doubtful debts 24.80 9.01 33.81Provision for leave encashment 10.40 0.38 10.78VRS Dues 32.49 35.89 68.38

TOTAL (559.37) 136.57 (422.80)

5 FIXED ASSETS Rs in lacs

C O S T D E P R E C I A T I O N NET BLOCK

Particulars As at As at Up to Deletion / For Up to As at As at1st April Additions Deductions 31st March 31st March Adjustment the 31st March 31st March 31st March

2006 2 0 0 7 2006 year 2 0 0 7 2 0 0 7 2006

Tangible Assets :Land - Freehold 5.94 – – 5 .94 – – – – 5 .94 5.94

- Leasehold 286.17 – – 2 8 6 . 1 7 3.13 – 3.74 6 .87 2 7 9 . 3 0 283.04Buildings 579.31 – – 5 7 9 . 3 1 152.79 – 16.63 1 6 9 . 4 2 4 0 9 . 8 9 426.52Plant and Machinery 7897.62 1123.05 64.21 8956 .46 5987.22 (33.26) 642.48 6596 .44 2360 .02 1910.40Equipments, Appliances & Tools 777.92 28.63 10.72 7 9 5 . 8 3 385.90 (10.01) 59.73 4 3 5 . 6 2 3 6 0 . 2 1 392.02Electrical Installations 232.14 25.68 – 2 5 7 . 8 2 168.50 – 17.38 1 8 5 . 8 8 7 1 . 9 4 63.64Furniture & Fixtures 113.52 3.76 1.53 1 1 5 . 7 5 53.47 (1.44) 5.63 5 7 . 6 6 5 8 . 0 9 60.05Vehicles 122.64 77.71 27.44 1 7 2 . 9 1 31.63 (14.58) 15.18 3 2 . 2 3 1 4 0 . 6 8 91.01Intangible Assets :Software (including licence fees) 116.05 13.55 – 1 2 9 . 6 0 22.80 – 41.12 6 3 . 9 2 6 5 . 6 8 93.25Total 10131.31 1272.38 103.90 11299 .79 6805.44 (59.29) 801.89 7548 .04 3751 .75 3325.87(Previous Year) 9061.07 1150.75 80.51 10131.31 6197.72 (76.43) 684.15 6805.44 3325.87 2863.35Capital Work-in-Progress includingadvances on Capital Accounts 7 3 . 4 6 7 3 . 4 6(Previous Year) 52.65 52.65Total 11373 .25 3825 .21(Previous Year) 10183.96 3378.52

As at 31st As at 31stMarch, 2007 March, 2006

Rupees Rupeesin lacs in lacs

6 INVESTMENTS (At cost)

LONG TERM

NON TRADEUnquoted :

a) 7 year National Savings Certificates (lodged with Collector of Central 0.10 0.10Excise/Sales Tax)

b) 12,629 6.75% Tax Free US64 Bonds of Rs.100/- each 12.63 12.63

c) 189,000 5% Cumulative Redeemable Preference Shares of Rs.100/- each 189.00 189.00 fully paid in Mipco Seamless Rings (Guj) Ltd.

22



March,2007 March,2006Rupees Rupeesin lacs in lacs

TRADEQuoted :d) 8,88,600 Equity Shares of Rs.10/- each fully paid in Mipco

Seamless Rings (Gujarat) Ltd. (Market Value Rs. 8.18 lacs) 95.86 95.86(Previous year Rs.8.18 lacs)

e) 11,72,166.046 Units of HSBC Mutual Fund of Rs.10/- each in Cash Fund. – 117.32Weekly Dividend Plan.

297.59 414.91Less : Provision for Diminution in value of Investment 275.86 275.86

21.73 139.05

CURRENT ASSETS, LOANS & ADVANCESA) CURRENT ASSETS :

7 INVENTORIES(As certified by the Management)(At lower of cost ‘or’ realisable value)a) Stores, Spares and Tools 207.88 164.89b) Raw Materials 575.05 819.53c) Work-in-Progress 722.62 843.08d) Finished Goods 1840.86 1096.47

3346.41 2923.97

8 DEBTORS (Unsecured)a) Considered good :

Over six months 412.30 117.94Others 3758.10 3097.71

4170.40 3215.65b) Considered doubtful

Over six months 96.10 69.32Less: Provision (96.10) (69.32)

4170.40 3215.65

9 CASH AND BANK BALANCESa) Cash on hand 0.97 1.15b) With Scheduled Banks

In Current Account 140.81 184.02In Margin Money Account 3.17In Fixed Deposit 683.91(Held by Banks as margin against facilities availed) 687.08 90.39

827.89 274.41

828.86 275.56

B) LOANS AND ADVANCES (UNSECURED)10 ADVANCES

Considered Good:a) Advances recoverable in cash or in kind or for value

to be received (Including Considered DoubtfulRs.4.35 lacs) (Previous year Rs.4.35 lacs) 772.41 598.17Less: Provision (4.35) (4.35)

768.06 593.82b) Sundry Deposits 89.30 66.50c) Balance with Customs and Central Excise 96.27 86.69d) Income Tax (net of provision) 41.14 –

994.77 747.01

23



11 CURRENT LIABILITIES AND PROVISIONSa) CURRENT LIABILITIES

i) Creditors(Including due to small scale industries Rs. 76.28 Lacs) 1370.01 1180.80(Previous year Rs. 37.25 lacs)

ii) Interest accrued but not due on loans 16.09 9.39iii) * Unclaimed Dividends 11.64 6.51iv) Other Liabilities 1104.18 928.72

2501.92 2125.42b) PROVISIONS

i) Proposed Dividend 462.00 462.00ii) Tax on proposed dividend 78.52 64.80iii) Income Tax (net of payment) – 39.10iv) Fring Benefit Tax 3.08 6.14v) Leave encashment 32.04 30.90

575.64 602.943077.56 2728.36

* Presently there are no amounts due and outstanding to becredited to Investor Education and Protection Fund undersection 205C of the Companies Act, 1956

Schedules forming part of the Profit and Loss AccountFor the year For the yearended 31st ended 31st


12 OTHER INCOMEa) Income from Investments (gross) 0.85 0.85b) Dividend from Mutual Fund – 1.21c) Interest Received :

Banks 52.55 2.50Others 57.12 38.26(Tax deducted at source Rs.11.65 lacs)(Previous year Rs.8.19 lacs) 109.67 40.76

d) Surplus on Redemption of Investment 0.04 0.58e) Profit on Fixed Assets sold/ scrapped (net) – 14.40f) Claims received 20.30 59.42g) Sale of Scrap 109.35 73.31h) Miscellaneous Income 88.88 402.74i) Income from power generation 31.87 35.75j) Excess Provision no longer required written back 15.95 3.15k) Difference in exchange – 13.32

376.91 645.49

13 INCREASE/(DECREASE) IN STOCK OF

WORK-IN-PROGRESS AND FINISHED GOODSa) Opening Stock 1897.88 1517.52

(Net of VAT credit availed Rs.41.67 Lacs)b) Closing Stock 2563.48 1939.55

665.60 422.03

24


Schedules forming part of the Profit and Loss AccountFor the year For the yearended 31st ended 31st


14 MANUFACTURING AND OTHER EXPENSESa) Raw Materials and Components consumed 8951.44 7990.61b) Stores and Spares consumed 949.36 670.49c) Power and Fuel 552.10 407.39d) Processing and Other Charges 1069.43 825.58e) Employees’ remuneration and benefits :

Salaries, Wages and Bonus 1000.04 1018.75Contribution to Provident and other Funds 74.19 74.09Gratuity 19.97 61.15Welfare Expenses 28.60 32.27

1122.80 1186.26f) Repairs:

Buildings 56.18 40.39Machinery 85.38 77.29Others 46.04 28.88

187.60 146.56g) Rent 16.94 17.33h) Rates and Taxes 26.71 12.28i) Insurance 51.76 51.76j) Postage, Telegrams and Telephones 39.05 43.20k) Travelling Expenses 83.78 84.28l) Remuneration to Auditors

Audit fees 1.75 1.75For Tax Audit 0.55 0.55For Certification & other matters 0.65 0.74For Expenses (including Service Tax) 0.09 0.02

3.04 3.06m) Cost Audit fees 0.45 0.35n) License & Technical Assistance Fees 15.90 16.25o) Commission and Discount on Sales 622.00 486.09p) Carriage Outward 240.17 219.08q) Provision for Doubtful Debts 26.78 33.71r) Claim for Sales tax Incentive /Deferement dues 169.33 –

(Refer note -B3, Schedule -16)s) Directors’ fees 3.65 1.85t) Loss on Fixed Assets sold / scrapped (Net) 9.55 –u) Other Expenses 428.95 400.61

14570.79 12596.74

15 INTEREST AND FINANCE CHARGESa) On Fixed Loans

Banks 87.86 70.04Others 39.36 50.98

127.22 121.02b) On Other Loans 262.42 133.06c) Exchange variation (15.13) 10.78d) Finance Charges 8.00 4.50

382.51 269.36

25

Schedules forming part of the Accounts

16. SIGNIFICANT ACCOUNTING POLICIES & NOTES TO ACCOUNTS

A. SIGNIFICANT ACCOUNTING POLICIES

1. FIXED ASSETS

a) Fixed Assets are stated at their historical cost.b) Addition to fixed assets comprise the purchase price and directly attributable costs.c) Tools each costing Rs.25,000/- or more are treated as fixed assets.d) Depreciation is provided in the manner and at the rates prescribed in Schedule XIV to the Companies

Act, 1956, as under :i) On straight line basis for assets acquired prior to 1st April, 1987 and after 31st March, 1991.ii) On written down value basis for assets acquired during 1st April, 1987 to 31st March, 1991.

e) Cost of Lease-hold land is amortised over the period of lease.f) Assets acquired under finance lease from 1st April 2001 are depreciated over the estimated useful

life or the lease term whichever is lower.g) Intangible asset is amortised equally over a period of three years.

2. INVESTMENTS

Investments are stated at cost, less diminution, if any, and are meant to be held for long-term period.

3. INVENTORY VALUATION

a) Stock of Stores and Spares : At lower of cost ( on FIFO / Moving Averagebasis ) or net realisable value.

b) Raw Materials and Tools

At lower of cost ( on FIFO basis) or net realisable value.c) Work in Progress

d) Finished Goods : At lower of cost or market value.

e) Excise duty payable on finished goods stocks at the end of the year is accounted for and consideredfor valuation.

4. FOREIGN CURRENCY TRANSACTIONS

Exchange difference other than on Fixed Assets is dealt with in the Profit and Loss Account.

5. RETIREMENT BENEFITS

Retirement benefits to employees comprise of payment of gratuity, superannuation and provident fundunder the approved schemes of the company / statutory regulation. Gratuity liability is provided on thebasis of actuarial valuation and funded with an approved Trust. Leave encashable on retirement isaccounted on accrual basis and provided for.

6. SALES

Sales are recognised on despatch to customers. Sales comprise sale of goods including excise duty andother incidental recoveries.

7. TAXES ON INCOME

Current Tax

Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax Provision

Deferred Tax is recognised, on timing differences, being the difference between the taxable income andaccounting income that originate in one period and are capable of reversal in one or more subsequentperiods.

8. OTHERS

Compensation to employees who have opted for retirement under the voluntary separation scheme isamortised over five years except for separation scheme at Lonavla, which is amortised over thirty-sixmonths and thirty months.

}

26


2006-2007 2005-2006Rupees Rupees

in lacs in lacs

B. CONTINGENT LIABILITIES AND NOTES TO ACCOUNTS

1. Contingent Liabilities not provided for :

(i) (a) Bills discounted with Banks 448.05 297.22

(b) For counter-guarantees to the Bank against Bank’sguarantee to the Government of India and other authorities 4.80 187.68

(ii) Excise Duty demand disputed 26.98 29.81

(iii) Income tax demand contested in appeal 490.29 24.71

(iv) Property tax demand contested in appeal 22.19 18.81

(v) Sales tax demand contested in appeal 32.60 28.99

2. Estimated amount of contracts remaining to be executed on capital accountand not provided for 577.19 764.39

3. Sales Tax incentive / deferment were availed at Lonavla plant under the Incentive Scheme of the StateGovernment during the period 1998 – 2003. On closure of the Lonavla plant the Director of Industries (Governmentof Maharashtra) has asked the company for recovery of amount availed by it. The Company is contemplating toseek opinion and take appropriate steps in this regard. Meanwhile based on liability likely to arise in this regardsa sum of Rs.169.33 lacs is provided in the books of accounts.

4. The Company has paid Rs.1807.72 lacs towards compensation to the employees who have retired under thevoluntary sepraration schemes. The expenditure so incurred is treated as Deferred Revenue Expenditure to becharged over a period of five years / 36 and 30 months. Accordingly a sum of Rs. 428.08 lacs (Previous yearRs399.08 lacs) pro rata for the year, is charged to Profit & Loss Account for the year ended 31.3.2007.

5. a) Sundry Creditors (Schedule 11 Item No. (a) (i)) includes Rs.76.28 lacs (Previous year Rs.37.25 lacs) dueto small scales industrial undertakings with dues exceeding Rs. 1 lac each outstandings for more than30 days, within the agreed terms to the extent identified from available information. Given below is a listof such parties. (Om Plastic Industries,Khodiyar Engineering,KVA Engineers,Vandan Engineers,GayatriEngg.Works,Janak Trading, OM Heat Treatment, Micro Tech Roller P Ltd, Galaxy Forge,N.J. Enterprise, Vishal Bearings )

b) As on date, there are no ascertainable claims on the Company towards overdue interest on the aboveoutstandings.

6. The Company’s business activity falls within a single primary segment viz., manufacture of Bearings. As suchthere are no separate reportable segments as envisaged under Accounting Standard - 17.

7. Related party disclosure as required by Accounting Standard - 18 :

A. Related Parties :

i) Associate Companies : ii) Executive Directors : iii) Non-Executive Directors:

Mipco Seamless Rings (Guj.) Ltd. Mr. P. M. Patel (Managing Director) Mr. S.M. Patel

Mipco Investments Pvt. Ltd. Mr. T.M. Patel ( Executive Director) Mr. C.U. Shah

Manoway Investments Pvt. Ltd. Mr. Y.H. Malegam

Maple Investments Co. Pvt. Ltd. Mr. S.K. Diwanji

Emsons Leasing Co. Pvt. Ltd. Mr. V.C. Vaidya

Ziwani Properties Pvt. Ltd. Mr. J. R. Patel

Saturn Holdings Pvt.Ltd.

Essex Holdings Pvt.Ltd.

Izumi Engineering India Pvt. Ltd.

27

2006-2007 2005-2006B. Related Party Transaction : Rupees Rupees

in lacs in lacs

Associate Companies

Transactions Name

Raw Material Processing Charges Mipco Seamless Rings (Guj.) Ltd 6.83 190.38

Rent Emsons Leasing Co.Pvt.Ltd 3.32 5.29

Utility Charges Mipco Seamless Rings (Guj.) Ltd 15.28 –

Lease charges received Mipco Seamless Rings (Guj.) Ltd 1.26 0.49

Purchases of Fixed Assets Mipco Seamless Rings (Guj.) Ltd – 436.00

Advance Izumi Engineering India Pvt.Ltd – 1.79

Executive Directors

Remuneration (Refer Note 14(b)) P.M Patel 196.17 152.16

T.M Patel 172.24 145.80

Non Executive Directors

Remuneration (Refer Note 14(c)) S.M Patel 39.45 30.60

Professional Fees andreimbursement of expenses S.M Patel 24.78 22.02

Rupees Rupeesin lacs in lacs

C. Outstanding Balances as at 31.03.2007 31.03.2006Associate Companies

i) Creditors Mipco Seamless Rings (Guj.) Ltd (213.77) (134.96)

D. There are no write-off / write back of any amounts for any of the above related parties except as under:

Transaction Associate Company

Amount Advanced Izumi Engineering India Pvt.Ltd – 1.79

8. In accordance with AS-22 Accounting for Taxes on Income , the Company has considered Deferred Taxesduring the year.Accodingly the net deferred tax Credit of Rs. 136.57 Lacs for the year has been recognised inthe Profit & Loss Account resulting in increase of Profit for the year by the same amount.

9. Opening and Closing Stock of goods manufactured during the year :

Opening Stock Closing Stock

Class of goods manufactured Rupees RupeesNos. in lacs Nos. in lacs

Ball & Roller Bearings 2006-2007 5,39,598 1025.48 8,73,716 1821.812005-2006 3,71,788 655.21 5,39,598 1025.48

Components 2006-2007 1,23,233 70.99 28,616 19.052005-2006 1,12,640 75.78 1,23,233 70.99

10. (A) Information for each class of goods manfactured and sold during the year :

Installed Production SalesClass of goods Capacity Quantity Value

RupeesNos.* Nos.*** Nos.** in lacs

Ball & Roller Bearings 2006-2007 64,00,000 63,60,642 60,78,356 20,726.58

2005-2006 64,00,000 52,16,445 50,48,635 17,152.81

Components 2006-2007 - 4,38,525 4,81,310 488.022005-2006 - 3,72,113 3,61,520 456.93

2006-2007 - - - 21,214.60Total 2005-2006 - - - 17,609.74

i) Licensed capacity has not been shown as the industry has been delicensed.ii) Installed Capacity is as certified by the Management and accepted by the Auditors. *iii) Sales includes free samples/ captive consumption 494 nos. (previous year 2971 nos.) **iv) Production figures are after adjusting scrapped rings of 10178 nos.***

28


(B) Raw Materials and Components consumed :

Quantity Value Rupees in lacs

Unit 2006-2007 2005-2006 2006-2007 2005-2006

(i) Steel MT 3,799.55 4,658.91 2,388.46 2,815.25(ii) Rolled/Forged Rings Nos 96,82,463 63,66,551 3,870.69 2,773.55(iii) Bought-out Components 2,692.29 2,401.81

8,951.44 7,990.61

(C) Percentage of Consumption :

% of total consumption 2006-2007 2005-2006Rupees Rupees

2006-2007 2005-2006 in lacs in lacs

(i) Raw Materials and Components:Imported (at landed cost) 12.65 9.07 1,132.01 724.87Indigenous 87.35 90.93 7819.43 7265.74

100.00 100.00 8951.44 7990.61(ii) Stores and Spares :

Imported (at landed cost) 2.65 3.68 25.15 24.67Indigenous 97.35 96.32 924.21 645.82

100.00 100.00 949.36 670.49

2006-2007 2005-2006Rupees Rupees

in lacs in lacs

11. CIF Value of Imports:Raw Materials 1035.58 754.91Stores and Spares 53.19 23.32Capital Goods 725.78 181.64

12. Earnings in Foreign Exchange :F.O.B. Value of Exports 95.15 39.61

13. Expenditure in Foreign Currency: (on mercantile basis)Interest 71.20 39.82Travelling Expenses 8.82 10.46Technical service/ assistance fees 15.90 16.25

14. Computation of Net profit as per section 309(5) andsection 198 of the Companies Act, 1956

(a) Profit as per profit and loss Account 3072.94 2314.23Add: Remuneration to Managing / Wholetime

Directors (including perquisites) 368.41 297.96Remuneration to Non wholetime Directors 39.45 30.60Depreciation debited in accounts 801.89 684.15Loss on sale of Assets(net) 17.01 –Provision for Doubtful Debts 26.78 33.71Dues under Voluntary Separation Scheme 428.08 399.08

1681.62 1445.50

4754.56 3759.73

Less: Profit on Fixed Assets sold / scrapped (Net) 7.47 14.40Surplus on Redemption of Investment 0.04 0.58Depreciation as per sec.350 of the 801.89 684.15Companies Act, 1956

809.40 699.13

Net Profit as per section 349 3,945.16 3,060.60

29

2006-2007 2005-2006Rupees Rupeesin lacs in lacs

(b) Remuneration to Managing / Wholetime Directorsunder Section 198 of the Companies Act, 1956.Salary 91.79 71.28Commission for the year to Managing and Executive Directors

subject to ceiling of 10% of the Net Profit restricted to amountas approved by the Board 245.00 200.00

Contribution to Provident Fund and Superannuation Scheme 24.78 19.25

Other perquisites 6.84 7.43

368.41 297.96(c) Commission to Non Wholetime Directors @ 1% of the net profit.

Total Managing / Wholetime & Non Wholetime Directors’remuneration including perquisites 39.45 30.60

407.86 328.56

15. Figures for the previous year have been regrouped wherever necessary for comparison.

16. Figures in italics are in respect of previous year.

17. Information pursuant to Part IV of Schedule VI to the Companies Act, 1956 is attached herewith.

Signatures to Schedules 1 to 16As per our report of even date For and on behalf of the Board




30


CASH FLOW STATEMENT

2006-2007 2005-2006Rs. In Lacs Rs. In Lacs Rs. In Lacs

A. CASH FLOW FROM OPERATING ACTIVITIES:

NET PROFIT BEFORE TAX 3,072.94 2,314.22Adjustment for:Depreciation 801.89 684.15Provision for Doubtful Debts 26.78 33.71Dues under Voluntary Seperation Scheme 428.08 399.08(Profit) / Loss on sale of fixed assets(net) 9.55 (14.40)Interest and finance charges 382.51 269.36Dividend and interest income (109.67) (42.82)Claims received (20.30) (59.42)Sundry balances written off (14.16) (4.14)Excess provision written back (15.95) (3.15)Sales Tax Deferment write back – (169.33)Surplus on redemption of Investments (0.04) (0.58)

1,488.69 1,092.46

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 4,561.63 3,406.68

Trade and other receivables (1,119.80) (375.60)Inventories (422.44) (687.17)Trade Payable 381.76 529.80

(1,160.48) (532.97)

CASH GENERATED FROM OPERATIONS 3,401.15 2,873.71

Interest paid (375.81) (307.05)

Direct Taxes Received/(Paid) (1,279.70) (916.94)(Including Fringe Benefit Tax)

(1,655.51) (1,223.99)

CASH FLOW BEFORE EXTRAORDINARY ITEMS 1,745.64 1,649.72

Claims Received 1.48 76.64

Dues under Voluntary Seperation Scheme – (1,015.71)

(939.07)

NET CASH FLOW FROM OPERATING ACTIVITIES (A) 1,747.12 710.65

B. CASH FLOW FROM INVESTING ACTIVITIES:

Purchase of Fixed Assets (1,293.20) (1,096.06)( Purchase)/Sale of Investments 117.36 (116.74)Sale of Fixed Assets 35.07 18.48Dividend & Interest Received 74.30 42.82

NET CASH USED IN INVESTING ACTIVITIES (B) (1,066.47) (1,151.50)

C. CASH FLOW FROM FINANCING ACTIVITIES:(Repayments) Proceeds from Outside Borrowings 394.32 894.29Dividend paid (456.87) (342.65)Taxes Paid on Distributed Profit (64.80) (48.60)

NET CASH USED IN FINANCING ACTIVITIES (C) (127.35) 503.04

NET INCREASE IN CASH & CASH EQUIVALENTS (A+B+C) 553.30 62.19

CASH & CASH EQUIVALENTS (Opening Balance) 275.56 213.37

CASH & CASH EQUIVALENTS (Closing Balance) 828.86 275.56

553.30 62.19

This is the Cash Flow Statement referred For and on behalf of the Boardto in our report of even date




31

Information pursuant to part IV of the Companies Act, 1956Balance Sheet Abstract and Company’s General Business Profile

i Registration details

Registration No. 1 2 0 2 8 State Code 1 1

Balance Sheet Date 3 1 0 3 2 0 0 7

Date Month Year

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

Public Issue N I L Rights Issue N I L

Bonus Issue N I L Private Placement N I L

iii Position of Mobilisation and Deployment of funds(Amount in Rs. Thousands)

Total Liabilities 1 0 5 1 6 1 0 Total Assets 1 0 5 1 6 1 0

Sources of Funds

Paid-up Capital 1 1 5 5 0 0 Reserves & 5 0 9 4 4 1Surplus

Secured Loans 3 8 4 3 7 7 Unsecured Loans 1 2

Deffered Tax Liability 4 2 2 8 0

Application of Funds

Net Fixed Assets 3 8 2 5 2 1 Investments 2 1 7 3

Net Current Assets 6 2 6 2 8 8 Misc. Expenditure 4 0 6 2 8

Accumulated Losses N I L

iv Performance of the Company(Amount in Rs. Thousands)

Turnover 1 8 5 9 0 6 1 Total 1 5 5 1 7 6 7 Expenditure

+ - + -

� Profit /Loss 3 0 7 2 9 4 � Profit / 2 0 1 3 1 1

before tax Loss after tax

Earning per Share in Rs. 1 7 . 4 3 Dividend Rate % 4 0

v Generic Names of Three Principal Products / Services of Company [as per monetary terms]

Item Code No. [HS Code] 8 4 8 2 1 0

Product Description B A L L B E A R I N G S


Product Description C Y L I N D R I C A L R O L L E R B E A R I N G S


Product Description T A P E R R O L L E R B E A R I N G S

32


We are environmental friendly organisation.We are accredited with ISO 14001:2004

33

ABC BEARINGS LIMITED

Regd. Office: 402-B, Poonam Chambers, Dr. Annie Besant Road, Worli, Mumbai – 400 018.

ATTENDANCE SLIP

To be handed over at the entrance of the meeting hall

Full Name of the Member attending

Full Name of the First / Joint-holder

(To be filled in if first named joint-holder does not attend the meeting)

Name of Proxy

(To be filled in if Proxy Form has been duly deposited with the Company)

I hereby record my presence at the FORTY-SIXTH ANNUAL GENERAL MEETING of the Company held on Tuesday, the

24th July, 2007 at 4.30 p.m. at Hall of Culture, Nehru Centre, Dr. Annie Besant Road, Worli, Mumbai – 400 018.

Regd. Folio/ID No.

No. of Shares held

Member’s/Proxy’s signature(to be signed at the time of

handing over this slip)

(Please cut here)

ABC BEARINGS LIMITED

Regd. Office: 402-B, Poonam Chambers, Dr. Annie Besant Road, Worli, Mumbai – 400 018.

PROXY FORM

I/We

of in the district of

being member(s) of the above named company, hereby appoint


or failing him


as my/our proxy and to vote for me/us on my/our behalf at the FORTY-SIXTH ANNUAL GENERAL MEETING of the Company

to be held on Tuesday, the 24th July, 2007 at 4.30 p.m. at Hall of Culture, Nehru Centre, Dr. Annie Besant Road, Worli,

Mumbai – 400 018 or any adjournment thereof.

Signed this day of 2007.

Regd. Folio/ID No.

No. of Shares held

The Companies Act, 1956 lays down that an instrument appointing a proxy shall be deposited at the Registered Office of

the Company not less than 48 hours before the time for holding the meeting.

Pleaseaffix

15 PaisaRevenue

Stamp

Documents

Annual Report 2007 - ABC Bearings Mahindra Bank ... dividend warrants for the financial years 2003-04 to 2005-06 are ... to present the Forty-sixth Annual Report with the Audited Statement