Rico Annual Report 2002-03 Annual Report 2002-03.pdf · In addition to your company Rico Auto Industries Limited, we have created wholly owned subsidiaries and joint ventures to create

About UsOur VisionBoard of Directors Financial HighlightsLetter from the MDManufacturing & Engineering Our CustomersOur Human Assets Quality & Continuous Improvements Environment Health & SafetyQuestion & AnswerNoticeDirectors’ ReportManagement Discussion and Analysis ReportCorporate Governance ReportAuditors’ ReportBalance SheetProfit and Loss AccountSchedules to Balance SheetSchedules to Profit and Loss AccountAdditional InformationBalance Sheet Abstract and Company’s General Business ProfileCash Flow StatementStatement u/s 212 of the Companies Act, 1956

SUBSIDIARY COMPANIESRico Softech LimitedRico Auto Industries Inc. USA

Consolidated Financial Statements

1234689

1011111217202426343637384249525355

5671

78

CONTENTS

Rico Auto Industries Limited is a world-class engineering group. We make high precisionferrous and aluminum components and assemblies focused on the automotive sector.

Leveraging on our reputation for engineering excellence, modern technology, customerservice, operational efficiency, quick time to market and cost effective solutions, wecontinue to make significant progress in growing our business, adding to our customerand product base and expanding our international presence. We aim to make ourcompany more competitive and generate value-enhancing growth while establishingourselves globally as a Full Service Supplier.

We are well positioned to capitalize on the attractive market opportunities. We will buildon our strong customer relationships and pursue new opportunities that further expandsour position in our strategic core business and enhances value for our shareholders.

Consolidated Group

In addition to your company Rico Auto Industries Limited, we have created wholly ownedsubsidiaries and joint ventures to create a larger Consolidated Group so as to deliverhigher value to our shareholders and customers.• FCC RICO: We have 50:50 joint venture with FCC of Japan (world leader in automobileclutches).• RICO SOFTECH LTD (wholly owned subsidiary) : Focussed on providing engineering services(CAD, CAM, CAE) and customer contact center services.• RICO AUTO INDUSTRIES INC, USA (wholly owned subsidiary): Focussed on providing logistics,local customer and engineering support services to our customers in the US.

ABOUT US

1ENHANCING VALUE THROUGH TECHNOLOGY

OURVISION

To be the preferred full service supplier to original equipment manufacturers across the globe

OUR STRATEGY

World Class Quality

– ISO / TS 16949

– Total Productive Maintenance

– Six Sigma

Full Service

– Design Development CAD CAM CAE

– Tooling & Prototyping

– Casting, Machining, Assembly & Logistics

Preferred Supplier

– Customer Focussed Enterprise

– Efficient Program Management

– Global Distributed Delivery & Teams

People

– Training & Skill Building

– Cross functional & Problem Solving Experience

– Empowerment & Leadership

Shareholder Value

– Pursue High Returns on Capital Employed

– Focus on Cash

– Consistent Dividend Distribution

2


BOARD OF DIRECTORS

Shri Chandra MohanChairman

Shri C.K. HazariShri Anup SinghProf. V.K. BhallaShri Kanwal MongaShri Amarjit ChopraShri John T. ShefflerShri Rakesh Kapur

Shri Arun KapurJoint Managing Director

Shri Arvind KapurManaging Director

SENIOR EXECUTIVES

Shri O.P. Aggarwal Shri R.S. Kundi Shri N.K. Sethi Dr. S. Chithambaram Shri G.S. BishtShri Rajiv Bajaj Shri R.M. SabbarwalShri Devendra Raina

COMPANY SECRETARY

Shri B.M. Jhamb

AUDITORS

M/s. Gupta Vigg & Co.Chartered Accountants New Delhi

BANKERS

State Bank of IndiaICICI Bank LimitedStandard Chartered BankCitibank N.A.IDBI Bank Limited

REGISTERED OFFICE & PLANT I

69 KM Stone, Delhi-Jaipur HighwayDharuhera -122 106 District Rewari Haryana (India)

CORPORATE OFFICE & PLANT II

38 KM Stone, Delhi-Jaipur Highway Gurgaon - 122 001Haryana (India)

AGROILS DIVISION

Silor Road Kota-Jaipur HighwayBundi - 323 001Rajasthan (India)

SHARE TRANSFER AGENT

M/s. MCS Limited Srivenkatesh Bhavan,212-A, Shahpurjat New Delhi - 110 049 (India)

4

HIGHLIGHTS

Sales & other Income PBDIT Depreciation PBITInterest Profit before Tax (PBT) Provision for Tax Provision for Deferred Taxes Profit after Tax (PAT)

Equity CapitalReservesDeferred Tax LiabilitiesLoan Funds

Net Fixed AssestsNet Current Assets

Per Share Data (Rs)Basic Earnings per shareDiluted Earnings per shareBasic Cash Earnings per shareDiluted Cash Earnings per shareDividend per share

Key Ratios (%)Operating MarginROCE (PBIT/Avg. Capital Employed)RONW (PAT/Avg. Net Worth)

2002-03Particulars 2001-02 2000-01 1999-00 1998-99

452.049.812.737.14.9

32.211.81.0

19.4

450.348.511.636.98.2

28.79.31.0

18.4

353.434.310.024.38.7

15.62.00.0

13.6

254.927.16.2

20.97.8

13.10.00.0

13.1

147.919.05.2

13.87.86.00.00.06.0

10.749.314.669.6

10.737.713.564.4

5.443.60.0

64.2

5.434.10.0

68.1

5.424.60.0

57.0

110.222.5

99.716.8

98.09.2

88.013.9

65.214.8

18.118.130.830.86.5

17.217.229.329.36.0

25.412.745.322.7

7.0

24.524.536.836.86.0

11.111.123.923.93.5

11.027.937.1

10.831.239.1

9.722.131.4

10.621.537.5

12.917.017.4

(Rs in Crores)RICO AUTO INDUSTRIES LTD

98-99 99-00 00-01 01-02 02-03

17.0

17.4

37.5 31.4 39.1 37.1

RONW (%)ROCE (%)

21.5 22.131.2 27.9

98-99 99-00 00-01 01-02 02-03

Sales & Other Income Rs./Cr

147.9

254.9353.4

450.3452.0

98-99 99-00 00-01 01-02 02-03

Dividend per share (Rs)

3.5

6.07.0

6.0 6.5

98-99 99-00 00-01 01-02 02-03

19.027.1

34.348.5 49.8

6.013.1 13.6

18.4

19.4

PBDIT Rs/CrPAT Rs/Cr

ENHANCING VALUE THROUGH TECHNOLOGY5

Gross SalesRico Auto Industries LimitedAuto Components SegmentAgroils SegmentRico Auto industries TotalRico Softech limitedRico Auto industries Inc, USAFCC Rico Limited (50%)Less: Inter CompanyRico Consolidated Group Total

PBDIT (EBITDA)PBIT (EBIT)PBT (EBT)PAT

Gross Fixed AssetsNet Fixed assetsNet Working CapitalMisc Exp & othersUse of Funds Total

Equity share CapitalReserves & SurplusShareholders FundsDebt & Loan FundsDeferred Tax LiabilitiesSources of Funds Total

EBITDA % of Gross SalesEBT % of Gross Sales

Gross Sales to Net Fixed Assets (Ratio)Gross Sales to Net Working Capital (Ratio)ROCE %RONW %

EPS (Rs/Share)Dividend declared (Rs/Cr)Dividend as % of PAT (%)Dividend as % of Equity (%)

2002-03Particulars 2001-02

415.636.4

452.04.57.5

52.8-16.6500.2

56.441.235.820.6

194.8124.422.91.4

148.7

387.363.0

450.32.00.5

31.6-8.2

476.2

53.138.329.919.5

4.021.8

29.6%40.0%

4.228.3

29.2%43.4%

19.27.9

43.6%83.8%

18.26.4

33.0%60.1%

11.3%7.2%

11.1%6.3%

171.8114.716.82.3

133.8

10.748.759.474.814.5

148.7

10.736.547.273.013.6

133.8

(Rs in Crores)CONSOLIDATED GROUP

6

Dear Shareholders,

I am pleased to report that, during 2002-03, we madeexcellent progress towards our strategic objectives ofconsolidating and growing our core business whilepositioning the Company for future growth and continuedprofitability.

During 2002-03, our financial performance wascommendable given the subdued business climate. Our consolidated group salesreached a new high of Rs. 500 crores.

Sales of automotive components reached Rs. 415 crores, an increase of 7 percentover the previous year. Total sales for the year, at Rs. 452 crores, remained atsimilar levels as in the previous year, due to 41 percent decline in the sales of ourAgro division, to Rs. 37 crores. Thanks to our continued focus on controlling costand improving productivity, pre-tax profits were 13 percent higher, at a record Rs.32 crores.

Sales at FCC RICO Limited, our 50:50 JV with FCC Co. Limited, Japan, the worldleader in automobile clutches, reached a record Rs. 105 crores, an increase of 67percent over the previous year.

Some of the other highlights of the year under review include:

• Stepped up supplies to key customers in the domestic market. • Added to our product range, and expanded our customer base in the globalmarkets.• Launched the next phase of continuous improvement initiatives (Total ProductiveMaintenance TPM and Six Sigma) in our journey towards being a world class Leanenterprise.• Component Design and Development capabilities were further strengthened.• Operations remained strongly cash generative and capital efficient.• Exports, at Rs. 11.6 crores, rose 35%. • Dividend to shareholders further stepped up.

During 2002-03, overall sales growth in the two-wheelers market continued to beled by the motorcycles segment, as the scooters and mopeds segment postednegative growth. Motorcycle sales during the year grew by 30 percent to 3.83million vehicles. Hero Honda, the world’s number one motorcycle manufacturerand our major customer, increased its sales by 17 percent to 1.67 million vehicles,though sales slackened considerably in the last quarter of the year. While volume

LETTER FROM THE MANAGING DIRECTOR


growth remained strong, the escalating competitive pressures in our key customersegments significantly impacted our price realizations.

I am pleased with the manner in which our teams responded, helping ussuccessfully navigate challenging business conditions, to report a solidperformance. Our resilient performance during the year is thanks to ourcontinuous efforts at reducing operating costs and improving efficiency. In thearea of finance, we tightened control on all costs and took pro-active steps tobenefit from the lower interest rates prevailing in the economy. Our workingcapital management remained highly efficient. Our operations continued togenerate significant cash for us to re-invest in our business, even as we continueto pay out higher dividends.

During the year, we retained our focus on key long-term objectives. We revitalizedour organization and aggressively pursued new growth opportunities. Ascomponent outsourcing from low-cost nations is on the rise, India is emerging asa potential outsourcing destination. At Rico Auto, our strategy, as is known, is tobe a low-cost, high-quality Full Service Supplier and we continue to make goodprogress with our global growth initiatives. Amongst our most notableaccomplishments was our being selected by Ford Motor Company globally to bepart of their Global Supplier Development Program. The objective of the programis to create a strategic partnership with Rico and develop Rico as a key supplier ofaluminium and ferrous components and assemblies for Ford and its global brands.Through this program, Ford will work with Rico to increase our understanding ofFord processes and requirements, and to help accelerate component sourcing.Both companies have signed a long-term agreement in April 2003 to formalize thisstrategic partnership.

Our approach is to work closely, preferably from the early stages of concept anddesign, so as to offer the most cost-effective products and solutions that exceedour customer's expectations.

We will support our key growth initiatives with value adding capital investmentsthat enhance our scale and scope of operations, increase our competitiveadvantage, add to our design and engineering capabilities, and improve ourproductivity levels. Having achieved QS 9000 and being one of the first autmotivecomponents companies to complete ISO / TS 16949 our efforts on TPM and SixSigma are being aleady recognized by our customers. We have the right products,capabilities and people to succeed and are confident of consistently deliveringgreater value to our customers and shareholders.

In closing, I would like to thank all my colleagues for their tireless efforts,commitment, dedication and support in working towards the achievement of ourobjectives. I would also like to thank our customers, suppliers, bankers andinstitutional lenders, for their loyal support and above all to you, our shareholders,for your continued support and confidence in our Company.

Arvind Kapur Managing Director

8

Ferrous Casting• World class ferrous foundry (grayand ductile iron components)• Casting capacity of approximately15,000 tonnes per annum• Future: Enhancing capacity andcapabilities by installing new mouldinglines

Aluminium Casting• 35 High Pressure Die Castingmachines• Future: Enhancing capacity (newmachines) and capabilities (highertonnage machines)

Machining & Assembly• Over 175 CNCs and 200 SPMs (specialpurpose machines)• In house painting and assembly lines• Machining lines are expanded withnew projects as per customerrequirements

MAN U FACTU RI NG


• Latest CAD/CAM/CAE Softwares(Unigraphics, Pro-E, Ideas, C3P)• In-house Dies & Patterns Making andPrototyping Facilities • Flow & Thermal Simulation • Future : Enhancing component design,development & CAE capabilities

ENGI N EERI NG

OU R CUSTOM ERS

Matsusaka EngineeringCo., Japan

India Key Customers

10

� At Rico Auto, our people have always been our most valuable assets.The tireless dedication, innovative capabilities and specialist skills ofour people are an important element of our success. Our people are animportant factor in the strong and enduring relationships we havedeveloped with our customers. Every employee at Rico understandsand appreciates the importance of personal responsibility as well asteam spirit.

� Rico Auto’s philosophy is to orient its people towards excellence interms of knowledge, skill and attitude in order to keep pace with therapidly changing global industrial scenario. We support our peoplewith continuous training and education initiatives. Our continuousfocus on internal as well as external trainings is yielding results in termsof higher productivity, efficiency and enhanced ability to handlecomplex situations.

� Rico Auto’s organisational culture is communicative. Employees arewell informed of latest corporate developments and are forthcomingwith their progressive suggestions / and views. We have an open, fairand transparent reward and compensation system, which helpsmaintain high levels of employee satisfaction and high retention rates.Our people are firmly committed to our values.

� Rico Auto is committed to building a world-class organization thatattracts and retains a first-rate team of people who thrive on changeand contribute to our continued success. As of March 2003, ouremployee strength was 1433.

OU R H U MAN ASSETS

11

� We, at Rico Auto Industries Limited, are committed tocontinuous improvement in the quality of all our products,services and operations in order to exceed our customers’expectations and achieve our vision of being a preferredsupplier.

� We have been a pioneer in adhering to internationalquality standards, thus remaining at the forefront inattaining International Quality Certifications. We are nowan ISO9002, QS9000, ISO/TS16949, ISO14001 and OHSAS18001 Certified Company.

� To become a world class manufacturing Company andupgrade the skills and abilities of our people we arecurrently implementing Total Productive Maintenance(TPM) and Six Sigma across the Company.

� Our quest for higher quality standards will remainnever-ending and we will continue to strive forcontinuous improvement by learning from best practicesof world class companies.

QUALITY & CONTI N UOUS I M PROVEM ENT

� We, at Rico Auto, are committed to protecting theEnvironment, Health & Safety (EHS) of our people, ourcustomers and our community.

� We create, operate and maintain our facilities incompliance with all applicable EHS regulations, laws andstandards. All our facilities are ISO 14001 and OHSAS18001 compliant.

� We promote EHS awareness amongst employeesthrough regular training and process improvements. Weregularly perform system audits to ensure effectiveness ofour EHS management system.

� We are committed to maintaining a standard ofexcellence that ensures continual improvement in our EHSperformance.

ENVI RON M ENT, H EALTH & SAFETY

ENHANCING VALUE THROUGH TECHNOLOGY

12

QQ

A

QA

AMr. Arvind Kapur, Managing Director,

answers questions relating to Rico Auto’s

performance and prospects &

Are you satisfied with Rico Auto’s financial performance in 2002-03?

Could you tell us more on the Company’s Agro division? What is RicoAuto’s future plan for this division?

We delivered increased sales and earnings in our core businessdespite a challenging operating environment. Pricing pressuresintensified as key customers continue to demand more for less. Ourvolume growth was impacted as well towards the end of the year,with a sharp drop in off-take by our major customer. Our focusedefforts at expanding our product offerings and adding newercustomers helped us. Strategic initiatives taken to expand exportsales yielded positive results, with exports rising 35% to Rs.11.6crores. While total sales, at Rs.452 crores, remained flat due to thenegative growth in the Agro division, we did well to boost pre-taxprofits, by 13%, to a new-high of Rs.32.3 crores.

� The improved profits are largely due to our collective hard-workto drive down costs while improving operating efficiencies. We haveimplemented improvements in several business processes over theprevious year. Our in house dies and patterns making facilities andthe use of high end simulation softwares helped us in managing ourtooling costs and increasing our yield and productivity. We have alsoimplemented a rigorous revenue and capital expenditure controlsystem. Resource (material, machine, manpower and money)productivity metrics are now used across all functions within ourcompany. The overall interest rate regime was favourable and weacted swiftly to substantially lower our cost of debt andconsequently, our interest outflows. We continued with our tightvigil on working capital and overall our operations remained capitalefficient and generated robust cash flows. Our balance-sheetposition remains very sound. During 2002-03, we have, in line withour stated dividend policy, paid out 40% of our profits toshareholders with a tax-free dividend of Rs.6.5 per share.

� Overall, given the challenges we faced, our operatingperformance during the year was highly encouraging.

As shareholders are aware, the Agro division came into being inOctober 1999 with the merger of the erstwhile Rico Agroils Limited.The unit, located at Bundi, Rajasthan, has a Solvent Extractioncapacity of 500 TPD and 50 TPD continuous type Edible Oilrefinery.During 2002-03, sales in the Agro division dropped 41percent, to Rs. 37 crores, accounting for 8 percent of our total sales.


Due to the severe drought conditions in Rajasthan, the Soyabeancrop in the State was at just 25% of normal levels. Our crushingduring 2002-03 was only 24500 MT as compared to 51600 MT in theprevious year. The division posted an operating loss of Rs.31 lacsduring 2002-03, as compared to a modest operating profit of Rs. 116lacs in the previous year.

� While our Soya plant is strategically well located and wecontinue to make all efforts to run the plant optimally, this is a ‘non-core’ area for us and we intend to exit this business in the nearfuture. We are already exploring options in this regard.

FCC RICO Limited, is Rico Auto’s 50:50 Joint Venture with FCCCompany Ltd, Japan, the world leader in automobile clutches. FCCRICO’s major customers in India include Hero Honda, Honda SielCars, Honda Motorcycles and Scooters India, Bajaj Auto and Yamaha.During 2002-03, FCC RICO posted its best performance ever, withsales at Rs. 105 crores, showing an increase of 67 percent over theprevious year.� Rico Softech Limited, a wholly subsidiary, was set up to leverageupon our wealth of engineering knowledge, particularly in the areaof CAD / CAM / CAE. Besides the CAD / CAM / CAE division, whichprimarily caters to the needs of Rico Auto, Rico Softech also has aContact Center division, which presently has 200 operating seats.During 2002 - 2003, Rico Softech more than doubled its turnover, to Rs. 4.5 crores, of which revenue from CAD / CAM / CAE activities wasRs. 2.1 crores. The year under review was the first full year ofoperations for the Contact Centre division, which posted revenues ofRs. 2.4 crores.

Automotive component outsourcing from India is on an uptrend.India’s cost advantage, in the area of high precision metal castings isgaining increasing global recognition. We are very excited by theglobal growth opportunities for our products and services.Alongwith volume production capabilities, our engineering skillsand vertical integration from tooling to sub assemblies are providingus with a competitive edge at the global market place. Rico Auto’sstrategy is to be a low-cost, high quality Full Service Supplierleveraging on our ability to provide the full range of services fromproduct engineering and component design to componentmanufacturing, assemblies and `just-in-time’ deliveries. Our strongfoundation is based upon our strong relationships with our globalcustomers. We are getting recognition for our competitive coststructure, world-class quality and technology standards. We are seenas a flexible and responsive organization with strong design,

QAComment on the performances of FCC RICO and Rico Softech during 2002-03.

QA

Could you please update us on Rico Auto’s export prospects and its growthinitiatives in this regard?

14

development and engineering capabilities, and a proven ability toscale up rapidly.

� We have been in the international markets for over adecade supplying critical components to global OEMs like

General Motors, Cummins Engine Company, Land Rover,Eaton Corp, Matsusaka Engineering etc. and, goingforward, we expect to see significantly higher exports toour established and expanding customer base. Wealready have a wholly owned subsidiary in the USA toprovide customer and logistics support and are in theprocess of setting up another one, in Europe.

� Our recent Global Supplier Development programwith Ford Motor Company, the world’s second largest

auto maker, is a major achievement. We expect significantrevenue gains to accrue, as a result of our being part of

Ford’s Global Sourcing Network, within the next three - fiveyears. The opportunities for expansion are immense and we

hope to significantly grow our global business in the comingyears.

As I’ve discussed in my Letter to Shareholders, the growth prospectsin the domestic market for the automobile sector look verypromising with all key growth drivers in place. Our marketreputation and our ability to work in partnership with our customersgive us an added edge. We intend to grow our traditional marketsby expanding our product portfolio, aggressively pursuing newercustomers and expanding into newer segments of the market. We see excellent opportunities in the domestic market and are wellpositioned to benefit from the same.

We continually look for ways to minimize costs and improveproductivity even as we keep up a focused capital investmentprogram to enhance our manufacturing capacities and capabilities.We intend to invest in higher tonnage die casting machines andnewer casting technologies to expand the scale and scope of ouroperations. Our future growth will be driven by increasing our valueadding capabilities. We are strengthening our design, engineeringand development capabilities. We are investing to become a worldclass lean enterprise and implementing Total Productive

QAWhat is the outlook in the domestic market?

QAHow is Rico Auto equipping itself for future growth?


Maintenance (TPM) and Six Sigma across the Company. We continueto invest in our people, strengthen our organization structure andcreate a work environment that continually motivates our people torespond enthusiastically to the competitive challenges.

We are also actively scouting for suitable strategic tie-ups and/oracquisitions in the international markets that expand andstrengthen our competitive standing and provide us with profitablegrowth opportunities in new markets.

� Our Balance-Sheet position is healthy and our internal accruals,strong. We aim to maintain an efficient capital structure through anappropriate debt-equity mix. We are conscious, at all times, of ourfinancial objectives of consistently generating positive cash flowsand a high return on capital employed. As we prepare ourselves forfuture growth we remain committed to creating value for ourcustomers and our shareholders.

16

17

NOTICENotice is hereby given that the 20th ANNUAL GENERALMEETING of the Members of RICO AUTO INDUSTRIES LIMITEDwill be held on Monday, the 15th day of September, 2003 at10.30 A.M. at the Registered Office of the Company at 69 KMStone, Delhi-Jaipur Highway, Dharuhera, Distt. Rewari, Haryanato transact the following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the Audited Balance Sheetas on 31st March, 2003 and the Profit and Loss Account forthe year ended on that date together with the Reports ofDirectors’ and Auditors’ thereon.

2. To declare Dividend on Equity Shares for the year ended31st March, 2003.

3. To appoint a Director in place of Shri C.K. Hazari, who retiresby rotation and being eligible, offers himself forre-appointment.

4. To appoint a Director in place of Shri Anup Singh, who retiresby rotation and being eligible, offers himself forre-appointment.

5. To appoint a Director in place of Prof. V.K. Bhalla, who retiresby rotation and being eligible, offers himself forre-appointment.

6. To appoint Auditors to hold office from the conclusion of thismeeting until the conclusion of the next Annual GeneralMeeting of the Company and to fix their remuneration.

SPECIAL BUSINESS

To consider and, if thought fit, to pass with or withoutmodification(s), the following Resolutions:

7. AS AN ORDINARY RESOLUTION

“Resolved that pursuant to the provisions of Section 293(1)(d)and other applicable provisions, if any, of the CompaniesAct, 1956 and subject to the approval of the Reserve Bankof India and the Securities and Exchange Board of India orsuch other authorities under relevant enactments, whereverapplicable, the Company hereby accords its consent to theBoard of Directors of the Company including committeethereof (hereinafter referred to as “the Board”) to borrowany sum or sums of money from time to time from any oneor more of the Company’s Bankers and/or from any one ormore, firms, bodies corporate (Indian or Overseas), financialinstitutions (Indian or Foreign), Non resident Indians orForeign Nationals or other persons whether by way ofAdvance, Deposits, Loans, External Commercial Borrowings(ECB) including other modes of External Borrowings,Debentures or otherwise and whether unsecured or securednotwithstanding that the moneys to be borrowed togetherwith moneys already borrowed by the Company (apart fromtemporary working capital loans obtained from Company’sBankers in the ordinary course of business) may exceed theaggregate of the paid-up capital of the Company and its freereserves, that is to say, reserves not set apart for any specificpurpose but so however that the total amount upto whichthe moneys may be borrowed by the Board and outstandingat any point of time shall not exceed in aggregate the limit ofRs.200.00 Crores (Rupees Two hundred crores only)exclusive of interest and other charges whatsoever connected

with the aforesaid loans, as against Rs.100.00 Croresapproved by the members in the 17th Annual GeneralMeeting of the Company held on 25th September, 2000”.

8. AS AN ORDINARY RESOLUTION

“Resolved that pursuant to the provisions of Section 293(1)(a)and all other applicable provisions, if any, of the CompaniesAct, 1956 (including any statutory modification orre-enactment thereof, for the time being in force) and subjectto such other approvals, sanctions as may be required fromthe Reserve Bank of India (RBI) and other authorities underany laws or regulations or guidelines and after such alterationsand modifications as may be specified by RBI and such otherauthorities while according the approval or sanction, consentof the Company be and is hereby accorded to the Board ofDirectors of the Company (hereinafter referred to as “theBoard” and includes any committee formed thereof) tomortgage and/or charge, in addition to the existing mortgages/charges created by the Company, in such form and mannerand with such ranking and at such time and on such termsas the Board may determine, on all or any of the moveableand/or immovable properties, both present and future of theCompany together with the power to make over themanagement of the business and concern of the Companyin certain events of defaults, in favour of the Lender(s),Agent(s) and Trustee(s) for securing the borrowings of theCompany availed/to be availed by way of loan(s) includingExternal Commercial Borrowings (ECB) and other mode ofExternal Borrowings and Debentures or other instruments,issued/to be issued by the Company, from time to time onprivate placement basis or otherwise so however that theoverall limit shall not exceed the limit of Rs.200.00 Crores(Rupees Two hundred crores only) at any point of timeexcluding interest and other charges, as against Rs.100.00Crores approved by the members at the 17th Annual GeneralMeeting of the Company held on 25th September, 2000”.

“Resolved further that for the purpose of giving effect to thisresolution, the Board be and is hereby authorized to finalise,settle and execute such documents/deeds/ writings/papersagreements as may be required and to do all such acts,deeds, matters and things, as it may in its discretion deemnecessary, proper or desirable.”

“Resolved further that all mortgages and/or charges createdhitherto by the Board under the authority of resolutionspreviously passed under the Companies Act, 1956 shallcontinue to remain in full force and effect without derogatingfrom the same in any manner whatsoever.”

9. AS A SPECIAL RESOLUTION

“Resolved that the Equity Shares of the Company be delistedfrom the Delhi Stock Exchange Association Limited and theLudhiana Stock Exchange Association Limited in accordancewith provisions of the Securities and Exchange Board of India(Delisting of Securities) Guidelines, 2003, the CompaniesAct, 1956 and the Securities Contract (Regulation) Act, 1956and subject to other compliances and clearances as maybe required from any other authority.”

“Resolved further that the Board of Directors of the Companybe and is hereby authorized to take all necessary steps forvoluntary delisting of the shares as aforesaid and to do allsuch acts, deeds, matters and things as it may in its absolute

18

Protection Fund (IEPF) and thereafter shall also be transferred,after the expiry of seven years from the date of declaration,to the IEPF. Therefore, shareholders who have not claimedthe dividend for the year 1995-96 onwards may contact theCompany for payment. It may also be noted that once theunclaimed dividend is transferred to the aforesaid fund, noclaim shall be entertained in respect thereof either by theCompany or by the said fund.

9. Shareholders of erstwhile Rico Agroils Limited who haveyet not exchanged their Share Certificates may surrenderthe same at the Corporate Office of the Company.

10. Members can avail the facility of nomination in respect ofshares held by them pursuant to the Companies Act, 1956.Members desiring to avail this facility, are requested to writeto Corporate Office of the Company.

11. All documents referred to in the Notice and ExplanatoryStatement are open for inspection at the Registered Officeof the Company on all working days except Sundays andPublic Holidays between 10.00 a.m. to 12.30 p.m. upto thedate of the Annual General Meeting.

12. The information as required by the Clause 49(VI) of the ListingAgreement regarding the Directors who are retiring by rotationand eligible for re-appointment is given below:

Item No. 3

Shri C.K. Hazari

Shri C.K. Hazari, born on 5th July, 1923 was appointed as Directorby the Board of Directors on 17th October, 1985 is a CharteredAccountant having more than 56 years of vast and rich experienceto his credit. He was Joint Managing Director of Escorts Limited.The Company regularly avails his advices on the strategic financialmatters. His professional guidance and advices has contributeda lot in the progress of the Company. He is also Director of thefollowing Companies:

1. Samtel India Limited2. Uniproducts India Limited3. Talbros Automotive Components Limited4. Shivalik Agro Poly Products Limited5. PNR Capital Services Limited6. Shaw Wallace & Co. Limited7. Core Lease Finance Private Limited8. Ascend Securities Private Limited9. Ascend Exports Private Limited

He is Member of the Committees in the following Companies:

1. Rico Auto Industries Limitedi) Audit Committee – Chairmanii) Shareholders/Investors Grievance

Committee – Chairmaniii) Remuneration Committee – Chairman

2. Uniproducts India Limitedi) Share Transfer Committee – Memberii) Audit Committee – Member

3. Samtel India Limitedi) Share Transfer/ Shareholders/

Investors Grievance Committee – Memberii) Audit Committee – Chairman

4. Shaw Wallace & Co. Limitedi) Audit Committee – Chairman

discretion deem necessary, proper or desirable and to settleany question, difficulty, doubt that may arise in regard todelisting of the Equity Shares and to execute all such deeds,documents, writings as may be necessary desirable orexpedient as may be deem fit for this purpose.”

By Order of the BoardFor Rico Auto Industries Limited

Place : Gurgaon B.M. JhambDated : 30th July, 2003 Company Secretary

NOTES

1. A MEMBER ENTITLED TO ATTEND AND VOTE ISENTITLED TO APPOINT A PROXY TO ATTEND ANDVOTE ON A POLL INSTEAD OF HIMSELF/HERSELF ANDTHE PROXY SO APPOINTED NEED NOT BE A MEMBEROF THE COMPANY. PROXIES, IN ORDER TO BEEFFECTIVE, MUST BE DEPOSITED AT THEREGISTERED OFFICE OF THE COMPANY NOT LESSTHAN 48 HOURS BEFORE THE TIME FIXED FOR THEMEETING.

2. The Register of Members and the Share Transfer Books ofthe Company, will remain closed from 6th September,2003 to 15th September, 2003 (both days inclusive).

3. Members are requested to notify change in their address.

4. Members are requested to intimate their queries,if any, on the Annual Report so as to reach on or before8th September, 2003 to enable to furnish the replies at theAnnual General Meeting.

5. The Dividend on Equity Share Capital for the year ended31st March, 2003 as recommended by the Board, if approvedby the members at the meeting, will be paid to those memberswhose names appear on the Company’s Register ofMembers on 15th September, 2003. In respect of sharesheld in electronic form, the dividend will be payable to thebeneficial owners of the shares as on the closing hours ofbusiness on 5th September, 2003 as per details furnishedby the depositories for this purpose. The dividend warrantswill be sent within 30 days from declaration.

6. Members holding Shares in physical form, who have yet notforwarded details either of their Bank Account or ElectronicClearing Service (ECS) mandates are requested to furnishthe same to the Company.

7. Members holding Shares in dematerialised mode arerequested to intimate all changes with respect to their bankdetails, ECS mandates, nomination, change of address totheir depository participant.

8. a) The amount of unclaimed dividend for and upto thefinancial year ended 31st March, 1994 has already beentransferred to the General Revenue Account of theCentral Government, Shareholders who have so far notclaimed dividend upto the aforesaid financial year mayclaim their dividend from the Registrar of Companies,NCT of Delhi & Haryana by submitting an application inthe prescribed form.

b) Pursuant to Section 205A of the Companies Act, 1956the amount of unpaid or unclaimed dividend relatingto the financial year ended 31st March, 1995 hasbeen transferred to the Investor Education and

19

Item No. 4

Shri Anup Singh

Shri Anup Singh, born on 9th November, 1931 was appointed asDirector by the Board of Directors on 28th June, 1996 is a Graduatefrom the Indian Railway Institution for Mechanical Engineering andElectrical Engineering and Fellow of IME (London, UK). He isretired Secretary, Government of India and Member of IndianRailway Board. He also held the position of Chairman, Institute ofMechanical Engineers (London) - Indian Centre.

He has also been honored with Gold Medal by Indian RailwayBoard and Steward-Dyer Award by the Institution of MechanicalEngineers (London). He has 49 years vast experience to his credit.His professional guidance on technical and other fields hascontributed a lot in the progress of the Company. He is alsoDirector of the following Companies:

1. Karam Chand Thapar & Bros. (Coal Sales) Limited2. United Van Der Horst Limited3. Sunil Synchem Limited4. Bilt Paper Holdings Limited

He is Member of the following Committees of Rico Auto IndustriesLimited:

i) Audit Committee – Memberii) Shareholders/Investors Grievance Committee – Memberiii) Remuneration Committee – Member

Item No. 5

Prof. V.K. Bhalla

Prof. V.K. Bhalla, born on 15th November, 1948 was appointed asDirector by the Board of Directors on 19th March, 1998 is aneminent Academician and Scholar with Ph.D. in Finance. Presentlyhe is Professor, Faculty of Management Studies, University ofDelhi. He has written many books on financial matters and hisspecialized area is Security Analysis & Portfolio Management,International Finance and Financial Decision Analysis. He hasalso contributed innumerable articles on financial matters. Hehas more than 30 years vast and rich experience. His guidanceand advice has contributed in the progress of the Company.He is also Director of the IFCI Financial Services Limited.He is Member of the following Committees of Rico Auto IndustriesLimited:i) Audit Committee – Memberii) Shareholders/Investors Grievance Committee – Member

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

Item No. 7

At the 17th Annual General Meeting held on 25th September, 2000the Board was authorised by the Ordinary Resolution of theShareholders to borrow a sum not exceeding Rs.100.00 Crores(Rupees One hundred crores only) from time to time. Keeping inview the expansion plans and future funds requirements, it isconsidered necessary to increase the present borrowing powers.The consent of the members is therefore sought to increase theborrowing powers of the Board to Rs.200.00 Crores (Rupees Twohundred crores only).

The Board recommends the resolution at Item No. 7 of the Noticefor your approval.

None of the Directors of the Company is concerned or interestedin the said resolution.

Item No. 8

At the 17th Annual General Meeting held on 25th September, 2000the Board was authorised by the Ordinary Resolution of theshareholders for creation of charges in terms of Section 293(1)(a)of the Companies Act, 1956. To meet its long and short termcapital needs, the Company proposes to borrow from FinancialInstitutions/Banks (Indian or Overseas) by way of Indian or ForeignCurrency Loan including External Commercial Borrowing (ECB)or by issue of Debentures or other instruments on privateplacement basis or otherwise within the limits of Rs.200.00 Crores(Rupees Two hundred crores only) including the existingborrowings. To secure such borrowings the Company would berequired to mortgages and/or charges its movable and/orimmovable properties (both present and future) in favour of theFinancial Institutions/Banks/Other Lender(s)/Trustee(s) with apower to make over the management of business and concern ofthe Company in certain events of default by the Company. Themortgaging/charging etc. may be regarded as otherwise disposalof the Company’s undertaking(s) within the meaning of Section293(1)(a) of the Companies Act, 1956 and requires the approvalof the members.

The Board recommends the resolution at Item No. 8 of the Noticefor your approval.

None of the Directors of the Company is concerned or interestedin the said resolution.

Item No. 9

Presently the Equity Shares of the Company are listed at thefollowing Stock Exchanges:

1. The Delhi Stock Exchange Association Limited (DSE)2. The Ludhiana Stock Exchange Associaton Limited (LSE)3. The Stock Exchange, Mumbai (BSE)4. National Stock Exchange of India Limited (NSE)

The Securities and Exchange Board of India (SEBI) has issuedSEBI (Delisting of Securities) Guidelines, 2003. As per the saidguidelines, the Company with the approval of the shareholders byway of Special Resolution, may get its shares delisted from theStock Exchanges including the Regional Stock Exchange. Thevolume of trading of shares of the Company at DSE and LSE hasbeen very insignificant. The Board of Directors, therefore, hasdecided that the shares at these Stock Exchanges be got delisted.In compliance with the aforesaid Guidelines, the Company’s shareswould continue to be listed at the BSE and NSE both having thenation wide trading terminals which would not affect the trading ofshares across the country. The Company will save to the extentof the Annual Listing Fee being paid to the DSE & LSE. TheBoard of Directors, therefore, seek your consent to get the sharesvoluntarily delisted from the DSE & LSE.

The Board recommends the Special resolution at Item No. 9 ofthe Notice for your approval.

None of the Directors is concerned or interested in the saidresolution.

By Order of the BoardFor Rico Auto Industries Limited

Place : Gurgaon B.M. JhambDated : 30th July, 2003 Company Secretary

20

DIRECTORS’ REPORTTo the Shareholders,

Your Directors have pleasure in presenting the 20th Annual Reportof your Company, together with the Audited Accounts for theyear ended 31st March, 2003.

FINANCIAL RESULTS (Rs. in Lacs)

Current Year Previous Year31/03/2003 31/03/2002

Sales and other Income 45199.19 45032.80

Profit before Interest &Depreciation 4981.97 4852.71

Less : Interest & FinancialCharges 491.16 826.05

4490.81 4026.66Depreciation 1265.68 1161.76Provision for Income Tax 1175.90 924.23Provision for Deferred Tax 105.90 98.92

Net Profit 1943.33 1841.75

Appropriations:

Proposed Dividend onEquity Shares @65% 696.61 643.02Corporate Dividend Tax 89.24 –Transferred to General Reserve 1050.00 450.00Balance carried to Balance Sheet 107.48 748.73

1943.33 1841.75

Your Company recorded an income of Rs.45200 lacs in the yearunder report as compared to Rs.45033 lacs in the previous yearand earned a Profit after Tax of Rs.1943 lacs as againstRs.1842 lacs in the earlier year.

RESERVESThe reserves of your Company after proposed appropriationsshall stand at Rs.4929 lacs as against Rs.3771 lacs in theprevious year.

EXPORTThe export turnover recorded a growth of 35% at Rs.1158 lacs ascompared to Rs.858 lacs in the previous year. In its efforts toenter the European market to promote exports, your Companyhas decided to establish a Wholly Owned Subsidiary in UnitedKingdom with an initial investment of £ 20000. It is expected thatthe Subsidiary Company shall commence its operations by theend of this year. Further details as regards efforts of your companyon this front has also been dealt in the Management Discussionand Analysis section of this report.

DIVIDENDYour Directors have recommended a dividend of Rs.6.50(65 per cent) per Equity share of Rs.10/- each for the financialyear 2002-2003 subject to your approval. The total Dividendpay-out including dividend tax of Rs.89 lacs would amount toRs.786 lacs as against Rs.643 lacs in the previous year.

FINANCEDuring the year under report your Company has repaid an amountof Rs.1665 lacs by raising funds from Banks at lower interest

rate. As a result of reduction in rate of interest on the borrowingsof the Company a saving was effected thereby the overallinterest cost was reduced to Rs.491 lacs as againstRs.826 lacs in the previous year.

FIRST QUARTER PERFORMANCE IN THE CURRENT FINANCIALYEAR

The un-audited financial results for the quarter ending 30th June,2003, already announced, show a turnover of Rs.11872 lacs asagainst Rs.11731 lacs in the corresponding quarter of the previousyear and a Profit after Tax of Rs.567 lacs as compared toRs.515 lacs in the same quarter of the previous year.

SUBSIDIARY COMPANIES

Your Company has two Subsidiary Companies.

A. Rico Softech Limited

During the year under report an interest free loan ofRs.510 lacs has been given to Rico Softech Limited therebymaking the total investment of Rs.1172 lacs in the loan andequity in this Company. The Company recorded a totalrevenue of Rs.453 lacs for the financial year ended31st March, 2003 as against the total revenue ofRs.205 lacs in the previous year and reported a loss ofRs.398 lacs for the year ended 31st March, 2003 as againsta loss of Rs.35 lacs in the previous year.

The first quarter ended 30th June, 2003 of the current yearshows a turnover of Rs.195 lacs as against turnover ofRs.32 lacs in the corresponding quarter of the previous yearand a net loss of Rs.25 lacs as compared to net loss ofRs.168 lacs over the same period of previous year.

B. Rico Auto Industries Inc. USA

Your Company’s total Investment in this Company amountsto Rs.12 lacs. The Company earned a total revenue ofRs.748 lacs for the financial year ended 31st March, 2003and reported a net profit of Rs.23 lacs as against thetotal revenue of Rs.47 lacs and a loss of Rs.10 lacs in theprevious year.

The first quarter ended 30th June, 2003 of the current yearshows a turnover of Rs.213 lacs as against turnover ofRs.152 lacs in the corresponding quarter of the previousyear and a net profit of Rs.1 lac as compared to net loss ofRs.2 lacs over the same period of previous year.

JOINT VENTURE COMPANIES

A. FCC RICO Limited

This Joint Venture Company recorded a turnover ofRs.10559 lacs for the financial year ended 31st March, 2003as against Rs.6319 lacs in the previous year. The Board ofthis Company has recommended a dividend of 25 per centfor the year ended 31st March, 2003 and your Companyexpects to receive Rs.99 lacs by way of dividend on itsinvestment.

The first quarter ended 30th June, 2003 of the current yearshows a turnover of Rs.3240 lacs as against turnover ofRs.2211 lacs in the corresponding quarter of the previousyear.

B. Hankook Motors LimitedAs reported in the previous year the operations of this JointVenture ceased in the last year and have still not been

21

resumed. This Company was earlier known as Rico DaewooPrecision Industries Limited. This Company has now ceasedto be joint venture of your Company.

FINANCIAL STATEMENTSThe statement alongwith reports and accounts of the SubsidiaryCompanies are appended pursuant to section 212 of theCompanies Act, 1956.

Pursuant to the Listing Agreements, the appended AuditedConsolidated Financial Statements of its two Subsidiaries and JointVenture Companies in accordance with Accounting Standardsissued by the Institute of Chartered Accountants of India form apart of the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT(MDA)Pursuant to Clause 49 of the Listing Agreement, MDA which formspart of this Report is annexed.

CORPORATE GOVERNANCEA separate report on Corporate Governance alongwith GeneralShareholders information as prescribed under the ListingAgreement is annexed as a part of this Report, alongwith theAuditor’s Certificate on its compliance.

DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to section 217(2AA) of the Companies Act, 1956, yourDirectors confirm that:

i) in the preparation of the annual accounts for the financialyear ended 31st March, 2003 the applicable accountingstandards have been followed;

ii) appropriate accounting policies have been selected andapplied consistently and have made judgements andestimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Companyas at 31st March, 2003 and of the profit for the year1st April, 2002 to 31st March, 2003;

iii) proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with theprovisions of the Companies Act, 1956 for safe guarding theassets of the Company and preventing and detecting fraudand other irregularities;

iv) the annual accounts for the financial year ended 31st March,2003 have been prepared on a going concern basis.

AUDIT COMMITTEEYour Company has an Audit Committee to meet the requirementof the Companies Act, 1956 as well as of Listing Agreement withthe Stock Exchange. The details are given under the CorporateGovernance Report.

LISTING/DELISTING OF EQUITY SHARESThe Equity Shares of your Company are presently listed on TheDelhi Stock Exchange Association Limited, The Ludhiana StockExchange Associaton Limited, The Stock Exchange, Mumbai &National Stock Exchange of India Limited. The Annual ListingFees have been paid for the financial year 2003-2004.

The trading of Company’s shares at The Delhi Stock ExchangeAssociation Limited and The Ludhiana Stock Exchange AssociatonLimited during the last few years has been negligible. The Boardof your Company after considering the proposal of voluntarydelisting of shares from The Delhi Stock Exchange AssociationLimited and The Ludhiana Stock Exchange Associaton Limited

has recommended for your approval a special resolution regardingthe delisting of shares as contained in the Notice convening the20th Annual General Meeting of the Company. The shares areactively being traded nationwide at The Stock Exchange, Mumbai(BSE) and National Stock Exchange of India Limited and wouldcontinue to be listed on both the Exchanges.

DIRECTORSIn accordance with the provisions of the Companies Act, 1956and the Articles of Association of your Company, Shri C.K. Hazari,Shri Anup Singh and Prof. V.K. Bhalla, Directors will retire byrotation at the forthcoming Annual General Meeting and beingeligible, offer themselves for re-appointment. Brief particulars oftheir resume are given in the Notice of the Annual General Meeting.

FIXED DEPOSITSDuring the year the Company has not accepted deposits from thepublic under section 58A of the Companies Act, 1956.

AUDITORSM/s. Gupta Vigg & Co., Chartered Accountants, Statutory Auditorsof the Company hold office till the conclusion of the forthcomingAnnual General Meeting and being eligible offer themselves forreappointment. They have given a certificate under section 224(1B)of the Companies Act, 1956 to the effect that their reappointmentas Auditors of the Company, if made, would be in accordancewith the said section.

The observations in the Auditors’ Report are dealt within the notesto accounts at appropriate places and, being self-explanatory, needno further explanation.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE EARNINGS AND OUTGO.As required by the provisions of Section 217(1)(e) of theCompanies Act, 1956 read with the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988, therelevant information is given in the annexure forming part of thisreport.

PERSONNELAs required by the provisions of section 217(2A) of the CompaniesAct, 1956 read with the Companies (Particulars of Employees)Rules, 1975 the particulars of the employees are given in theannexure forming part of this Report.

During the year under report the Industrial relations with personnelremain cordial, at all Plants. Your Directors wish to place on recordtheir appreciation of the sincere and unstinted support provided tothe Company by its employees at all levels.

ACKNOWLEDGEMENTSThe Board wishes to place on record its sincere appreciation ofthe continued assistance and support extended to the Companyby Financial Institutions, Banks and various departments of Centraland State Governments. Your Directors acknowledge with gratitudethe encouragement and support extended by our valuedcustomers, in particular, Hero Honda Motors Limited, Maruti UdyogLimited, Honda Motorcycles & Scooters India Private Limited andCummins Engine Co.

On behalf of the Board of Directors

Place : Gurgaon Chandra MohanDated : 30thJuly, 2003 Chairman

22

ANNEXURE TO DIRECTORS’ REPORT

INFORMATION UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES (DISCLOSURE OFPARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORS’ REPORTFOR THE YEAR ENDED 31ST MARCH, 2003.

A. CONSERVATION OF ENERGY

a) Energy Conservation Measures taken

Energy conservation is an ongoing process and there is a continuous programmes to create awareness and motivate theemployees to conserve energy. The various measures taken by the Company are as under:i) Fuel Additives introduced in DG Sets to reduce specific fuel oil consumption.ii) Conversion of DG Sets from HSD to LDO fuel resulting reduction of power cost.iii) Regular monitoring of leakages of compressed air and fuel oil to save fuel and energy.iv) Schedule monitoring of major energy consuming equipments through installation of master energy meters at different

locations.v) Pressure adjustment in fuel line of Skoda DG Set for optimisation of fuel consumption.

b) Additional Investments and proposals for reduction of consumption of energy.

i) Conversion of DG Sets from LDO to HFO or coal base power generation for further saving in power generation cost.ii) Replacement of conventional ballasts with electronics ballasts.iii) Installation of energy saver for lighting in shop floor area.iv) Installation of intermediate controller system in the compressed air line which optimise the loading/unloading time of the

compressor leading to saving of energy.v) Substitution of HSD Fired Backing Oven by electrical heat pack unit in paint shop leading to safety and energy saving.

Note : The additional investment cannot be precisely ascertained, and is part of the repairs and maintenance, consumablesexpenditure and investments in fixed assets.

c) Impact of the above measures

With the implementation of the various energy conservation measures, energy cost is expected to be reduced and consequentlythere will be impact on the cost of production.

d) Total Energy Consumption and Energy Consumption per unit of production

Your Company has two segments, one is Auto Components and other is edible oil. Being not applicable to auto componentssegment Form A is attached for the edible oil segment only.

B. TECHNOLOGY ABSORPTION

e) Efforts made in technology absorption as per Form B.

The details in this regard are set out in Form B attached hereto.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

f) Activities relating to exports, initiatives taken to increase exports; development of new export markets for products andservices and export plans (Mentioned in the Directors’ Report)

g) Total foreign exchange used and earned (Rs. in Lacs)

2002-03 2001-02

i) CIF value of imports 1949.47 1395.34ii) Expenditure in foreign currency 158.32 63.71iii) Foreign exchange earned 1158.20 858.21

23

FORM – A

Form A of Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules 1988 is not applicable on Auto ComponentsSegment. Hence information is furnished only in respect of Edible Oil Segment.

CURRENT YEAR PREVIOUS YEAR31.03.2003 31.03.2002

A. POWER AND FUEL CONSUMPTION

1. Electricity

a) PurchasedUnit 194298.00 463980.00Total Amount (Rs.) 1459965.00 2395956.00Rate/Unit (Rs.) 7.51 5.16

b) On Generationi) Through Diesel Generator Unit 1045922.00 1978213.00

Units per Ltr. of Diesel Oil 3.158 3.074Cost/Unit (Rs.) 5.15 5.04

ii) Through Steam Turbine/GeneratorUnit Nil NilUnit per Ltr. of Diesel Oil Nil NilCost/Unit (Rs.) Nil Nil

2. Coal (Specify quantity & where used)Quantity (MT) Coal & Lignite 2258.700 4801.600Total Cost (Rs.) 3591994.00 9594649.75Average Rate (Rs.) 1590.29 1998.22

3. Furnace OilQuantity (MT) Nil NilTotal Amount Nil NilAverage Rate (Rs.) Nil Nil

4. Other Internal GenerationQuantity Nil NilTotal Cost Nil NilRate/Unit (Rs.) Nil Nil

B. CONSUMPTION PER UNIT OF PRODUCTION

Products (with detailed unit) 26259.95 55717.580Electricity 47.23 43.83Coal & Lignite 86.01 86.18Furnace Oil Nil NilOthers Nil Nil

FORM – B

A. RESEARCH & DEVELOPMENT (R & D)

1. Specific Areas in which R & D carried out by the Company Nil2. Benefits derived as a result of R & D Nil3. Future Plan & Action

It is being contemplated to set-up R & D Division to carry out productdevelopments for customers with in-house designing of AutomotiveComponents with stress testing using stimulation techniques

4. Expenditure on R & D

a) Capital Nilb) Recurring Nilc) Total Nild) Total R & D Expenses as a % of total turnover Nil

24

ANNEXURE TO DIRECTORS’ REPORTMANAGEMENT DISCUSSION AND ANALYSIS

As the sourcing of components by global OEMs increasinglymigrates towards low-cost countries, the Indian automotivecomponents industry is uniquely positioned to benefit. During2002-03, exports of automotive components from India grew by40% to US$800 million as compared to the growth of just 2.5% inthe earlier year. It is expected exports of automotive componentsto exceed US$ 2 billion by 2005-06.

Rico Auto is amongst the leading players in the Indian automotivecomponents sector. Rico supplies Aluminium and FerrousMachined Components and Assemblies to several major OEMsin India, including Hero Honda, Maruti Udyog, Honda Siel CarsIndia, Honda Motorcycle & Scooter India, General Motors Indiaand Tata Cummins.

Rico is also a Tier-one supplier to auto OEMs in the Internationalmarket. Its international customers include General Motors inUSA, Ford in UK & USA, Land Rover and Jaguar in UK, EatonTransmissions in UK, Cummins Engine Company in USA & UKand Matsusaka Engineering Company in Japan.

After having been recognized as Full Service Supplier (FSS) byFord Motor Co., UK. Rico has now signed a Value ParticipationAgreement with Ford Motor Company, US, the world’s secondlargest auto maker, and is a part of Ford’s Global Sourcing Network.

Through this program Ford would work closely with Rico to helpgain better understanding of Ford processes and requirementsand to help accelerate components sourcing. With thisstrategic partnership Rico would become a preferred supplier ofaluminium and ferrous components and assemblies for Ford andits global brands.

The Company is expanding capacities for the existing as well asnew customers and adding new products for the two wheelers,four wheelers and the commercial vehicle segments. Rico has awholly owned subsidiary in USA to provide logistics support to itsNorth American customers and is incorporating another whollyowned subsidiary in the UK with the same objective. Rico is alsoscouting for suitable international strategic alliances and/oracquisition opportunities.

To meet the international competition and global standards yourCompany has obtained accreditation/certification for theinternational standards i.e. ISO/TS 16949 for Quality ManagementSystem, ISO 14001 for Environment Management System andOHSAS 18001 for Occupational Health and Safety ManagementSystem. These systems, after certification, are being audited andreviewed continuously by the concerned agencies from time totime to assure compliance.

To improve quality and efficiency at all levels in the Company it isalso following TPM & Six Sigma and has implemented ERPSystems. Towards the Information Security System your Company

ANNEXURE TO DIRECTORS’ REPORTSTATEMENT OF PARTICULARS OF EMPLOYEES PURSUANT TO THE PROVISIONS OF SECTION 217(2A) OF THE COMPANIESACT, 1956 READ WITH THE COMPANIES ( PARTICULARS OF EMPLOYEES ) RULES, 1975 AS AMENDED.

Sl. NAME AGE DESIGNATION/ REMUNE- QUALI- EXPERI- DATE OF LAST EMPLOYMENTNO. (YEARS) NATURE OF RATION FICATIONS ENCE APPOINT- (DESIGNATION)

DUTIES (Rs.) (YEARS) MENT

Employed throughout the year and in receipt of remuneration not less than Rs. 24,00,000/-

1. Shri Arvind Kapur 53 Managing 18,187,331 B.Sc. 33 16.12.1984 PartnerDirector Rico Industries, Ludhiana

2. Shri Arun Kapur 50 Jt. Managing 18,187,331 B.A. 27 01.05.1985 Sr. Manager (Tech.)Director Rico Industries, Ludhiana

NOTES:1. No person drawing Rs. 2,00,000 per month or more was employed for part of the year. Moreover there was no person employed either throughout

the financial year or part thereof, who was holding either by himself or alongwith the spouse and dependent children 2% or more of the shares ofthe Company and drawing remuneration in excess of the remuneration drawn by the Managing Director/Joint Managing Director.

2. Remuneration includes, salary, commission, other allowance / payment and expenditure incurred on perquisites.3. Shri Arvind Kapur, Managing Director and Shri Arun Kapur, Jt. Managing Director are related to Shri Rakesh Kapur, Director of the Company.

B. TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION

1. Efforts in brief, made towards technology absorption, adaptation & innovation- CAD/CAM Techniques for designing of Dies in shorter time span & with more accuracy- Development & Testing of Prototype for new products has been undertaken

2. Benefits derived as a result of the above efforts e.g. product improvement, cost reduction, productdevelopment, import substitution etc.- New Business opportunities as a result of faster responses & development- In-house skills being developed in design, product engineering to meet customers quality requirements

3. In case of imported technology following information may be furnisheda) Technology imported Nilb) Year of Import N.A.c) Has technology been fully absorbed N.A.d) If not fully absorbed, areas where this has not taken place, reasons & future plans of action N.A.

25

is in the process of obtaining the certification under the InformationSecurity Management BS-7799.

Besides manufacturing automotive components, Rico also hasan Agro division, which operates in the edible oil segment. Thisunit has a capacity of 500 TPD Solvent Extraction and 50 TPDcontinuous type Edible Oil Refinery. The Agro business is a“non-core” activity for Rico and efforts are on to exit this business.

FINANCIAL PERFORMANCE

1. Total Income

The total revenue of Rs.45200 lacs was recorded in thefinancial year ended 31st March, 2003 as compared toRs.45033 lacs in the previous year. The total income forthe financial year ended 31st March, 2003 includes anexport revenue of Rs.1158 lacs. The growth of the overalltotal income has been affected by lower demand from HeroHonda during the last quarter of the financial year. The fallin revenue from Agro Division has also impacted the totalrevenue on account of lower sales in the year under reportat Rs.3669 lacs against Rs.6303 lacs in the previous year.

2. Profits

The Company has earned Profit before Interest, Depreciationand Tax of Rs.4982 lacs during the financial year ended31st March, 2003 which represents an increase of 2.7 percent over the previous year’s profit of Rs.4853 lacs. TheProfit before Tax of Rs.3225 lacs and Profit after Tax ofRs.1943 lacs represent an increase of 12.6 per cent and5 per cent respectively over the previous year Profit beforeTax of Rs.2865 lacs and Profit after Tax of Rs.1842 lacs.

The Company has improved profits by taking various stepssuch as cost reduction, inventory control and better workingcapital management.

3. Earning per Share (EPS)

The EPS at Rs.18/- has recorded an increase of 6 percentin the financial year ended 31st March, 2003 over the previousyear’s EPS of Rs.17/-.

4. Dividend

The Board has recommended a Dividend of Rs.6.50 per sharefor the financial year ended 31st March, 2003 as comparedto Rs.6/- per share paid in the previous year.

5. Dividend Payout

The dividend payout of Rs.786 lacs comes to 40 per cent ofProfit after Tax in the financial year ended 31st March, 2003as compared to 34 per cent in the previous year.

6. Investment

During the year, your Company has invested Rs.7 lacs andRs.250 lacs in the equity share capital of Wholly OwnedSubsidiary Companies namely Rico Auto Industries Inc. USAand Rico Softech Limited respectively.

7. Inventories

The Company has been able to maintain almost the samelevel of inventory at Rs.1377 lacs as on 31st March, 2003 incomparison to Rs.1328 lacs in the previous year.

8. Reserve & Surplus

The Reserve and Surplus at Rs.4929 lacs in the financialyear ended 31st March, 2003 as compared to Rs.3771 lacsin the previous year shows an increase of 31 per cent.

9. Loan Funds

Total debts in the financial year ended 31st March, 2002 hasincreased to Rs.6960 lacs from Rs.6440 lacs over theprevious year. The above debts includes Sales Tax Defermentamount of Rs.1463 lacs in the financial year ended31st March, 2003 and Rs.1432 lacs in the previous year.Ratio of total debts to equity now stands at 1.19 from 1.39.

10. Fixed Assets

Net Addition to gross block of Rs.1696 lacs during thefinancial year ended 31st March, 2003 raised the total grossblock to Rs.16810 lacs. Net Addition to Plant & Machineryof Rs.1340 lacs comprises 79 per cent of the total additionsmade. Net sales to net block ratio has reduced from 4.00times to 3.77 times in the financial year 2002-2003. Most ofthe additions in the block of assets have been made in thesecond half of the financial year under report. Full impact ofthese additions for the turnover would be reflected in thecurrent financial year. These additions besides raising theplant’s production capabilities & capacities to meet theanticipated increased demand of the customers have helpedto reduce delivery time to customers, so essential in today’scompetitive market.

OPPORTUNITIES & FUTURE PROSPECTS

The discussion on Opportunities and Future Prospects has beenadequately covered in the earlier sections of this Annual Report.

RISK MANAGEMENT

The operations of the company are directly dependent on the Indianautomotive industry. The cyclical nature of the industry affects us.General economic conditions impact the automotive industry, and,in turn, the operations as well. To counter these risks, we continueto broaden our product portfolio, increase our customer profileand geographic reach.

The Company is exposed to market risk from changes in interestrates, foreign exchange rates, and commodity prices. We are takingproactive steps to mitigate such risks.

The company is also exposed to strong competitive pressures.Our established reputation, strong customer relationships,ability to provide higher level of engineering and design supportand our relentless drive for continuous improvement gives us acompetitive edge.

INTERNAL CONTROL SYSTEMS

The company has effective internal control systems covering allareas of operations. These are being periodically reviewed by theAuditors of the Company and continuous improvements are beingmade in the same.

HUMAN RESOURCES

At Rico, our people have always been our most valuableresource. We support our people with continuous training andeducation initiatives. Our relations with employees are cordial atall the plants.

There are 1433 employees on the roll of the Company as on31st March, 2003.

CAUTIONARY NOTE

This report contains certain forward looking statements. All suchstatements are subject to risks and uncertainties. Actual resultscould differ materially from those expressed or implied.

26

ANNEXURE TO DIRECTORS’ REPORT

CORPORATE GOVERNANCE REPORT (AS PER CLAUSE 49 OF LISTING AGREEMENT)

A good Corporate Governance aims to maximize long term stakeholders value. It is a combination of many factors to achieve theobjectives of transparency, full disclosure, a system of checks and balances between the shareholders, directors, auditors and themanagement. Your Company’s Board comprises of not only promoter directors but professionally competent non-executive andindependent directors who have effective control over the affairs of the Company. The Board on a continuous basis monitorimplementation of decisions taken and at the same time provide management and employees a stable environment to plan andexecute strategy.

The compliance report on the Corporate Governance is given below:

1. Composition of Board

Rico Auto’s Board meets the requirement of code of Corporate Governance as stipulated in the Listing Agreement as it consistseight Non-Executive Directors out of the ten Directors, who have with them considerable experience in their respective fields.

Particulars of Directors of the Company and their directorship in other Companies, Membership/Chairmanship in committeesacross all Companies in which they are Directors:

Name of the Director Category No. of Committees No. of other

Membership held # Chairmanship held # Directorship held #

Shri Chandra Mohan Independent - Non Executive (Chairman) 1 – 7Shri C.K. Hazari Independent - Non Executive 3 5 7Shri Anup Singh Independent - Non Executive 3 – 4Prof. V.K. Bhalla Independent - Non Executive 2 – 1Shri Kanwal Monga Independent - Non Executive 1 – 4Shri Amarjit Chopra Independent - Non Executive – – 2Shri John T. Sheffler Independent - Non Executive – – 3Shri Rakesh Kapur Non-Executive 2 – 2Shri Arun Kapur Executive - Jt. Managing Director 1 – 1Shri Arvind Kapur Executive - Managing Director 1 – 3

# Excluding Private Limited Companies

Shri Arun Kapur and Shri Rakesh Kapur are brothers of Shri Arvind Kapur.

There are no pecuniary relationship or transactions of Independent Directors vis-à-vis the Company.

Only three Committees viz. the Audit Committee, Shareholders/ Investors Grievance Committee and the Remuneration Committeeare considered for the purpose.

A. Managing Director and Joint Managing Director

The Company has one Managing Director and one Joint Managing Director who are responsible for overall management,planning, policy, strategy, operations, marketing, production, sales and matters relating to the Board.

B. Retirement of Directors

Managing Director and Joint Managing Director are not subject to retirement by rotation but hold office for five years and areeligible for re-appointment.

The Non-Executive/Independent Directors are liable to retire by rotation in accordance with the provisions of the CompaniesAct, 1956 and the Articles of Association of the Company.

The particulars of Directors being re-appointed are given in the Explanatory Statement attached to the Notice for the AnnualGeneral Meeting scheduled to be held on 15th September, 2003.

27

C. Board Meetings, Shareholder Meetings & Attendance Record of the Directors

The details of the Meetings as well as attendance record of all Directors during the year 2002-2003 is as under:

Details of Board Meetings held

Date of the Board Meeting Place of the DirectorsMeeting Number Present

1st June, 2002 Gurgaon 10 931st July, 2002 Gurgaon 10 730th October, 2002 Gurgaon 10 828th January, 2003 Gurgaon 10 513th February, 2003 Gurgaon 10 9

Attendance at Meetings

Name of the Director No. of Board Meetings Attended Last

Held Attended AGM*

Shri Chandra Mohan 5 4 NoShri C.K. Hazari 5 5 YesShri Anup Singh 5 4 NoProf. V.K. Bhalla 5 5 NoShri Kanwal Monga 5 4 NoShri Amarjit Chopra 5 2 NoShri John T. Sheffler 5 1 NoShri Rakesh Kapur 5 5 YesShri Arun Kapur 5 3 YesShri Arvind Kapur 5 5 Yes

*19th Annual General Meeting (AGM) held on 30th September, 2002 at the Registered Office of the Company.

2. Audit Committee

Your Company has an Audit Committee since 1996 and is fully operational. The Committee consists all the Independent Directorsand one of them is a Chartered Accountant and other being well qualified and experienced in the field of finance and management.The Committee deals with accounting matters, financial reporting and internal controls. The power and role of the audit committeeis as per guidelines set out in the listing agreement and as prescribed under section 292A of the Companies Act, 1956. Thecomposition and attendance in the Committee is as under:

Name of the Director Position held Meetings held on Members present

Shri C.K. Hazari Chairman 31/05/2002 3Shri Anup Singh Member 28/07/2002 2Prof. V.K. Bhalla Member 28/10/2002 3

27/01/2003 3

The Minutes of each Audit Committee Meeting are placed before the Meetings of the Board.

The Company Secretary acts as Secretary to the Committee.

3. Shareholders/Investors Grievance Committee

The “Shareholders/Investors Grievance Committee” as required under Clause 49 of Listing Agreement consisting of the threeIndependent and one Non-Executive Directors met four times during the year 2002-2003:

Name of the Director Position held Meetings held on Members present

Shri C.K. Hazari Chairman 31/05/2002 4Shri Anup Singh Member 28/07/2002 3Prof. V.K. Bhalla Member 28/10/2002 4Shri Rakesh Kapur Member 27/01/2003 4

The Minutes of each Shareholders/Investors Grievance Committee Meeting are placed before the Meetings of the Board.

The Company Secretary acts as Secretary to the Committee.

28

4. Remuneration Committee

The Remuneration Committee was set up by the Board in the year 1999 consisting of two Independent Directors Shri C.K. Hazarias Chairman and Shri Anup Singh to consider and recommend payment of remuneration of the Managing Director and JointManaging Director. During this financial year no meeting of this committee was held as it was not considered necessary.

The Non-Executive Directors are entitled to sitting fee and commission based on Net Profit of the Company subject to a maximumcommission of Rs.12.00 lacs (Rupees twelve lacs only) per financial year w.e.f. 1st April, 2002. The commission is distributableamongst them equally. In the earlier year ended 31st March, 2002 the amount of maximum commission was fixed at Rs.5.00 lacs(Rupees five lacs only) to be distributed among all the Non-Executive Directors equally.

The details of the remuneration paid during 2002-2003 is given below: (Rupees ’000)

Name of the Director Sitting Fees Salary & Perks Commission* Total (1) (2) (3) (1+2+3)

Shri Chandra Mohan 4 N.A. 76 80Shri C.K. Hazari 13 N.A. 76 89Shri Anup Singh 10 N.A. 76 86Prof. V.K. Bhalla 13 N.A. 76 89Shri Kanwal Monga 4 N.A. 40 44Shri Amarjit Chopra 2 N.A. 40 42Shri John T. Sheffler 1 N.A. 40 41Shri Rakesh Kapur 9 N.A. 76 85Shri Arun Kapur N.A. 2297 14330 16627Shri Arvind Kapur N.A. 2870 13760 16630

* Commission paid for the year 2001-2002

5. Share Transfer Committee

The Share Transfer Committee met 18 (Eighteen) times in the last financial year (01/04/2002 to 31/03/2003). The Minutes of eachShare Transfer Committee Meeting are placed before the Meetings of the Board.

The Share Transfer Committee consists of the following four members

i) Shri Arvind Kapur – Managing Directorii) Shri Arun Kapur – Joint Managing Directoriii) Prof. V.K. Bhalla – Independent Directoriv) Shri Rakesh Kapur – Non-Executive Director

Name and Designation of Compliance Officer

Shri B.M. Jhamb – Company Secretary

6. Details of General Body Meetings

Location and time of last three Annual General Meetings and one Extra Ordinary General Meeting:

Date of AGM/EGM Location Time

25/09/2000 Regd. Office at Dharuhera 10.30 AM17/09/2001 — do — 10.30 AM30/09/2002 — do — 10.30 AM25/02/2002 (EGM) — do — 10.00 AM

No Special Resolutions were put through postal ballot last year.

7. Disclosures

a) Disclosures on materially significant related party transactions i.e. transactions of the Company of material nature, with itspromoters, the directors or the management, their subsidiaries or relatives etc. that may have potential conflict with theinterests of the Company at large:

None of the transactions with any of the related parties were in conflict with the interests of the Company. The related party’sdisclosure is annexed to and forms part of the accounts for the year ended 31st March, 2003. (Refer Schedule 15 at Sl.No.11).

b) Details of non-compliance by the Company, penalties, strictures imposed on the Company by Stock Exchange or SEBI or anystatutory authority, on any matter related to the capital markets, during the last three years.

No penalties have been imposed or strictures passed by any regulatory authority on any matter related to capital marketsduring the last three years.

29

8. Means of Communication

i) Quarterly Results are published in the following Newspapers:

a) Business Standardb) Veer Arjunc) The Pioneer

ii) Quarterly Results and Shareholding Pattern are displayed on SEBI’s website at www.sebiedifar.nic.in & Company’swebsite at www.ricoauto.com and it also displays official news released and presentations made to InstitutionalInvestors/Analysts, if any.

iii) The Shareholder Information section forms part of the Annual Report.

iv) A Management Discussion and Analysis Report which forms part of the Annual Report is given by means of a separateannexure and is attached to the Directors’ Report.

v) At present, Half Yearly Reports are not being sent to each Shareholder.

9. Code for Prevention of Insider Trading Practices

In compliance with the SEBI Regulations on prevention of Insider Trading, the Company has adopted a code of conduct for itsDirectors and designated employees. The code lays down guidelines which includes procedures to be followed and disclosuresto be made while dealing with the Shares of the Company.

GENERAL SHAREHOLDERS’ INFORMATION

1. Annual General Meeting– Date and Time : 15th September, 2003 at 10.30 AM– Venue : Registered Office

69 KM Stone, Delhi-Jaipur Highway,Dharuhera, Distt. Rewari (Haryana) India

2. Financial Calendar (Tentative)

– Results for the quarter ending June 30, 2003 : Fourth week of July, 2003– Results for the quarter ending Sept. 30, 2003 : Fourth week of October, 2003– Results for the quarter ending Dec. 31, 2003 : Fourth week of January, 2004– Results for the quarter ending March 31, 2004 : Fourth week of April, 2004

Annual General Meeting for the year endingMarch 31, 2004 : September, 2004

3. Dates of Book Closure : 6th September, 2003 to 15th September, 2003(both days inclusive)

4. Dividend Payment Date : Dividend @Rs.6.50 per share would be paid latest by14th October, 2003 if approved by the Shareholders inthe Annual General Meeting.

5. Registered Office : 69 KM Stone, Delhi-Jaipur HighwayDharuhera, Distt. Rewari (Haryana) India

6. Registrar and Transfer Agent : M/s. MCS LimitedSri Venkatesh Bhawan212-A, ShahpurjatBehind Panchsheel ClubNew Delhi – 110 049, India

7. Share Transfer System : The shares sent for transfer in physical form are firstregistered in the name of transferee provided the necessarydocuments are in order. Under the Transfer-cum-Dematfacility offered by the Company (w.e.f. 12th February, 2003this facility is available for transfer upto 500 shares) ademat option form is sent to the shareholders for exercisingthe option to receive the shares in demat form. As optedby shareholders either the shares are credited in demataccount maintained with the Depositories or sent in physicalform to the shareholders by registered post.

30

8. Dematerialisation of Shares and Liquidity

Trading in Equity Shares of the Company is permitted only in dematerialised form w.e.f. 28th August, 2000 for all investors. TheISIN Number on both NSDL and CDSL is INE209B01017.

The Equity Shares of the Company are regularly traded on The Stock Exchange, Mumbai and National Stock Exchange ofIndia Limited.

Break-up of Shares in Physical and Demat segment as on March 31, 2003

Segment No. of Shareholders % of Shareholders No. of Shares % of Shareholding

Physical 13228 81.85 5053647 47.16Demat 2934 18.15 5663353 52.84

Total 16162 100.00 10717000 100.00

9. Stock Market Data

Monthly high and low quotations of shares traded at Mumbai and National Stock Exchanges for 2002-2003 are as under

Year 2002-2003 Bombay Stock Exchange National Stock Exchange

High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)

April, 2002 145 78 148 86May, 2002 160 135 155 133June, 2002 146 121 150 120July, 2002 162 129 164 135August, 2002 138 91 141 100September, 2002 130 115 140 121October, 2002 125 104 133 110November, 2002 130 103 132 107December, 2002 130 117 134 122January, 2003 132 107 138 115February, 2003 121 99 121 102March, 2003 111 87 115 91

10. Stock Performance of Rico Auto Industries Limited Vs. Bombay Stock Exchange (BSE) indices

INDEX COMPARISON - RICO SHARE PRICE VS. BSE SENSEX

145160

146162

138130 125 130 130 132

121111

3338

31263245

2988

3181

2991 2949

3229

3377

3250 3284

3049

3900

3700

3500

3300

3100

2900

2700

200

150

100

50

0Apr’02 May’02 Jun’02 Jul’02 Aug’02 Sep’02 Oct’02 Nov’02 Dec’02 Jan’03 Feb’03 Mar’03

RICO SHARE PRICEBSE SENSEX

31

11. Listing and Stock CodesShares of the Company are listed on the following Stock Exchanges and the Listing Fee for the year 2003 - 2004 has been paid.

Name of Stock Exchanges Stock Codes

The Stock Exchange, Mumbai – 520008The Delhi Stock Exchange Association Limited – 018081The Ludhiana Stock Exchange Association Limited – RICONational Stock Exchange of India Limited – RICOAUTO

(Listed on 12/05/2003)

12. Investors’ Services – Complaints received during the year upto March 31, 2003

Nature of Complaints Received Attended to

Non-receipt of Share Certificates – –Non-receipt of Rico Auto Shares in exchange of Rico Agroils Shares – –Letters from Stock Exchanges, SEBI etc. 5 5Non-receipt of Dividend Warrants – –

The Company has attended to most of the investors’ grievances/ correspondence within a period of 10 days from the date of thereceipt of the same during the years 2002-2003.

13. Distribution of Shareholding as on March 31, 2003

No. of Equity Shares held No. of Shareholders % of Shareholders No. of Shares % of Shareholding

Up to 500 15575 96.37 636868 5.94501–1000 356 2.20 232611 2.171001–2000 86 0.53 124230 1.162001–3000 19 0.12 47011 0.443001–4000 27 0.17 99657 0.934001–5000 10 0.06 43992 0.415001–10000 22 0.14 162224 1.5110001 & above 67 0.41 9370407 87.44

Total 16162 100.00 10717000 100.00

14. Pattern of Shareholding as on March 31, 2003

Category No. of No.of VotingShareholders Shares held Strength (%)

Individuals 16014 3150448 29.39Private Corporate Bodies 108 1492123 13.92FIIs – – –NRI/OCBs 11 633032 5.91Mutual Funds – – –Banks/Financial Institutions 3 450 0.01Promoters & their Families* 26 5440947 50.77

Total 16162 10717000 100.00

* Promoter Group for interse transfer of shares under clause 3(e) of Securities & Exchange Board of India (Substantial Acquisitionof Shares and Takeovers) Regulations, 1997.

1. Shri Arvind Kapur2. Shri Arun Kapur3. Shri Rakesh Kapur4. Shri Mohan Lal Kapur5. Smt. Shalini Kapur6. Smt. Ritu Kapur7. Smt. Upasna Kapur8. Miss Shikha Kapur9. Miss Nyla Kapur

10. Miss Shivani Kapur11. Master Samarth Kapur12. Master Suhail Kapur13. Smt. Romilla Bahl14. Smt. Promilla Sikka15. Shri Tilak Sikka16. M/s. Kapsons Associates Private Limited17. M/s. Rico Castings Limited

32

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

16. Plant Locations : Dharuhera Plant69 KM Stone, Delhi-Jaipur HighwayDharuhera, Distt. Rewari - 122106 (Haryana) India

Gurgaon Plant38 KM Stone, Delhi-Jaipur HighwayGurgaon - 122001 (Haryana) India

Agroils DivisionSilor Road, Kota-Jaipur HighwayBundi - 323001 (Rajasthan) India

17. Investor/Shareholders Correspondencei) Transfer/Dematerialisation of Shares and any other : M/s. MCS Limited

queries relating to Shares Sri Venkatesh Bhawan212-A, ShahpurjatBehind Panchsheel ClubNew Delhi - 110 049, IndiaTel : 26494830, Fax : 26494152E-mail : [email protected]

ii) Any queries relating to the Financial Statements of the : Shri O.P. AggarwalCompany Executive Director (Finance)

E-mail : [email protected]

iii) Payment of Dividend on Shares, payment of unpaid : Shri B.M. JhambInterest & Redemption on Debentures and any other Company Secretaryqueries relating to Debentures and Annual Report Rico Auto Industries Limited

38 KM Stone, Delhi-Jaipur HighwayGurgaon - 122001 (Haryana) IndiaTel : (91)(0124) 2824221, 2824000Fax: (91)(0124) 2824200, 2824300E-mail : [email protected]

18. Unclaimed Dividends

i) The amount of unclaimed dividend for and upto the financial year ended 31st March, 1994 has already been transferred to theGeneral Revenue Account of the Central Government as required by the Companies Unpaid Dividend (Transfer to GeneralRevenue Account of the Central Government) Rules, 1978. Those Shareholders who have so far not claimed dividend uptothe aforesaid financial year may claim their dividend from the Registrar of Companies, NCT of Delhi & Haryana, 2nd Floor,Paryavaran Bhawan, B-Block, C.G.O. Complex, Lodhi Road, New Delhi - 110 003 by submitting an application in the prescribedform. The Company’s Registration No. is 05-23187.

ii) Pursuant to Section 205A of the Companies Act, 1956 the amount of unpaid or unclaimed dividend relating to the financialyear ended 31st March, 1995 has been transferred to the Investor Education and Protection Fund (IEPF) constituted by theCentral Government under the Companies Act, 1956 and thereafter shall also be transferred, after the expiry of seven yearsfrom the date of declaration, to the IEPF. Therefore, shareholders who have not claimed the dividend for the year 1995-96onwards may contact the Company for payment. It may also be noted that once the unclaimed dividend is transferred to theaforesaid fund, no claim shall be entertained in respect thereof either by the Company or by the said fund.

Date of Transferring unclaimed Dividend to the Central Government

Year Rate of Dividend Date of Declaration Due Date fortransfer to IEPF

1996 Final – 22% 30/09/1996 11/11/20031997 Final – 25% 27/09/1997 08/11/20041998 Final – 28% 26/09/1998 07/11/20051999 Final – 35% 24/12/1999 04/02/20072000 Interim– 50% 31/03/2000 12/05/20072000 Final – 10% 25/09/2000 06/11/20072001 Final – 70% 17/09/2001 17/10/20082002 Final – 60% 30/09/2002 30/10/2009

33

Unclaimed Dividend as on March 31, 2003

Year Rate of Dividend No. of Amount of Amount of UnclaimedWarrants Dividend Unclaimed Dividend

issued (Rs.) Dividend (Rs.) (%)

1996 Final – 22% 4445 08650138.66 49678.93 0.571997 Final – 25% 4345 13105875.00 077340.00 0.591998 Final – 28% 4073 14678580.00 083790.00 0.571999 Final – 35% 17971 18449856.00 133215.25 0.722000 Interim – 50% 17571 26792500.00 168745.00 0.632000 Final – 10% 17146 05358500.00 051636.00 0.962001 Final – 70% 16610 37509500.00 244216.00 0.652002 Final – 60% 16537 57727176.00 456307.00 0.79

19. Bank Details

Shareholders holding Shares in physical form are requested to intimate the following to the Company at the Corporate Office orRegistrar and ShareTransfer Agent, MCS Limited to facilitate better servicing:

i) any change in their address / mandate / bank details, andii) particulars of the bank account in which they wish their dividend to be credited, in case the same have not been furnished

earlier.

Shareholders are advised that respective bank details and address as furnished by them or by NSDL/CDSL to the Company, forShares held in the physical form and in the dematerialised form respectively, will be printed on dividend warrants so as to protectagainst fraudulent encashment.

20. Electronic Clearing Service (ECS) Facility

The Company, with respect to payment of dividend, provides the facility of ECS to Shareholders at the selected cities, as permittedby the Reserve Bank of India.

Shareholders holding Shares in the physical form who now wish to avail the ECS facility, may authorise the Company by sendingtheir ECS mandate, in the prescribed form to the Company, in case the same has not been furnished earlier. The ECS mandateform can be obtained from the Corporate Office of the Company.

21. Nomination Facility

Sharesholders holding Shares in physical form and desirous of making/changing nomination in respect of their shareholding in theCompany, as permitted under Section 109A of the Companies Act, 1956, may submit the prescribed Form 2B to the Company.

AUDITORS’ CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF CORPORATE GOVERNANCEUNDER CLAUSE 49 OF THE LISTING AGREEMENTS

To the Members ofRico Auto Industries Limited

1. We have reviewed the implementation of Corporate Governance procedures by Rico Auto Industries Limited (the Company)during the year ended 31st March, 2003 with the relevant records and documents maintained by the Company, furnished to us forour review and the report on Corporate Governance as approved by the Board of Directors.

2. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited toprocedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of CorporateGovernance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

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.

3. On the basis of our review and according to the information and explanations given to us, the conditions of Corporate Governanceas stipulated in Clause 49 of the listing agreements with the Stock Exchanges have been complied with in all material respect bythe Company.

For and on behalf of Gupta Vigg. & Co.Chartered Accountants

Place : Gurgaon KAWAL JAINDated : 30th July, 2003 PARTNER

34

AUDITORS’ REPORT

To the Members ofRico Auto Industries Limited

1. We have audited the attached Balance Sheet of Rico AutoIndustries Limited (the Company) as at 31st March, 2003and also the Profit & Loss Account for the year ended onthat date annexed thereto. These financial statements arethe responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. These Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financial statementsare free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used andsignificant estimates made by management, as well asevaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for ouropinion.

3. As required by the manufacturing and other Companies(Auditor’s Report) Order, 1988, issued by the Central Govt.of India in terms of sub-section (4A) of section 227 of theCompanies Act, 1956, we enclose in the Annexure ‘A’statement on the matters specified in the paragraphs 4 & 5of the said Order.

4. Further to our comments in the Annexure “A’ referred toabove, we report that :

i) We have obtained all the information and explanationswhich to the best of our knowledge and belief werenecessary for the purpose of our audit.

ii) In our opinion, proper books of account as required bylaw have been kept by the Company so far as appearsfrom our examination of those books.

iii) The Balance Sheet and Profit & Loss Account dealt withby this report are in agreement with the books ofaccount.

iv) In our opinion, the Balance Sheet and Profit and LossAccount dealt with by this report comply with theaccounting standards referred to in sub-section (3C) ofsection 211 of the Companies Act, 1956 to the extentapplicable.

v) On the basis of written representations received fromthe Directors as on 31st March, 2003, and taken onrecord by the Board of Directors, we report that none ofthe Directors is disqualified as on 31st March, 2003from being appointed as a Director in terms of clause(g) of sub-section (1) of section 274 of the CompaniesAct, 1956.

vi) In our opinion, there is no adverse effect on thefunctioning of the Company.

vii) In our opinion and to the best of our information andaccording to the explanations given to us, the said

accounts read together with the Notes on Accounts asper Schedule - 15 give the information required by theCompanies Act, 1956, in the manner so required andgive a true and fair view in conformity with the accountingprinciples generally accepted in India:

a) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2003;and

b) in the case of the Profit and Loss Account, of theprofit for the year ended on that date.

For Gupta Vigg & Co.Chartered Accountants

Place : Gurgaon KAWAL JAINDated : 31st May, 2003 PARTNER

ANNEXURE ‘A’ REFERRED TO IN PARAGRAPH ‘3’OF THE AUDITOR’S REPORT ON THE ACCOUNTS OFRICO AUTO INDUSTRIES LIMITED FOR THE YEAR ENDED 31stMARCH, 2003.

i) The Company is maintaining proper records showing fullparticulars including quantitative details and the situation ofits fixed assets. The fixed assets have been physically verifiedby the management at reasonable intervals except forfurniture and fixtures and office equipment. No materialdiscrepancies were noticed on such verification.

ii) The fixed assets have not been re-valued during the financialyear.

iii) The stocks of finished goods, stores, spare parts and rawmaterials have been physically verified by the managementduring the financial year. In our opinion, the frequency ofverification is reasonable.

iv) In our opinion, the procedure of physical verification of stocksfollowed by the management is reasonable and adequate inrelation to the size of the Company and the nature of itsbusiness.

v) The discrepancies noticed on physical verification of stocksas compared to book records were not material and the samehave been properly dealt with in the books of accounts.

vi) In our opinion, the valuation of stocks is fair and proper inaccordance with the normally accepted accounting principlesand is on the same basis as in the preceding year.

vii) According to the explanation and informations given to us,the Company has not taken any loans, secured or unsecured,from Companies, firms or other parties listed in the registermaintained under sections 301 of the Companies Act,1956or from companies under the same management as definedunder section 370(1-B) of the Companies Act,1956.

viii) The Company has not given any loans, secured orunsecured, to companies, firms or other parties as listed inthe register maintained under section 301 of the CompaniesAct,1956, or to the Companies under the same managementas defined under sub-section (1B) of section 370 of theCompanies Act, 1956. In respect of interest free loans givento subsidiaries where there are no stipulations regarding

35

repayment, in our opinion, having regard to the long terminvolvement with these companies and considering theexplanations given to us in this regard, the terms andconditions of the above are not, prima facie, prejudicial tothe interests of the Company.

ix) In our opinion and according to the information andexplanations given to us, there are adequate internal controlprocedures commensurate with the size of the Companyand the nature of its business for the purchase of the stores,raw materials including components, plant & machinery,equipments and other assets and for the sale of goods.

x) In our opinion and according to the information andexplanations given to us, the transaction of purchase of goodsand materials and sale of goods, materials and services inexcess of Rs. 50,000/- in value of each type thereof fromfirms, companies or other parties in which Directors areinterested, as listed in the register of contracts maintainedunder section 301 of the Companies Act, 1956, arereasonable as compared to the prevailing market prices ofsuch goods, materials & services except for items stated tobe proprietary nature. As alternative sources of supplies arenot available, it is not possible for us to compare the pricespaid for such items.

xi) As explained to us, the Company has a regular procedurefor the determination of unserviceable or damaged stores,raw materials and finished goods. Adequate provision hasbeen made in the accounts for the loss arising on the itemsso determined.

xii) In our opinion and according to information and explanationsgiven to us, the Company has not accepted any deposit fromthe public.

xiii) In our opinion, the Company is maintaining reasonablerecords of the sale and disposal of realizable scrap and by-products.

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

xv) The Company has made and maintained cost records asprescribed by the Central Government under section209(1)(d) of the Companies Act, 1956.

xvi) According to the records of the Company, Provident Fundand Employees State Insurance dues have been regularlydeposited during the financial year with the appropriateauthorities.

xvii) According to the records of the Company and the informationgiven to us, there were no undisputed amounts payable inrespect of Income Tax, Wealth Tax, Sales Tax, Custom Dutyand Excise Duty outstanding as at 31st March, 2003, whichare outstanding for a period of more than six months fromthe date they became payable.

xviii) According to the records of the Company and informationand explanations given to us, no personal expenses havebeen charged to revenue account, other than those payableunder contractual obligations or in accordance with generallyaccepted business practice.

xix) The Company is not a Sick Industrial Company within themeaning of clause (O) of sub-section (1) of section 3 of theSick Industrial Companies (Special Provisions) Act, 1985.

xx) In the case of service activities, the Company has areasonable system of recording receipts, issue, consumptionof materials and stores and allocation thereof to the relativejobs is in commensurate with the size and nature of itsbusiness.

xxi) There is a reasonable system of authorization at proper levelsand an adequate system of internal control commensuratewith the size of the Company and the nature of its businesson the issue of stores and allocation of stores and labourto the jobs.



36

As per our report of even date For and on behalf of the Board of Directorsfor Gupta Vigg & Co.Chartered Accountants

Kawal Jain O.P.Aggarwal C.K.Hazari Chandra MohanPartner Executive Director (Finance) Prof. V.K.Bhalla Chairman

Kanwal Monga Arvind KapurJohn T. Sheffler Managing Director

Place : Gurgaon B.M.Jhamb Rakesh Kapur Arun KapurDated : 31st May, 2003 Company Secretary Directors Jt. Managing Director

BALANCE SHEET AS AT MARCH 31, 2003

Schedule As at March As at MarchNo. 31, 2003 31, 2002

(Rs. in Lacs) (Rs. in Lacs)

SOURCES OF FUNDS

1. SHAREHOLDERS’ FUNDSShare Capital 1 1071.70 1071.70Reserves & Surplus 2 4928.87 3771.40

6000.57 4843.102. LOAN FUNDS 3 6960.37 6440.43

3. DEFERRED TAX LIABILITY 3A 1455.26 1349.36

TOTAL 14416.20 12632.89

APPLICATION OF FUNDS

1. FIXED ASSETSGross Block 4 16810.25 15113.80Less: Depreciation 6341.16 5214.57

Net Block 10469.09 9899.23Capital Work-in-Progress 547.43 69.60

2. INVESTMENTS 5 1014.98 757.76

3. CURRENT ASSETS,LOANS & ADVANCESA) Inventories 6 1377.27 1328.18B) Sundry Debtors 7 4175.16 4271.82C) Cash & Bank Balances 8 55.87 69.96D) Loans & Advances 9 1889.18 1363.84

7497.48 7033.80Less: Current Liabilities & Provisions 10 5245.93 5351.08

Net Current Assets 2251.55 1682.72

4. MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted) 11 133.15 223.58

TOTAL 14416.20 12632.89

NOTES ON ACCOUNTS 15

37

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2003

Schedule No. Year ended Year endedMarch 31, 2003 March 31, 2002

(Rs. in Lacs) (Rs. In Lacs)

INCOMESales & Other Income 12 45199.18 45032.80

EXPENDITUREManufacturing & Other Expenses 13 34439.92 34772.83Financial Charges 14 491.16 826.05Excise Duty 5686.87 5267.85Miscellaneous Expenditure Written Off 90.43 80.72Diminuation in Value of Investment – 58.69

40708.38 41006.14

Profit before Depreciation 4490.80 4026.66Depreciation 1265.68 1161.76Profit after Depreciation 3225.12 2864.90

Provision for Taxation 1135.98 925.00Provision for Deferred Tax 105.90 98.92Profit after Tax 1983.24 1840.98Add : Previous Year Income Tax Provision written back – 0.77Less : Previous Year Income Tax 39.92 –

Amount Available for Appropriations 1943.32 1841.75

APPROPRIATIONSProposed Dividend on Equity Shares @ 65 % 696.61 643.02Corporate Dividend Tax @ 12.81 % 89.24Transferred to General Reserve 1050.00 450.00Balance carried over to Balance Sheet 107.47 748.73

1943.32 1841.75

Earning Per Share ( Equity shares, par value Rs. 10/- each )Basic & Diluted (Rs.) 18.13 17.19

Number of shares considered for computing earning per shareBasic & Diluted 10717000 10717000






38

SCHEDULES TO BALANCE SHEET

As at March As at March31, 2003 31, 2002


Schedule 1 - SHARE CAPITAL

AUTHORISED1,10,00,000 Equity Shares of Rs. 10/- each 1100.00 1100.0050,00,000 Redeemable Preference Share of Rs. 10/- each 500.00 500.00

1600.00 1600.00

ISSUED, SUBSCRIBED AND PAID-UP1,07,17,000 Equity Shares of Rs. 10/- each fully paid up 1071.70 1071.70(Previous Year 1,07,17,000 Equity Shares of Rs. 10/- each)(Out of above, 53,58,500 Equity Shares areallotted as fully paid-up by way of Bonus Shares)

1071.70 1071.70Schedule 2 - RESERVES AND SURPLUS

CAPITAL RESERVE 0.35 0.35(On Forfeited Shares & NCD)

STATE CAPITAL SUBSIDY 20.00 20.00

SHARE PREMIUM ACCOUNT 749.36 1285.21Less : Utilised for allotment of Bonus Shares – 535.85

749.36 749.36CAPITAL REDEMPTION RESERVE 200.00 200.00

DEBENTURE REDEMPTION RESERVEAs per last Balance Sheet – 251.00Less : Teansfer to General Reserve – 251.00

GENERAL RESERVEAs per last Balance Sheet 1751.00 1050.00Add: Transferred from Deb. Redemption Reserve – 251.00Add: Transferred from Profit & Loss Account 1050.00 450.00

2801.00 1751.00SURPLUSAs per last Balance Sheet 1050.69 1552.40Less: Transferred to Provision for Deferred Tax – 1250.44Add: Transferred from Profit & Loss Account 107.47 748.73

1158.16 1050.69

4928.87 3771.40

39

SCHEDULES TO BALANCE SHEET (CONTD.)

As at March As at March31,2003 31,2002


Schedule 3 - LOAN FUNDS

SECURED LOANSA. (i) Term Loans from Financial Institutions and Banks

ICICI Bank Limited 850.00 910.00HDFC Limited 196.00 252.00Indian Overseas Bank – 721.18

B. (ii) Loans and Advances from BanksState Bank of India 596.94 182.00IDBI Bank Limited 1249.56 824.14Standard Chartered Bank 1480.10 222.99Citi Bank N.A. 1125.07 951.90

C. (iii) Other LoansInterest Free Loan from Govt. of Haryana 1462.70 1432.01

UNSECURED LOANSFrom Banks – 244.56From Companies – 699.65

6960.37 6440.43

RUPEE TERM LOANS

(i) Loan from ICICI Bank Limited is secured by way of first charge/mortgage by way of deposit of Title Deeds in respect of theCompany’s immovable properties both present and future and by way of hypothecation of the Company’s all movable assets(subject to banker’s prior charge) and also personally guaranteed by the Managing Director and the Joint Managing Director of theCompany. Term Loan from HDFC Limited is secured against exclusive charge on industrial plot measuring approximately 4 acressituated at Khandsa, Distt. Gurgaon (Haryana).

(ii) Loans and Advances from Banks are Secured by Hypothecation of bills receivable & inventories. IDBI Banks facility uptoRs. 1700.00 Lacs is further secured by way of second charge over the fixed assets of the Company and SBI facilities are alsopersonally guaranteed by the MD & JMD.

(iii) Interest free Loan from Govt. of Haryana is partly secured against Bank Guarantees and second charge on the fixed assets of theCompany.

Schedule 3 A - DEFERRED TAX LIABILITY

As per last Balance Sheet 1349.36 –Add : Transferred from Surplus – 1250.44Add : Provision for the year 105.90 98.92

1455.26 1349.36

40


Schedule 4 - FIXED ASSETS ( Rs. in Lacs )

GROSS BLOCK DEPRECIATION NET BLOCK

Addition Sale/Trf. Total Cost For OnParticulars Cost as on During During as on Up to the Sale/ Up to As on As on

31.03.02 the Year the Year 31.03.03 31.03.02 Year Transfer 31.03.03 31.03.03 31.03.02

LAND 549.96 101.97 – 651.93 – – – – 651.93 549.96

BUILDINGS 2503.64 90.26 – 2593.90 378.55 83.05 – 461.60 2132.30 2125.09

FURNITURE &FIXTURES 107.66 14.47 1.42 120.71 55.80 10.58 0.67 65.71 55.00 51.86

PLANT &MACHINERY 11261.84 1528.18 188.56 12601.46 4451.76 1048.84 132.01 5368.59 7232.87 6810.08

OFFICEEQUIPMENT 415.06 97.95 1.15 511.86 208.67 72.92 0.60 280.99 230.87 206.39

VEHICLES 275.64 66.65 11.90 330.39 119.79 50.29 5.81 164.27 166.12 155.85

TOTAL 15113.80 1899.48 203.03 16810.25 5214.57 1265.68 139.09 6341.16 10469.09 9899.23

PREVIOUS YEARFIGURES 13908.38 1299.52 94.11 15113.80 4109.86 1161.76 57.06 5214.57 9899.23 9798.52

CAPITAL WORK - IN - PROGRESSCapital Work - in - progress 547.43 69.60

Note : Additions in Fixed Assets during the year include Rs. 6.10 Lacs (previous year Rs. 46.09 Lacs) on account of capitalisation ofborrowing cost and Rs. 0.98 Lacs (previous year Rs. 3.15 Lacs) on account of foreign exchange fluctuation.



Schedule 5 - INVESTMENTS(AT COST OR REALISABLE VALUE WHICHEVER IS LESS) - Unquoted

Trade - (Fully Paid-up)Hankook Motors Limited 1.81 1.816,05,000 Equity Shares of Rs.10/- each (Realisable Value Rs. 0.30/- each)(Previous Year 6,05,000 Equity Shares of Rs. 10/- each – Realisable Value Rs. 0.30/- each)FCC Rico Limited * 395.00 395.0039,49,994 Equity Shares of Rs. 10/- each(Previous Year 39,49,994 Equity Shares of Rs. 10/- each)Rico Auto Industries Inc. USA * 12.17 4.90(100 % Subsidiary of the Company)2,500 Equity Shares of US$ 10/- each(Previous Year 1,000 Equity Shares of US$ 10/- each)

Non Trade - (Fully Paid-up)Rico Softech Limited * 600.00 350.05(100 % Subsidiary of the Company)60,00,000 Equity Shares of Rs. 10/- each(Previous Year 35,00,540 Shares of Rs. 10/- Each)

Inapex Limited 6.00 6.0060,000 Equity Shares of Rs. 10/- each(Previous Year 60,000 Equity Shares of Rs. 10/- each)

1014.98 757.76Aggregate Value:1. Cost of Quoted Investments – –2. Market Value of Quoted Investments – –3. Cost of Unquoted Investments 1014.98 757.76

* Under the same Management.

41




Schedule 6 - INVENTORIES

(As valued and certified by the Management)Goods in Transit 25.44 11.51Stores & Spares (at cost) 396.31 386.30Raw Material & Components (at cost) 479.77 751.71Work-in-process (at cost) 285.41 157.83Finished Goods (at cost or Realisable Valuewhichever is less) 190.34 20.83

1377.27 1328.18

Schedule 7 - SUNDRY DEBTORS

(Unsecured considered good)Debts outstanding for a period exceeding six months 108.64 275.80Other debts 4066.52 3996.02

4175.16 4271.82

Schedule 8 - CASH AND BANK BALANCES

1. Cash on hand 6.83 6.432. Balances with Scheduled Banks

a) In Current Accounts 30.39 45.28b) In Margin Money Accounts

– against bank guarantees 0.91 0.35– against discounting – 2.38

c) In Dividend Accounts 12.88 9.25d) In NCD Interest Accounts 4.86 6.27

55.87 69.96

Schedule 9 - LOANS AND ADVANCES

(Unsecured considered good)a) Advances recoverable in cash or in kind

or for value to be received 1781.46 1267.47b) Security deposits 107.72 96.37

1889.18 1363.84

42




Schedule 10 - CURRENT LIABILITIES AND PROVISIONS

a) Sundry creditors1) Due to SSI Units 279.79 131.112) Others 3155.21 3600.15

b) Share application money refundable – 0.17c) Other liabilities

1) Expenses payable 778.02 672.082) Income Tax deducted at source payable 35.44 22.283) Interest accrued but not due 3.53 18.804) Statutory liabilities 111.20 126.805) Unclaimed Dividends 12.65 9.266) NCD Interest Due 4.89 6.69

d) Proposed Dividend 696.61 643.02e) Provision for Income Tax ( Net of Advance Tax ) 79.35 120.72f) Provision for Corporate Dividend Tax 89.24 –

5245.93 5351.08

Schedule 11 - MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)Share Issue & Deffered Revenue Expenses 223.58 304.30Less: Expenses written off during the year 90.43 80.72

133.15 223.58

SCHEDULES TO PROFIT & LOSS ACCOUNT

Year ended Year endedMarch 31, 2003 March 31, 2002


Schedule 12 - SALES & OTHER INCOME

Sales 44812.42 44783.04Miscellaneous Sales 91.07 110.95Interest Received 6.94 12.51(TDS Rs. 1,27,245/- Prev. Year Rs. 98,372/-)Previous Year Expenses Written back 4.80 0.55Miscellaneous Receipts 205.62 121.66(TDS Rs. 5,24,160/- Prev. Year Rs. 3,25,584/-)Job Work (TDS Rs. 11,550/- Prev.Year Rs. 4,386/-) 78.33 4.09

45199.18 45032.80

43




Schedule 13 - MANUFACTURING & OTHER EXPENSES

Raw Material & Components Consumed 26750.30 27158.68Add : Opening Stock

Work-in-Process 157.83 211.61Finished Goods 20.83 178.66 25.67

26928.96 27395.96Less : Closing Stock

Work-in-Process 285.41 157.83Finished Goods 190.34 475.75 20.83

26453.21 27217.30Stores & Spares Consumed 1667.25 1899.47Power & Fuel 1763.11 1727.19Repair & Maintenance (Machinery) 257.37 208.02Personnel Expenses 2216.55 1929.94Contribution to Provident & Other Funds 124.67 115.46Labour & Staff Welfare 81.01 73.43Rent 17.49 13.71Rates & Taxes 24.47 26.11Directors’ Sitting Fees 0.56 0.54Commission to Directors 324.06 285.90Insurance 111.72 102.68Travelling & Conveyance 140.23 111.22Auditors’ Remuneration* 8.12 6.37Advertisement & Publicity 10.19 2.27Sales Promotion 36.73 2.17Repair & Maintenance (Building) 114.72 136.85Repair & Maintenance (Others) 72.98 74.38Charity & Donation 6.60 3.91Other Expenses 958.67 809.25Loss on Sale of Assets 41.45 20.61Previous Year Expenses 8.76 6.05

34439.92 34772.83

Note : * Auditors’ Remuneration includes payments/provisions for :Auditors’ RemunerationAudit Fee 5.09 3.56Tax Audit Fee 0.81 0.74Income Tax Matters 0.84 0.59Other Capacity 0.60 0.67Expenses Reimbursed 0.78 0.81

8.12 6.37

Schedule 14 - FINANCIAL CHARGES

N.C.D. Interest – 63.24Term Loan Interest 194.44 441.89Interest to Bank & Others 296.72 320.92

491.16 826.05

44

Schedule 15 - NOTES ON ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES

(i) Accounting Convention:

The financial statements are prepared on accrual basis under the historical cost convention, in accordance with the applicableaccounting standards issued by The Institute of Chartered Accountants of India and relevant provisions of the CompaniesAct,1956.

(ii) Fixed Assets and Depreciation:

Tangible fixed assets are stated at cost less accumulated depreciation. Depreciation on Building and Plant & Machinery ischarged on pro-rata basis at the straight line method rates as prescribed in Schedule XIV of the Companies Act, 1956 excepton Plant and Machinery costing less than Rs. 5000/- each in value, which are depreciated at the rate of 100% in the year ofpurchase and depreciation on rest of the fixed assets is provided on the WDV method at the rates prescribed in Schedule XIVof the Companies Act, 1956.

(iii) Investments:

Long Term Investments are carried at cost less provision for diminution in value other than temporary, if any.

(iv) Inventories:

Raw Materials, Components, Stores and Spares, Loose Tools, and Work-in-process are valued at cost, Finished goods arevalued at cost or realizable value whichever is less. By products and Scrap is valued at realizable value. The basis of determiningcost for various categories of inventories are as follow:

Raw Material, Components, Stores & Spares and Loose Tools : At cost (Weighted Average)Material in Transit : At costWork in Process : At Material cost plus share of Direct ExpensesFinished Goods : At Material cost plus share of Direct Expenses

(inclusive of Excise Duty Payable)

Inventory of finished goods includes closing stock of scrap.

During the year, the method of valuation of Inventories has been changed from FIFO to Weighted Average Method. Had theCompany followed method of valuation as per previous year, the net profit of the Company would have been higher byRs.1.29 Lacs.

(v) Inter-unit transfers of finished materials are being made at market price. Closing stock of such material at Balance Sheet dateis evaluated at cost.

(vi) Retirement Benefits:

The Company has various Schemes of retirement benefits such as Provident Fund, Gratuity, and Earned Leaves.

a) The Company’s contribution to the Provident Fund is charged against revenue every year.

b) The Company is maintaining a Trust called “Rico Auto Industries Limited Employees Group Gratuity Scheme” for thegratuity payable to employees. The contribution paid to the Trust has been charged to revenue. The funds of the trust aremanaged by Life Insurance Corporation of India.

c) The Company is maintaining a Fund called ”Rico Auto Industries Limited Employee Group Leave Encashment AssuranceScheme” for leave encashment benefits of the employees by paying contribution to Life Insurance Corporation of India.The contribution paid to the Fund has been charged to revenue.

(vii) Sales:

Sales of Goods is recognized at the point of dispatch of goods to the customers. Sale value is inclusive of Excise Duty paidon the clearance of goods. Price revision of goods sold is accounted for at the time of billing. The export sales are accountedfor as under:

Export Sale/Income is accounted for at exchange rate prevailing at the time of sale. Effect of foreign exchange fluctuation onthe sale bills realized is booked in Miscellaneous Income/Miscellaneous Expenses account under the head Exchange RateFluctuation account.

(viii) Insurance claims which are not significant and not determinable are being accounted for on receipt basis.

(ix) Miscellaneous Expenditure:

Lease Rent paid on hiring of Capital Equipments till the date the equipments were put to use, has been debited to DeferredRevenue Expense Account amounting to Rs.204.33 Lacs during the Financial year 2001-02, which is being amortised overthe lease period which will expire in the financial year 2005-06.

45

(x) Prior period and Extraordinary items and changes in Accounting Policies having material impact on the financial affairs of theCompany are disclosed.

(xi) Material events occurring after the Balance Sheet date are taken into cognizance.

(xii) Interest on Borrowed Funds:

In respect of new units/major expansions, the interest paid/payable on borrowed funds, attributable to construction of Buildingand acquisition/erection of Plant and Machinery is capitalized upto the date of construction/acquisition/erection of aforesaidassets.

(xiii) Foreign Currency Transactions:

Transactions in foreign currency are recorded at exchange rate prevailing on the date of transactions. Assets and Liabilitiesoutstanding as at the close of the accounting year are converted at the exchange fluctuations, incurred for the acquisition offixed assets, if material, is adjusted to the cost of fixed assets.

2. Some of the Debit and Credit balances and loans and advances are subject to confirmation.

3. Building includes cost of leasehold land & building at Ambernath(Mumbai) Maharashtra amounting to Rs.44.18 Lacs (Previousyear Rs. 44.18 Lacs).

4. In the opinion of the Board of Directors, the Current Assets, Loans and Advances are having the value at which they are stated inthe Balance Sheet, if realized in the ordinary course of business save as otherwise stated in this Balance Sheet elsewhere.

5. Sale and Purchase includes an amount of Rs.1077.90 Lacs (Previous year Rs.675.45 Lacs) on account of Inter-unit Sales/Purchase including excise duty of Rs. 155.09 Lacs (Previous year Rs. 93.96 Lacs).

6. The Profit & Loss Account of the Company includes an expense of Rs.41.62 Lacs (Net) (Previous year Income ofRs.21.66 Lacs – Net) on account of Foreign Exchange Fluctuation relating to Imports & Exports, other than fluctuation on Importof Machinery & Equipments.

7. Sundry Debtors (Schedule 7) includes Rs.103.73 Lacs (Previous year Rs.161.37 Lacs) due from a Joint venture Company underthe same management. Maximum amount due during the year Rs.292.14 Lacs (Previous year Rs.186.24 Lacs).

Loans and advances (Schedule 9) includes Rs.571.73 Lacs as interest free advance given to Rico Softech Limited a 100%subsidiary of the Company (Previous year Rs.313.65 Lacs), maximum amount outstanding during the year Rs.609.27 Lacs(Previous year Rs.632.22 Lacs).

8. Deferred Tax Liability of Rs.105.90 Lacs for the current year has been charged to current year’s profit. Deferred Tax Liability ismainly on account of timing difference in depreciation, after adjustment of Deferred Tax Assets arising from Long Term CapitalLoss.

9. Earning per share (EPS) – The numerators and denominators used to calculate Basic and Diluted Earnings per share:


Net Profit after Income Tax (Rs.) (A) 19,43,33,118 18,41,75,268

No. of Equity Shares– Basic (B) 1,07,17,000 1,07,17,000– Diluted/Adjusted (After issue of Bonus Shares) (C) 1,07,17,000 1,07,17,000

Nominal Value per Equity Shares (Rs.) 10 10

Earning Per Share (Rs.)– Basic (A)/(B) 18.13 17.19– Diluted/Adjusted (after issue of Bonus Shares) (A)/(C) 18.13 17.19

46

10. SEGMENT ACCOUNTINGSegment information has been prepared in conformity with the accounting policies adopted for preparing and presenting thefinancial statements of the Company as set out in Significant accounting policy in the Schedule –15.

Information about Business Segment – Primary (Rs. in Lacs)

Particulars Year ended Year endedMarch 31, 2003 March 31, 2002

(i) Segment Revenuea) Automotive Component 35842.83 33461.90b) Solvent Extraction & oil Refining 3669.48 6303.05

Total 39512.31 39764.95

Less : Inter segment revenue – –Less : Intra segment revenue 923.00 581.49

–Net Sales/Income from Operations 38589.31 39183.46

(ii) Segment Results(Profit/(Loss) before tax and interest from each segment)a) Automotive Component 3804.59 3631.57b) Solvent Extraction & Oil Refining (88.31) 59.38

Total 3716.28 3690.95Less : Interest 491.16 826.05Less : Other un-allocable expenditure net of unallocable Income – –

Total Profit before Tax 3225.12 2864.90

(iii) Capital Employed(Segment Assets-Segment Liabilities)a) Automotive Component 12263.16 10673.21b) Solvent Extraction & Oil Refining 1004.91 1085.09

Total 13268.07 11758.30

11. LIST OF RELATED PARTIES & NATURE OF RELATED PARTY RELATIONSHIP WHERE CONTROL EXISTS

Key Management Personnel Relatives of Key Management Personnel

Shri Chandra Mohan – Chairman –

Shri C.K.Hazari – Director –

Shri Anup singh – Director –

Prof. V.K.Bhalla – Director –

Shri Kanwal Monga – Director –

Shri John T. Sheffler – Director –

Shri Amarjit Chopra – Director –

Shri Rakesh Kapur – Director Smt. Upasna KapurShri Arvind KapurShri Arun Kapur

Shri Arvind Kapur – Managing Director Smt. Shalini KapurShri Arun KapurShri Rakesh Kapur

Shri Arun Kapur – Jt. Managing Director Smt. Ritu KapurShri Arvind KapurShri Rakesh Kapur

47

RELATED PARTY TRANSACTIONS (Rs.in Lacs)

Name Rico FCC Rico Rico Auto Kapsons LGI Sheffler Mfg. All DirectorsCastings RICO Softech Industries Associates Inter- & InternationalLimited Limited Limited Inc, USA Private national, Logistics,

Limited USA USA

Nature of Relationship Associate Joint Wholly Wholly Associate One One KeyCompany Venture Owned Owned Company Director Director Management

Subsidiary Subsidiary having having Personalinterest interest

Goods Purchased(semi finished) 976.10 18.55 – – – – – –

Goods sold 1.64 1310.88 – 784.16 – 53.19 46.17 –

Purchase of Machineries 136.88 – – – – – – –

Sale of Machinery 11.81 – – – – – – –

Paid for Services (AMCand Repairing of 35.18 – 182.40 – – – – –Machines & other)

Jobwork Income – – – 4.26 – – – –

Rent Received – – 24.96 – – – – –

Rent Paid – – – – 18.00 – – –

Loans given(Interest free) – – 571.73 – – – – –

Equity Contribution inCash during the year – – 249.95 7.27 – – – –

Guarantees/collateralsoutstanding as on31.03.2003 – – 350.00 – – – – –

Remuneration, SittingFee/Commission – – – – – – – 376.29

Balance as on31.03.2003 - Recoverable – 103.73 571.73 365.90 – 57.75 13.44 –

Balance as on 17.50 – – – – – – –31.03.2003 - Payable

12. CONTINGENT LIABILITIES

i) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)Rs.243.14 Lacs (Previous year Rs.244.81 Lacs).

ii) Banks have given guarantees on behalf of the Company worth of Rs. NIL (Previous year Rs.24.45 Lacs).iii) Letters of Credit outstanding in favour of suppliers pending supplies Rs.491.59 Lacs (Previous year Rs.556.30 Lacs).iv) The Company has given Corporate Guarantee to a Bank for Rs.350.00 Lacs (Previous year 350.00 Lacs) on behalf of Rico

Softech Limited a subsidiary Company.v) The Company has executed General surety Bonds for Rs.110.00 Lacs (Previous year Rs.110.00 Lacs) in favour of The

President of India, under Central Excise Act, 1944.vi) Central Excise Demands pending in appeals Rs.NIL (Previous year Rs.906.77 Lacs).vii) Sales Tax demands pending in appeals Rs.59.84 Lacs (Previous year Rs.5.52 Lacs).

48

13. The names of the Small Scale Industrial (SSI) undertakings to whom the Company owes any sum which is outstanding for morethan 30 days at the year end are as follows:

(Rs.in Lacs)

Aaress Auto Pvt.Ltd 16.08 33.17Accu-Size Gauges & Tools P.Ltd 0.07 0.11A.K.Automatics – 0.55Akash Hi Tech Industries Pvt.Ltd 0.28 0.97A.K. Rubber Industries 0.01 –Aravali Engineers 0.16 –Bansal Precision Screws P.Ltd 5.28 11.48Bansal Brothers 0.38 0.27Balaji Fluxes Pvt Ltd 0.73 0.21Bij Engineering & Consultancy 0.04 0.22Bhagwati Packers 5.71 6.18Bhagwati Wood Products 1.45 2.47Banas Cooling Tower Corporation 0.61 –Chakson Engineering Company 0.09 –Durga Furnitures 0.07 0.42Dee Kay Plastics 0.28 0.30D & D Organics Pvt.Ltd 1.97 –Daka Monolithics Pvt.Ltd 0.20 –Dinesh Packers 0.80 –Dropco Engineers 0.62 –Diamond Enterprises – 0.32Emuge India Pvt Ltd 0.20 –Engineering Associates 0.55 2.34Electric & Machinery Traders 0.58 –Flow Guards 0.10 –Global Machine And Tool Co. 3.28 2.22Gupta Associates 1.80 –Gaurav Engineers 0.60 –Heatex Comptools Pvt.Ltd 0.09 –Hitech Quality Centre 0.14 –Haryana Spring & Pressings Work – 0.53Helical Springs 5.68 10.11Integrated Automation Systems 3.33 –Jaycee Steels Industries 65.02 16.97Jai Sai Steel Balls Pvt Ltd 0.12 0.18Khanna & Associates 1.78 0.43K.L.Saw Mills 2.10 3.20Ledger Graphic 0.16 –Material Movell India Pvt.Ltd 2.09 –Mausam Enterprises 0.24 –

Mohindra Fastners Ltd 14.01 7.59Mohini Engineering Works 1.18 0.10Malhal Sons 1.06 –Multi ARC India Ltd. 3.36 –Nasa Engineers 0.04 1.25Nipman Fastners Ind Pvt Ltd 3.73 0.69Nicks Auto Industries 5.43 –Neelkamal Crates & Bins 0.39 –Omega Automotive Pvt Ltd 2.34 0.62Pagan Paints & Chemical 2.29 3.13Premier Plastics 5.32 7.42Poly Plastics 2.13 2.17Packers 0.15 0.27Pyro Industries 4.00 –R.V. Industries 3.41 2.31Rishi Industries 0.55 0.53Raga Engineers 0.19 0.23Rohit Felts &Ind Enterprises 0.78 0.99Rajhans Pressing Pvt.Ltd 3.97 –SPL Engineers Pvt Ltd 2.88 1.46Sidhartha Tools Pvt Ltd 2.71 0.56Safety Vision – 0.68Survodaya Engineering Works 2.33 1.48SP Metallurgical P Ltd – 8.04Sheel Industries 0.26 0.26Special Washer India Pvt Ltd 0.31 0.03Sanewal Auto Engineers Pvt Ltd 3.82 5.19Samir Industries 3.02 –Satyog Engineering Industries 0.35 –Sharda Proplene Pvt Ltd 0.47 –Shri Krishna Engineering Works 0.55 –Satyam Plastics 0.23 –Techno Thermal Treaters Pvt Ltd 0.02 0.02T.K.W Fasteners 2.80 3.01Trident Products Pvt.Ltd 0.06 –Techno Art Tools & Services 3.02 –Vishal Engg. Works 0.36 –Vikas Spintex Ltd 1.26 –Walkers Automotives Pvt Ltd 0.43 0.46Weldo Technology Pvt.Ltd 0.27 0.28

NAME OF THE PARTIES 31.03.2003 31.03.2002NAME OF THE PARTIES 31.03.2003 31.03.2002

The above information and that disclosed in schedule-10 “Current Liabilities” regarding small scale industrial undertakings has beencompiled by the Company on the basis of details obtained from its suppliers. This has been relied upon by the auditors.

14. The amount has been given in Lacs.

15. Previous year figures have been re-grouped or rearranged wherever found necessary.

16. Schedules 1 to 15 form an integral part of the Balance Sheet and Profit & Loss account.

49

ADDITIONAL INFORMATION PURSUANT TO PARAGRAPHS 3 & 4 OF PART II OF SCHEDULE VI OF THE COMPANIES ACT, 1956

A. DETAILS OF CAPACITY AND PRODUCTION

AUTO DIVISION

ACTUAL PRODUCTION (In Nos.)

Year ended Year endedCLASS OF GOODS March 31, 2003 March 31, 2002

AUTO PARTS 17047900 16015225GENERATOR PARTS 35478 50325DIES & MOULDS 437 354OTHERS 110866 79169

NOTE : It is not feasible to give installed Capacity as numerous items of Auto Parts and other Components are manufactured bythe Company.

AGRO DIVISION

(a) Licensed Capacity– Solvent Extraction 150000 Tpa 150000 Tpa– Refined Vegetable Oil 15000 Tpa 15000 Tpa

(b) Installed Capacity *Soyabean 500 Tpd 500 TpdMustard Cake 400 Tpd 400 TpdRefined Oil 50 Tpd 50 Tpd

(c) ProductionSolvant Oil – Soyabean 2022.47Mt 1618.48 Mt

– Mustard – –Deoiled Cake – Soyabean 20943.321Mt 44902.580 Mt

– Mustard – –Refined Oil – Soyabean 3294.16Mt 9200.02 Mt

* As certified by the management and relied on by the auditors being a technical matter.

B. PARTICULARS OF OPENING STOCK, SALES AND CLOSING STOCK OF FINISHED GOODS

AUTO DIVISION (Rs. in Lacs)

OPENING STOCK SALES CLOSING STOCK

CLASS OF Current Year Previous Year Current Year Previous Year Current Year Previous YearGOODS Qty Value Qty Value Qty Value Qty Value Qty. Value Qty. Value

(Nos.) (Rs.) (Nos.) (Rs.) (Nos.) (Rs.) (Nos.) (Rs.) (Nos.) (Rs.) (Nos.) (Rs.)

AUTO PARTS 15620 10.79 26709 15.89 17030528 40391.03 16026314 38015.19 32992 35.07 15620 10.79

GENERATORPARTS – – – – 35478 57.64 50325 85.38 – – – –

DIES & MOULDS – – – – 436 475.92 354 336.65 1 4.65 – –

OTHERS 4021 1.94 4614 2.61 106534 310.52 79762 158.03 8353 5.62 4021 1.94

JOB WORK – – – – – 78.33 – 4.09 – – – –

AGRO DIVISION


CLASS OF Current Year Previous Year Current Year Previous Year Current Year Previous YearGOODS Qty Value Qty Value Qty Value Qty Value Qty. Value Qty. Value

(MT.) (Rs.) (MT.) (Rs.) (MT.) (Rs.) (MT.) (Rs.) (MT.) (Rs.) (MT.) (Rs.)

SOLVANT OIL– Soyabean 7.967 1.99 23.57 4.95 1692.550 678.72 1634.080 427.57 337.884 138.56 7.967 1.99– Mustard – – – – – – – – – – – –

DEOILED CAKE– Soyabean 14.925 1.05 – – 20958.246 1818.97 44887.655 3285.66 – – 14.925 1.05– Mustard – – – – – – – – – – – –

REFINED OIL– Soyabean 9.286 2.41 – – 3288.235 1145.69 9190.733 2540.52 15.213 6.23 9.286 2.41OTHERS – 2.65 – 2.22 – 25.00 – 44.97 – 0.21 – 2.65

50

C. RAW MATERIAL, COMPONENTS, STORES AND SPARE PARTS CONSUMED

Year ended March 31, 2003 Year ended March 31, 2002Qty. Value Qty. Value

(Kg.) (Rs. in Lacs) (Kg.) (Rs. in Lacs)

1. Aluminium Alloy 7786235 6459.25 6901835 5778.052. Pig Iron & Steel Scrap 5809324 502.00 5145123 417.973. Other Materials & Components – 16274.94 – 15340.004. Stores and Spare Parts – 1667.25 – 1899.475. Soya - Seed 24457771 3139.82 51561721 5119.656. Others – 374.29 – 503.01

It is not practical to furnish quantitative information of other materials, components and stores & spares parts Consumed in viewof considerable number of items diverse in size and volume.

D. CONSUMPTION OF IMPORTED AND INDIGENOUS RAW MATERIAL (INCLUDING COMPONENTS AND SPARES)CONSUMED AND PERCENTAGE OF EACH TO TOTAL CONSUMPTION

Year ended March 31, 2003 Year ended March 31, 2002Value Percentage Value Percentage

to Total to Total(Rs. in Lacs) Consumption (Rs. in Lacs) Consumption

1. Aluminium AlloyIndigenous 6425.84 99.48% 5642.91 97.66%Imported 33.41 0.52% 135.14 2.34%

2. Pig Iron & Steel ScrapIndigenous 502.00 100.00% 417.97 100.00%Imported – – – –

3. Soya SeedIndigenous 3139.82 100.00% 5119.65 100.00%Imported – – – –

4. Other Materials & ComponentsIndigenous 15497.34 93.08% 14669.26 92.59%Imported 1151.89 6.92% 1173.75 7.41%

5. Stores & Spare PartsIndigenous 1416.84 84.98% 1734.69 91.32%Imported 250.41 15.02% 164.78 8.68

E. CIF VALUE OF IMPORTS



Capital Goods 918.99 275.85Other Raw Materials and Components 843.57 980.37Stores & Spares 186.91 139.12

F. EXPENDITURE IN FOREIGN CURRENCY



Bank Charges against Export 0.63 2.11Travelling Expenses 48.14 32.63Books & Periodicals 3.79 –Professional Charges 28.38 6.32Repair & Maint. Machinery 30.56 4.61Staff Rectruitment & Tranining 6.46 17.40Sales Promostion 28.97 –Others 11.39 0.64

51

G. EARNING IN FOREIGN CURRENCY


(Rs. in Lacs) ( Rs. in Lacs)

F.O.B. Value of Export 1085.36 858.21Job Work 72.84 –

H. PAYMENT TO DIRECTORS



Remuneration 37.86 32.46Commission 324.06 285.90Perquisites & Allowances 9.27 9.89Directors Sitting Fees 0.56 0.54Contribution to Provident Fund 4.54 3.90

Computation of Commission to DirectorsU/s 349 of the Companies Act, 1956Profit after Depreciation 3225.12 2864.90Added BackDirectors Remuneration Charged toProfit and Loss Account 364.29 327.68Commission to Other Directors 12.00 5.00Loss on sale of Fixed Assets (Net) - as per Books 41.45 20.61Loss on sale of Investment – 58.69SUB TOTAL 417.74 411.98

3642.86 3276.88Less: Depreciation as per Section 350 of the

Companies Act 1956 – –

TOTAL 3642.86 3276.88

Computation of commission to Managing Director &Jt. Managing DirectorMaximum Permissible 10% of Net Profit 364.29 327.69Less: Remuneration already paid 52.23 46.79

Balance 312.06 280.90

Computation of commission to other Directors1% of Net Profit (Subject to maximum of Rs.12.00 Lacs) 12.00 5.00(Previous year Rs.5.00 Lacs)





52

INFORMATION PURSUANT TO PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956

Balance Sheet Abstract and Company’s General Business Profile

I. Registration Details Registration No. 23187 State Code 05Balance Sheet Date 31 Month 03 Year 2003

II. Capital raised during the year (Rs. in Lacs) Public Issue Right IssueNil Nil

Bonus Issue Private PlacementNil Nil

III. Position of Mobilisation and Deployment of Funds:(Rs. in Lacs)Sources of Funds Total Liabilities Total Assets

14416.20 14416.20

Paid-Up Capital Reserves & Surplus1071.70 4928.87

Secured Loans Deffered Tax Liability6960.37 1455.26

Application of Funds Net Fixed Assets Investments11016.52 1014.98

Net Current Assets Misc. Expenditure2251.55 133.15

Accumulated LossesNil

IV. Performance of Company (Rs. in Lacs) Turnover Total Expenditure45199.18 41974.06

Profit Before Tax Profit After Tax3225.12 1943.32

Earning Per Share in Rs. Dividend Rate %18.13 65.00

Generic Names of Three Principal Products/Service of Company (as per monetary terms)

1. Item Code No. (ITC Code) 8714.99.90Product Description Motorcycle Components

2. Item Code No. (ITC Code) 8708.99.00Product Description Parts and Accessories of Motor Vehicles

3. Item Code No. (ITC Code) 1507.90.10Product Description Soyabean Oil edible grade

As per ITC-HS Classification as amended upto April, 2003.





53

CASH FLOW STATEMENT FOR THE YEAR ENDED 31.03.2003



A. Cash Flow From Operating ActivitiesNet Profit Before Tax and Extra-Ordinary Items 3225.12 2864.90Adjustments for:Depreciation 1265.68 1161.76Loss on Sale of Assets 41.45 20.61Interest Paid 491.16 826.05Provision for diminuation in Value of Investments – 58.69Miscellaneous Expenses Written off 90.43 1888.72 80.72 2147.83

Operating Profit Before Working Capital Changes 5113.84 5012.73Adjustments for:Trade and Other Receivables (428.69) (1769.30)Inventories (49.09) (49.81)Trade Payable and provisions (206.60) (684.38) 851.49 (967.62)

Cash Generated From Operations 4429.46 4045.11Interest Paid (491.16) (826.05)Income Tax Payment for the Year (1217.28) (1708.44) (995.57) (1821.62)

Cash Flow Before Extraordinary Items 2721.02 2223.49

Extraordinary Items – (208.27)

Net Cash From Operating Activities (A) 2721.02 2015.22

B. Cash Flow From Investing ActivitiesPurchase of Fixed Assets (2377.31) (1369.12)Sale of Fixed Assets 22.49 16.44Purchase of Investments (257.22) (321.45)Sale of Investments – –

Net Cash used in Investing Activities (B) (2612.04) (1674.13)

C. Cash Flow From Financing ActivitiesProceeds from Short/Long Term Borrowings 3478.09 3901.81Repayment of Short/Long Term Borrowings (2958.14) (3883.86)Proceeds from issue of Share Capital – –Dividend Paid - Equity Shares (643.02) (413.36)

Net Cash used in Financing Activities (C) (123.07) (395.41)

Extra Ordinary Items – –

Net Increase in Cash and Cash Equivalents (14.09) (54.32)Cash and Cash Equivalents as at (Opening Balance) 69.96 124.28Cash and Cash Equivalents as at (Closing Balance) 55.87 69.96

Notes :

1. The above statement has been prepared under indirect method except in case of dividend which has been considered on the basisof actual movement of cash, with corresponding adjustments in assets and liabilities.

2. Cash and Cash equivalents represent cash and Bank Balances only.

54

CASH FLOW STATEMENT FOR THE YEAR ENDED 31.03.2002 (CONTD.)3. Additions to fixed assets are stated inclusive of movements of Capital work-in-progress between beginning and end of the year and

treated as part of investing activities.

4. Previous year figures have been regrouped/recast, wherever necessary.





AUDITORS’ CERTIFICATE

We have examined the attached cash flow statement of Rico Auto Industries Limited for the year ended 31st March, 2003. The Statementhas been prepared by the Company in accordance with the requirements of listing agreement clause 32 with Stock Exchanges andis based on and in agreement with the corresponding Profit & Loss Account and Balance Sheet covered by our report of even dateto the members of the Company.

for Gupta Vigg & Co.Chartered Accountants

KAWAL JAINPARTNER

Place : GurgaonDated : 31st May, 2003

55

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956RELATING TO SUBSIDIARY COMPANIES

1. Name of the Subsidiary : Rico Softech Limited Rico Auto Industries Inc., USA

2. Date from which it became Subsidiary : 28th March, 2000 12th June, 2001

3. Financial Year of the Subsidiary ended on : 31st March, 2003 31st March, 2003

4. Shares of the subsidiary held by :Rico Auto Industries Limited onthe above dates :

i) Number & Face Value : 6000000 shares @ Rs.10/- 2500 shares @US$ 10/- eacheach fully paid-up fully paid-up

ii) Extent of holding : 100% 100%

5. Net aggregate Profit/Loss for the : Loss - Rs.398 lacs Profit - US$ 47914current financial year

6. Net aggregate profits or losses for the : Nil Nilprevious financial years since becomingsubsidiary so far as it concerns the membersof the holding Company dealt with orprovided for in the accounts of theholding Company

7. Net aggregate amount received as dividends : Nil Nilfor previous financial years since becomingsubsidiary dealt with in the accounts of theholding Company in the financial year.

For and on behalf of the Board of Directors




56

DIRECTORS’ REPORT

To the Shareholders,

Your Directors present the Fifth Annual Report of your Company,together with the Audited Accounts for the year ended 31st March,2003.

FINANCIAL RESULTS (Rs. in Lacs)

Current Year Previous Year31/03/2003 31/03/2002

Sales and Other Income 452.80 204.94

Profit/ (Loss) before Interest& Depreciation (232.55) 49.43Less: Interest & Financial

Charges 42.42 4.35

(274.97) 45.08Less: Depreciation 162.97 77.00

Profit/ (Loss) before Tax (437.94) (31.92)

Less: Provision for Income Tax – 3.00Provision for Deferred TaxAsset/(Liability) 40.10 (0.16)

Profit/ (Loss) After Tax (397.84) (35.08)

Less: Depreciation of earlier yearwritten back 58.57 –

Balance Carried toBalance Sheet (339.27) (35.08)

Your Company during the year under report achieved a totalturnover of Rs.452.80 lacs as against Rs.204.94 lacs in theprevious year, thereby recording a growth of 120 per cent. Thenet loss of the Company for the year ended 31st March, 2003was Rs.339.27 lacs as against a net loss of Rs.35.08 lacs in theprevious year.

CAD/CAM/CAE & TRAINING DIVISION

The Company’s CAD/CAM/CAE Division recorded a growth of9.63 per cent at Rs. 213.50 lacs including a revenue of Rs.23.32lacs from the CAD/CAM/CAE Training Centres during the yearunder report as against Rs.194.73 lacs (inclusive of Rs.34.05 lacsfrom Training Centre) in the previous year.

This division has earned a profit of Rs.89.84 lacs as againstRs.22.96 lacs in the previous year.

Outlook for Current Year

The CAD/CAM/CAE activities have a direct synergy with the mainactivities of the holding Company - Rico Auto Industries Limited.Besides supporting the holding Company, your Company hasinitiated various measures which include providing services tooutside parties for improving the performance of this division.

CONTACT CENTER DIVISION

During the year under report, the Contact Center Division recordeda total income of Rs.239.29 lacs as against Rs.10.20 lacs in the

previous year. This division incurred a net loss of Rs.429.11 lacsas against Rs.58.05 lacs in the previous year. The performanceof this division was affected by the intense competition andstringent regulations prevailing in the Industry.

Outlook for Current Year

In our constant endure to make the Contact Center world class,your Company has been offering outbound/inbound telemarketingcampaigns and customer care services for USA & UK. Apartfrom the above services your Company is contemplating toundertakes campaign for Business Process Outsourcing, BackOffice operations, E-mail Management and Customer Care SupportServices. Efforts are on to broad base the present clients in USA,UK and Australia. It is expected that all these efforts would improvethe performance of the Company.

DIVIDEND

In view of the losses, the Directors are unable to recommend anydividend for the financial year 2002-2003.

RIGHTS SHARES

During the year under review, the Company made a Rights Issueoffering 2499460 Equity Shares of Rs.10/-each for cash at par tothe holding Company Rico Auto Industries Limited. Consequentto this rights offer; the paid up capital of the Company has increasedfrom Rs.3,50,05,400/- (Rupees Three crores fifty lacs fivethousand four hundred only) to Rs.6,00,00,000/- (Rupees Sixcrores only).

FIXED DEPOSITS

The Company has not accepted any deposit from the public duringthe financial year ended 31st March, 2003.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956and the Articles of Association of the Company Mr. Arun Kapurand Mrs. Upasna Kapur, Directors will retire by rotation at theforthcoming Annual General Meeting and being eligible offerthemselves for re-appointment.

Mr. Arvind Kapur was appointed as an Additional Director by theBoard on 19th September, 2002. Pursuant to the provisions ofSection 260 of the Companies Act, 1956 he holds office up to thedate of the ensuing Annual General Meeting of the Company. TheBoard recommends the proposal of his appointment as containedin the Notice of Annual General Meeting for your approval.

AUDIT COMMITTEE

The Company has constituted an Audit Committee with effect from17th January, 2003 in consonance with the provisions of Section292-A of the Companies Act, 1956. The Committee comprisesfour members of which three are Non-Executive Directors andone is Executive Director. Mr. Arvind Kapur – Non-ExecutiveDirector is the Chairman of the Committee, Mr. Rakesh Kapur –Whole-time Director, Mr. Arun Kapur and Mr. O.P Aggarwal –Non-Executive Directors are the other members of the Committee.The Statutory Auditors and the Internal Auditors are permanentinvitees to the Committee. The Company Secretary of the Companyserves as the Secretary of the Committee.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to section 217 (2AA) of the Companies Act, 1956, yourDirectors confirm that:

57

i) in preparation of the annual accounts for the financial yearended 31st March, 2003 the applicable Accounting Standardshave been followed;

ii) appropriate accounting policies have been selected andapplied consistently and have made judgments and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March,2003 and of the profit of the Company for the year1st April, 2002 to 31st March, 2003;

iii) proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with theprovisions of the Companies Act, 1956 for safe guarding theassets of the Company and preventing and detecting fraudand other irregularities;

iv) the annual accounts for the financial year ended 31st March,2003 have been prepared on a going concern basis.

AUDITORS

M/s. Gupta Vigg & Co., Chartered Accountants, Statutory Auditorsof the Company hold office till the conclusion of the forthcomingAnnual General Meeting and being eligible offer themselves forreappointment. They have given a certificate under section 224(1B)of the Companies Act, 1956 to the effect that their reappointmentas Auditors of the Company, if made, would be in accordancewith the said section.

The observations in the Auditors’ Report are dealt within the notesto accounts at appropriate places and, being self-explanatory, needno further explanation.

Pursuant to Section 217(1)(e) of the Companies Act, 1956 readwith the Companies (Disclosure of particulars in the Report ofBoard of Directors) Rules, 1988, the following information isprovided:

A. Conservation of Energy

The Company’s operations involve low energy consumption.There are no major areas where any energy conservationmeasures can be taken. However, efforts are being made toconserve and optmize the use of energy in regular operations.Consequently impact on cost cannot be stated.

B. Technology Absorption

Efforts made in technology absorption as per Form B.

No Research and Development activities are being carriedby the Company hence no expenditure has been incurredon capital and recurring nature. The Company has also notimported any technology. The prescribed Form B is, therefore,not applicable to the Company.

C. Foreign Exchange Earnings and Outgo

The Company earned Rs.239.21 lacs in Foreign Exchangefrom the telemarketing Sales during the year as againstRs.10.20 lacs in the previous year. Expenditure on accountof traveling expenses, connectivity charges, internationalprivate link charges, and professional charges etc. wereamounting to Rs.230.70 lacs (previous year Rs.89.21 lacs).Outgo on account of import of capital goods was of the valueof Rs.2.26 lacs (previous year Rs.230.46 lacs).

PERSONNEL

During the year under review none of the employees of theCompany has been paid remuneration in excess of the limitsprescribed under section 217(2A) of the Companies Act, 1956read with the Companies (Particulars of Employees) Rules, 1975.

During the year under report the relations with personnel remaincordial.

ACKNOWLEDGEMENTS

The Board wishes to place on record its sincere appreciation forthe continued assistance and support extended to the Companyby Banks and various departments of Central and StateGovernments. Your Directors acknowledge with gratitude theencouragement and support extended by our valued customers.Your Directors also wish to place on record their appreciation ofthe sincere and unstinted support provided to the Company by itsemployees at all levels.

On behalf of the Board of Directors

Place : Gurgaon Arun KapurDated : 28th May, 2003 Chairman

58

AUDITORS’ REPORT

To the Members ofRico Softech Limited

We have audited the attached Balance Sheet of Rico SoftechLimited (the Company) as at 31st March 2003 and also the Profit& Loss Account for the year ended on that date annexed thereto.These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that weplan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluatingthe overall financial statement presentation. We believe that ouraudit provides a reasonable basis for our opinion.

As required by the manufacturing and other Companies (Auditor’sReport) Order, 1988, issued by the Central Govt. of India in termsof sub-section (4A) of section 227 of the Companies Act, 1956,we enclose in the Annexure ‘A’ a statement on the matters specifiedin the paragraphs 4 & 5 of the said Order.

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

i) We have obtained all the information and explanations, whichto the best of our knowledge and belief were necessary forthe purpose of our audit.

ii) 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.

iii) The Balance Sheet and Profit & Loss Account dealt with bythis report are in agreement with the books of account.

iv) In our opinion, the Balance Sheet and Profit and Loss Accountdealt with by this report comply with the accounting standardsreferred to in sub-section (3C) of section 211 of theCompanies Act, 1956 to the extent applicable.

v) On the basis of written representations received from theDirectors as on 31st March, 2003, and taken on record bythe Board of Directors, we report that none of the Directorsis disqualified as on 31st March, 2003 from being appointedas a Director in terms of clause (g) of sub-section (1) ofsection 274 of the Companies Act, 1956.

vi) In our opinion, there is no adverse effect on the functioningof the Company.

vii) In our opinion and to the best of our information and accordingto the explanations given to us, the said accounts readtogether with the Notes on Accounts as per Schedule - 14give the information required by the Companies Act, 1956,in the manner so required and give a true and fair view inconformity with the accounting principles generally acceptedin India:

a) in the case of the Balance Sheet, of the state of affairsof the Company as at 31st March, 2003; and

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


Place : Gurgaon KAWAL JAINDated : 28th May, 2003 PARTNER

ANNEXURE ‘A’ REFERRED TO OF OUR REPORT OF EVENDATE.

i) The Company is maintaining proper records showing fullparticulars including quantitative details and situation of FixedAssets except Furniture & Fixtures and Office Equipments.The Fixed Assets have been physically verified by theManagement except Furniture & Fixtures and OfficeEquipments at the end of the year. No material discrepancieswere noticed on such verification.

ii) The Fixed Assets have not been revalued during theFinancial Year.

iii) As per the explanations & information given to us by theManagement, it is not technically feasible to physically verifythe Inventory, hence we are unable to comment uponinventory in the financial statements.

iv) Consequently paragraphs 4(A) (iv), 4 (A) (v), 4 (A) (xii) and4A (xiv) of this order are not applicable in relation to itsactivities.

v) In our opinion, the valuation of stocks is fair and proper inaccordance with the normally accepted accounting principlesand is on the same basis as in the preceding year.

vi) According to the explanations and information given to us,the Company has taken loans from Companies, firms orother parties listed in the register maintained under sections301 of the Companies Act, 1956. In our opinion, the rate ofinterest, terms and conditions of the said Loans were notprejudicial to the interest of the Company. The Companyhas not taken any Loans Secured or Unsecured from theCompanies under the same management as defined undersection 370 (1-B) of the Companies Act, 1956.

vii) The Company has not granted Loans to Companies, Firmsor other parties listed in the register maintained under section301 of the Companies Act, 1956, or to the Companies underthe same management as defined under section 370 (1-B)of the Companies Act, 1956. The Company has given loansto its employees who are repaying the amount as stipulated.

viii) In our opinion and according to the information andexplanations given to us, there are adequate internal controlprocedures commensurate with the size of the Companyand the nature of its business for the purchase of thecomplete hardware and software, consumables, plant &machinery and other assets. The activities of Company donot involve the sale of goods.

ix) In our opinion and according to the information andexplanations given to us, the prices paid for purchases ofgoods, materials and sale of goods, materials and servicesin excess of Rs.50,000/- in value of each type thereof fromFirms, Companies or other Parties in which Director’s are

59

interested, as listed in the Register of Contracts maintainedunder section 301 of the Companies Act, 1956, arereasonable as compared to the prevailing market prices ofsuch goods and materials except for items stated to be ofproprietary nature. As alternative sources of supplies arenot available, it is not possible for us to compare the pricespaid for such items.

x) In our opinion and according to the information andexplanations given to us, the Company has not acceptedany deposit from the Public.

xi) The Central Government has not prescribed maintenanceof Cost records under section 209(1)(d) of the CompaniesAct, 1956 by the Company for any of its products.

xii) According to the records of the Company, Provident Funddues have been regularly deposited during the FinancialYear with the Appropriate Authorities.

xiii) According to the records of the Company and the informationand explanations given to us, there were no undisputedamounts payable in respect of Income Tax, Wealth Tax,Custom Duty and Excise Duty outstanding as at 31st March,2003.

xiv) According to the records of the Company and informationand explanations given to us, no personal expenses have

been charged to revenue account other than those payableunder contractual obligation or in accordance with generallyaccepted business practice.

xv) In our opinion and according to the information andexplanations given to us, the Company has a reasonablesystem of allocating man hours utilised to the relative jobs,commensurate with its size and nature of its business.

xvi) In our opinion, the Company has a reasonable system ofauthorisation at proper levels, commensurate with the sizeof the Company and the nature of its business.

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

xviii) The Company is not a Sick Industrial Company within themeaning of clause (o) of sub-section (1) of section 3of the Sick Industrial Companies (Special Provisions)Act, 1985.


Place : Gurgaon KAWAL JAINDated : 28th May, 2003 PARTNER

60

BALANCE SHEET AS AT MARCH 31, 2003

Schedule No. As at March As at March31, 2003 31, 2002


SOURCES OF FUNDS

1. SHAREHOLDER’S FUNDSShare Capital 1 600.00 350.05Reserves & Surplus 2 – –

2. LOAN FUNDS 3 774.71 663.65

TOTAL 1374.71 1013.70


1. FIXED ASSETS 4Gross Block 1146.92 1125.36 Less : Depreciation 283.46 179.06

Net Block 863.46 946.30

2. CURRENT ASSETS, LOANS & ADVANCESA) Inventories 5 14.90 16.52B) Sundry Debtors 6 72.42 8.12C) Cash & Bank Balances 7 14.21 13.57D) Loans & Advances 8 59.68 55.78

161.21 93.99Less : Current Liabilities & Provisions 9 87.48 90.54


3. DEFERRED TAX ASSETS (NET) 9A 27.20 (12.90)

4. MISCELLANEOUS EXPENDITURE 10 – 5.80(to the extent not written off or adjusted)

5. BALANCE IN PROFIT & LOSS ACCOUNT 410.32 71.05

TOTAL 1374.71 1013.70



Kawal Jain Rakesh Kapur O.P. AggarwalPartner Whole-time Director Director

Place : Gurgaon G.Govindan NampoodiriDated : 28th May, 2003 Company Secretary

61

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2003

Schedule No. Year ended Year endedMarch 31, 2003 March 31, 2002


INCOME

Sales, Training Fees & Other Income 11 452.80 204.93

EXPENDITURE

Manufacturing & Other Expenses 12 679.55 149.70Financial Charges 13 42.42 4.35Misc. Expenditure Written off 5.80 5.80

727.77 159.85

Profit / (Loss) before Depreciation (274.97) 45.08Depreciation 162.97 77.00Profit / (Loss) after Depreciation (437.94) (31.92)Provision for Income Tax – 3.00Provision for Deferred Tax Liabilities /Assets 40.10 0.16Profit / (Loss) after Tax (397.84) (35.08)

Profit / (Loss) available for Appropriations (397.84) (35.08)

APPROPRIATIONS

Depreciation of Earlier Years Written back 58.57 –

Balance carried over to Balance Sheet (339.27) (35.08)

EARNING PER SHARE (Equity Share, for value Rs. 10/- each)

Basic (6.63) (1.00)Diluted (9.18) (1.75)

NUMBER OF SHARES CONSIDERED FOR COMPUTING EARNING PER SHARE

Basic (Total Number of Shares) 6000000 3500540Diluted ( Weighted Average Number of Shares) 4335976 2003937





62

SCHEDULES TO BALANCE SHEET



Schedule 1 - SHARE CAPITALAUTHORISED60,00,000 Equity Shares of Rs.10/- each 600.00 600.00

ISSUED, SUBSCRIBED AND PAID-UP 600.00 350.0560,00,000 Equity Shares of Rs. 10/- each fully paid up(Previous year 35,00,540 Equity Shares of Rs. 10/-each fully paid up)

600.00 350.05

Schedule 2 - RESERVES & SURPLUSSURPLUSAs per Last Balance Sheet (71.05) (23.23)

Less : Transferred to Deferred Tax Liabilities – 12.74Add : Transferred from Profit & Loss Account (339.27) (35.08)

(410.32) (71.05)

Schedule 3 - LOAN FUNDSSECURED LOANSTerm Loan from Lord Krishna Bank Limited 202.98 350.00

UNSECURED LOANSFrom Holding Company 571.73 313.65

774.71 663.65

TERM LOANTerm Loan from Lord Krishna Bank Limited is secured by way of First charge on the present and future Fixed Assets includingMachineries, Vehicles and other Implements and also Secured with the Corporate Guarantee extended by Rico Auto Industries Limited(Holding Company) up-to Rs. 3,50,00,000/-.

63

SCHEDULE TO BALANCE SHEET (CONTD.)

Schedule 4 - FIXED ASSETS (Rs. in Lacs)


Cost Additions Cost Up to For Dep. Dep. of Up to As on As onPARTICULARS as on During as on 31.3.02 the Capitalised earlier 31.3.03 31.3.03 31.3.02

31.3.02 the 31.3.03 year of Pre- yearsyear Operating Written

period Back

FURNITURE & FIXTURES 178.41 7.43 185.84 25.62 11.69 – 13.30 24.01 161.83 152.79PLANT & MACHINERY 5.80 – 5.80 3.35 0.28 – 3.07 0.56 5.24 2.45OFFICE EQUIPMENTS 85.40 6.62 92.02 10.85 12.55 – 5.01 18.39 73.63 74.54COMPUTERS 839.43 7.51 846.94 129.64 136.90 – 32.56 233.98 612.96 709.79VEHICLES 16.32 – 16.32 9.60 1.55 – 4.63 6.52 9.80 6.73

TOTAL 1125.36 21.56 1146.92 179.06 162.97 – 58.57 283.46 863.46 946.30

PREVIOUS YEAR 191.73 933.63 1125.36 27.62 77.00 74.44 – 179.06 946.30 164.11

PRE - OPERATIVE EXPENSES (Rs. in Lacs)



Personnel Expenses – 88.69Contribution to Provident Fund – 4.60Contribution to ESI – 0.03Connectivity Expenses - USA End – 23.52IPLC Link charges - USA End – 21.63International Link Charges - India End – 22.09Local Lead Charges – 2.61Office Rent – 13.44Insurance – 1.26Fees & Taxes – 1.75General expenses – 0.03Electricity Expenses – 3.39Internet Access Charges – 1.10Vehicle Running & Maintt. Charges – 1.85Staff Welfare Expenses – 8.64Printing & Stationary – 1.36Travelling Expenses – 2.49Telephone expenses – 3.03Conveyance Expenses – 0.54Transportation Charges – 28.88Repair & Maintt. Charges - Others – 1.23Seminar expenses – 0.30Staff Recruitment & Training expenses – 37.30Consultancy & Professional Expenses – 43.64Donations – 0.11Advertisement & publicity expenses – 1.41Books & Periodicals – 0.07Membership fees – 0.03Courier & Postage expenses – 0.01Rupee Term Loan Interest – 7.65Bank Charges – 0.02Depreciation – 74.43

TOTAL – 397.13

Less : CapitalisedComputers – 397.13

TOTAL – 397.13

64

SCHEDULE TO BALANCE SHEET (CONTD.)



Schedule 5 - INVENTORIES(As valued and certified by the Management )Job-in-process (At Cost) 14.90 16.52

14.90 16.52

Schedule 6 - SUNDRY DEBTORS(Unsecured Considered good)Debts outstanding for a period exceeding six months 8.03 1.72Other Debts 64.39 6.40

72.42 8.12

Schedule 7 - CASH AND BANK BALANCES1. Cash in hand 0.64 0.322. Balances with Scheduled Banks

a) In Current Accounts 13.57 13.25

14.21 13.57

Schedule 8 - LOANS AND ADVANCES(Unsecured Considered good)a) Advances recoverable in cash or in kind or for 37.15 21.44

value to be receivedb) Security Deposits 9.73 22.39c) Advance Income Tax / Tax deducted at source 12.80 11.95

59.68 55.78

Schedule 9 - CURRENT LIABILITIES AND PROVISIONSa) Sundry Creditors 44.67 56.10b) Other Liabilities

1) Expenses Payable 33.11 25.542) Income Tax deducted at source payable 2.64 3.543) Statutory Liabilities 3.99 2.364) Interest Accrued but not due 0.07 –

c) Provision for Income Tax 3.00 3.00

87.48 90.54

Schedule 9 A - DEFFERED TAX ASSETS (NET)As per Last Balance Sheet (12.90) (12.74)Provision for the Year 40.10 (0.16)

27.20 (12.90)

Schedule 10 - MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)Preliminary Expenses 0.38 0.76Less : Expenses written off during the year 0.38 0.38

– 0.38

Deffered Revenue Expenditure 5.42 10.85Less : Expenses written off during the year 5.42 5.43

– 5.42

Total Preliminary and Deferred Revenue Expenses not written off – 5.80

65




Schedule 11 - SALES & OTHER INCOMESales 239.21 10.20Sale of Software 188.40 160.68(TDS Rs.4,59,622/-, Previous Year 8,19,742/-)Training Fees 23.32 20.18Miscellaneous Receipt 3.49 4.05Increase/(Decrease) in Stocks (1.62) 9.82

452.80 204.93

Schedule 12 - MANUFACTURING & OTHER EXPENSESPurchases 8.92 0.29Computer Rent 3.48 8.02Personnel Expenses 204.55 63.87Contribution to Provident & other Funds 11.86 4.79Labour & Staff Welfare 55.65 7.67Rent,Rates & Taxes 26.68 3.74Insurance 3.36 0.93Travelling & Conveyance 11.89 3.78Auditor’s Remuneration* 0.72 0.37Advertisement & Publicity 1.58 3.08Sales Promotion 2.05 0.37Repair & Maintenance (Computers) 15.67 –Repair & Maintenance (Others) 5.83 4.72Other Expenses 324.41 48.06Previous Year Expenses 2.90 0.01

679.55 149.70

Note : * Auditor’s Remuneration includes payments/Provisions for :Auditor’s Remuneration :Audit Fees 0.41 0.13Tax Audit Fee 0.07 0.06Income Tax Matters 0.20 0.18Expenses Reimbursed 0.04 –

0.72 0.37

Schedule 13 - FINANCIAL CHARGESTerm Loan Interest 40.37 4.16Bank Interest & Charges 2.05 0.19

42.42 4.35

66

Schedule 14 - NOTES ON ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES

(i) Accounting Convention :The Financial statements are prepared on accrual basis under the historical cost convention, in accordance with theapplicable accounting standards issued by The Institute of Chartered Accountants of India and relevant provisions of theCompanies Act, 1956.

(ii) Fixed Assets and Depreciation :During the Year the depreciation method has been changed from WDV Method to Straight Line Method at the rates prescribedin Schedule XIV of the Companies Act, 1956.

(iii) Inventories :Software in hand and Software Job-in-process are valued at cost or realizable value whichever is less. The basis of determiningcost for various categories of inventories are as follows:

Job-in-process – At Process cost plus share of Overheads.

(iv) Miscellaneous Expenditure :Deferred Revenue expenditure comprises of Rs.16.28 Lacs was paid to a consultant during the year 2000-2001 and the samewas deferred to be written off in 3 years in equal installments, starting from the Financial year 2000-2001 to 2002-2003.

(v) Material events occurring after the Balance Sheet date are taken into cognizance.

(vi) Retirement Benefits :The Company has various Schemes of retirement benefits such as Provident Fund, Gratuity and Earned Leaves.

a) The Company’s Contributions to the Provident Fund is charged against revenue every year.

b) Provision for Earned leaves and Gratuity has been made in books of accounts on the basis of Actuarial valuation.

(vii) Taxation :Provision for Taxation has not been made in books of accounts due to Losses as per provision of Income Tax Act, 1961.

(viii) Prior period and extraordinary items and changes in Accounting Policies having material impact on the Financial affairs of theCompany are disclosed.

(ix) Interest on Borrowed Funds :The interest paid on borrowed funds, attributable to erection of Machinery is capitalized up-to the date of Pre-operative stageof operations.

(x) Foreign Currency Transactions :Transactions in foreign currency are recorded at exchange rate prevailing on the date of transactions. Assets and Liabilitiesoutstanding as at the close of the accounting year are converted at the exchange fluctuations, incurred for the acquisition offixed Assets, if material, is adjusted to the cost of Fixed Assets.

(xi) Sales :Export sales/Income is accounted for at exchange rate prevailing at the time of sale.

2. Some of the Debit and Credit balances and Loans and Advances are subject to confirmation.

3. In the opinion of the Board of Directors, the Current Assets, Loans and Advances are having the value at which they are stated inthe Balance Sheet, if realized in the ordinary course of business same as otherwise stated in this Balance Sheet elsewhere.

4. Sundry Debtors of more than six months includes an amount of Rs.6.30 Lacs (Previous Year Nil) for which legal notices has beensent. The recovery of the amount is doubtful.

5. During the year the depreciation method has been changed from Written Down value to Straight Line method at the rates prescribedin Schedule XIV of the Companies Act, 1956.

The Arrears of depreciation of the earlier years of Rs.58.57 Lacs have been written back to the Profit & Loss Account.

Had the Company follow the depreciation method as per previous year policies, the Loss of the Company have been higher byRs.165.05 Lacs and Net Block of the Fixed Assets would have been lower by Rs.165.05 Lacs.

6. Loan funds (Schedule 3) includes Rs. 571.73 Lacs as interest free advance received from Rico Auto Industries Limited,Holding Company (Previous Year Rs. 313.65 Lacs), maximum amount outstanding during the year Rs. 609.27 Lacs (Previous YearRs. 632.22 Lacs)

7. Previous year figures have been re-grouped or rearranged wherever found necessary.

8. The Company do not owes any amount to the Small Scale Industrial (SSI) undertakings at the year end.

67

9. SEGMENT ACCOUNTINGSegment information has been prepared in conformity with the Accounting Policies adopted for preparing and presenting thefinancial statements of the Company as set out in significant accounting policies in the Schedule – 14.Information about Business Segment – Primary

(Rs. in Lacs)

Particulars Year ended Year endedMarch 31, 2003 March 31, 2002

(i) Segment Revenuea) Call Center 239.21 10.20b) CAD /CAM / CAE 215.21 184.91

Total 454.42 195.11Less : Inter Segment Revenue – –Less : Intra Segment Revenue – –

Net Sales / Income from Operations 454.42 195.11

(ii) Segment Results(Profit/(Loss) before tax and interest from each segment)a) Call Center (449.75) (53.80)b) CAD / CAM / CAE 54.23 26.23

Total (395.52) (27.57)Less : Interest 42.42 4.35Less : Other un-allocable Expenditure net of Un-allocable Income – –

Total Profit / (Loss) before Tax (437.94) (31.92)

(iii) Capital Employed(Segment Assets – Segment Liabilities)

a) Call Center 792.62 830.55b) CAD / CAM / CAE 144.57 119.20

Total 937.19 949.75

10. RELATED PARTY TRANSACTIONS (Rs. in Lacs)

Nature of Transactions Rico Auto Industries Limited Whole Time Directors(Holding Company) (Key Management Personnel)

Year ended Year ended Year ended Year endedMarch 31, 2003 March 31, 2002 March 31,2003 March 31,2002

CAD/CAM Work (Receipts) 163.69 135.50 – –Paid For Services 18.71 4.70 – –Office Rent Paid 24.96 15.96 – –Equity Share Capital Contributed during the year 249.95 316.50 – –by Holding CompanyCorporate Guarantee Extended by Holding 350.00 350.00 – –Company to Lord Krishna Bank Limited, Gurgaonfor availment of Term Loan

Remuneration Paid- Mr. Rakesh Kapur – – 15.94 9.28- Mrs. Shalini Kapur – – 5.37 5.38

Balance payable 571.73 313.65 – –

68

ADDITIONAL INFORMATION PURSUANT TO PARAGRAPHS 3&4 OF PART II OF SCHEDULE VI OF THE COMPANIES ACT, 1956

A. PARTICULARS OF OPENING STOCK, SALES AND CLOSING STOCK OF FINISHED GOODS (Rs. in Lacs)


CLASS OF GOODS Current Year Previous Year Current Year Previous Year Current Year Previous YearValue (Rs.) Value (Rs.) Value (Rs.) Value (Rs.) Value (Rs.) Value (Rs.)

TELEMARKETING SALES – – 239.21 10.20 – –SOFTWARE/JOB WORK 16.52 6.70 188.40 160.68 14.90 16.52TRAINING FEES – – 23.32 20.18 – –

* Quantitative information of Software is not Feasible.

Note : List of Parties forming part of transaction with related Party :


a) Shri Rakesh Kapur – Whole Time Director Smt. Upasna KapurShri Arun KapurShri Arvind Kapur

b) Shri Arvind Kapur – Director Smt. Shalini KapurShri Rakesh KapurShri Arun Kapur

c) Shri Arun Kapur – Director Smt. Ritu KapurShri Rakesh KapurShri Arvind Kapur

d) Shri O.P.Aggarwal – Director –

e) Smt. Shalini Kapur – Whole Time Director Shri Arvind Kapur

f) Smt. Ritu Kapur – Director Shri Arun Kapur

g) Smt. Upasna Kapur – Director Shri Rakesh Kapur

11. EARNING PER SHARE (EPS)

The Numerator & Denominator used to calculate Basic & Diluted Earning per Share:

Year Ended Year EndedMarch 31, 2003 March 31,2002

Net (Loss) after Income Tax (A) (39783973) (3508203)Number of Equity Shares / weighted Average Shares– No. of Shares – Basic (B) 6000000 3500540– No. of Shares – Diluted (C) 4335976 2003937

Nominal Value per Equity Share (Rs.) 10.00 10.00

Earning per Share (Rs.)– Basic (A) / (B) (6.63) (1.00)– Diluted (A) / (C) (9.18) (1.75)

12. CONTINGENT LIABILITY

(i) The Company has executed General surety Bond for Rs.250.00 Lacs (Previous Year Rs.250.00 Lacs) in favour of Presidentof India for Importing Equipments for 100% Export Oriented Unit.

(ii) Videsh Sanchar Nigam Limited raised the demand of Rs.17.78 Lacs (PreviousYear Nil), which is disputed and liability for thesame has not been provided for.

13. The amount has been given in Lacs.

14. Schedule 1 to 14 form an integral part of the Balance Sheet and Profit and Loss Account.

69

B. RAW MATERIAL, COMPONENTS, STORES AND SPARE PARTS CONSUMED

Year ended March 31, 2003 Year ended March 31, 2002

Qty. Value Qty. Value(Kg.) (Rs.) (Kg.) (Rs.)

Stores & Spares – – – –Raw Material & Components – – – –Job Work – – – –

C. CONSUMPTION OF IMPORTED AND INDIGENEOUS RAW MATERIAL (INCLUDING COMPONENTS AND SPARES) CONSUMEDAND PERCENTAGE OF EACH TO TOTAL CONSUMPTION

Year ended March 31, 2003 Year ended March 31, 2002

Value Percentage to Value Percentage to(Rs.) Total (Rs.) Total

Consumption Consumption

Stores & Spares (Indigeneous) – – – –Raw Materials (Indigeneous) – – – –

D. CIF VALUE OF IMPORTS


(Rs.in Lacs) (Rs.in Lacs)

Capital Goods 2.26 230.46

E. EXPENDITURE IN FOREIGN CURRENCY



Travelling Expenses 10.60 2.15Connectivity Charges 162.72 30.43International Private Link Charges 57.38 26.63Professional Charges – 30.00

F. EARNING IN FOREIGN CURRENCY



Telemarketing Operator Sales 239.21 10.20

G. PAYMENT TO DIRECTORS



Remuneration 14.60 10.20Perquisites & Allowances 4.96 3.24Contribution to Provident Fund 1.75 1.22




70

INFORMATION PURSUANT TO PART IV OF SCHEDULE VI OF THE COMPANIES ACT, 1956

Balance Sheet Abstract and Company’s General Business Profile

I. Registration Details Registration No. 33869 State Code 05

Balance Sheet Date 31 Month 03 Year 2003

II. Capital Raised During the Year (Rs. in Lacs)Public Issue * Right Issue

Nil 249.95

Bonus Issue Private PlacementNil Nil

III. Position of Mobilisation and Deployment of Funds :(Rs. in Lacs)Sources of Funds Total Liabilities Total assets

1374.71 1374.71

Paid-up Capital Reserves & Surplus600.00 –

Secured Loans Unsecured Loans202.98 571.73

Application of Funds Net Fixed Assets Investments863.46 –

Net Current Assets ** Misc. Expenditure73.73 27.20

Accumulated Losses410.32

IV. Performance of Company Turnover Total Expenditure(Rs. in Lacs) 452.80 890.74

Profit/(Loss) before Tax Profit/(Loss) After Tax(437.94) (397.84)

Earning per Share in Rs. Dividend Rate %(6.63) Nil

Generic Names of Three Principal Products / Service of Company (as per monetary terms)Item Code No. ( ITC Code)Product Description IT Enabled Services

Item Code No. ( ITC Code)Product Description Software Development & CAD/CAM/CAE Training

* 24,99,460 Equity Shares of Rs.10/- each fully paid up issued.** Deferred Tax Assets (Net) of Rs. 27.20 Lacs.




71

DIRECTORS’ REPORT

Your Directors present the Second Annual Report of yourCompany, together with the Audited Accounts for the year ended31st March, 2003.

DIRECTOR’S RESPONSIBILITY STATEMENT

The Board of Directors of the Company hereby state andconfirm that:

1. in the preparation of the annual accounts the applicableaccounting standards has been followed along with properexplanation relating to material departures;

2. the Directors had selected such accounting policies andapplied them consistently and made judgements andestimates that are reasonable and prudent so as a true andfair view of the state of affairs of the Company at the end ofthe financial year and of the profit of the Company forthat year;

3. the Directors had taken proper and sufficient care for themaintenance of adequate accounting records forsafeguarding the assets of the Company and for preventingand detecting fraud and other irregularities;

4. the Directors had prepared the annual accounts on a goingconcern basis.

REPORT OF INDEPENDENT ACCOUNTANTS

Board of DirectorsRico Auto Industries Inc.

We have audited the accompanying balance sheet of Rico AutoIndustries Inc. (‘the Company’) as of March 31, 2003 and therelated statements of income, stockholders’ equity and cash flowsfor the year ended March 31, 2003. These financial statementsare the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statementsbased on our audit.

We conducted our audit in accordance with auditing standardsgenerally accepted in the United States of America. Thosestandards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by themanagement, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basisfor our opinion.

In our opinion, the financial statements referred to above presentfairly in all material respects, the financial position of Rico AutoIndustries Inc. as of March 31, 2003 and the results of its operationsfor the year ended March 31, 2003, in conformity with theaccounting principles generally accepted in the United States ofAmerica.

New Delhi, India Grant Thornton IndiaMay 28, 2003

PRINCIPAL ACTIVITIES

The Company’s activities are of providing logistic services forsupplies of Rico Auto Industries Limited, India the HoldingCompany, to its customers in North America. Gradually thisCompany will diversify into value added operations.

RESULTS & DIVIDEND

During the year under review, the Company has achieved turnoverof USD 15,82,768 (Previous period USD 96,540) and earned NetProfit of USD 47,914 (Previous period loss of USD 16,853) perthe audited accounts attached herewith.

The Company earned the profits during the year but Directors donot recommend any dividend for the year due to the marginalprofits.

This report was approved by the Board on May 28, 2003 andsigned on their behalf.

For and on behalf of Board

Place :Gurgaon, INDIA Arvind KapurDated :May 28, 2003. President

72

BALANCE SHEET AS ON MARCH 31, 2003

2003

ASSETS

Current assets

Cash and cash equivalents $ 55,070Accounts receivable 297,981Inventories 509,568Other Current Assets 18,153

Total Assets $ 880,772

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current LiabilitiesAccounts Payable $ 766,025Other Current Liabilities 58,686

Total Liabilities 824,711

Stockholders’ Equity

Common stock, of $10 (previous year $10) par2,500 (previous year 1,000) Shares authorized2,500 (previous year 1,000) Shares, issued & outstanding $ 25,000

Retained Earnings 31,061

Total Stockholders’ Equity 56,061

Total Liabilities and Stockholders’ Equity $ 880,772

The accompanying notes are an integral part of these financial statements

73

STATEMENT OF INCOME FOR THE YEAR ENDED MARCH 31, 2003

2003

REVENUESOperating Revenues $ 1,582,768

Total Revenues 1,582,768

Costs and ExpensesCost of Revenues $ 1,407,633Selling, General and Administrative Expenses 114,692

Total Cost and Expenses 1,522,325

Net Income before Income Tax 60,443Income TaxCurrent Tax Expense (9,083)Deferred Tax Expense (3,446)

Net Income $ 47,914


STATEMENT OF STOCKHOLDERS’ EQUITY AND RETAINED EARNINGS FOR THEYEAR ENDED MARCH 31, 2003

(Amount in US $)

Common Stock

Authorized Issued and Retained Total Stock-Outstanding Earnings holders Equity

Shares Value Shares Value

Balance as on April 1, 2002 1,000 10,000 1,000 10,000 (16,853) (6,853)Shares issued during the year 1,500 15,000 1,500 15,000 – 15,000Net Income – – – – 47,914 47,914

Balance as on March 31, 2003 2,500 25,000 2,500 25,000 31,061 56,061


74

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2003

2003

Cash Flow from Operating Activities

Net Income $ 47,914

Adjustments to Reconcile Net Income to Net Cash provided by Operating Activities

Deferred Income Taxes 3,446

Changes in Assets and Liabilities

Accounts Receivable (201,441)

Inventories (253,422)

Other Current Assets (15,228)

Accounts Payable 419,836

Other Current Liabilities 36,130

Net Cash provided by Operating Activities 37,235

Cash Flow from Investing Activities –Cash Flow from Financing Activities

Common Stock Issued 15,000

Net Cash provided by Financing Activities 15,000

Net increase in Cash and Cash Equivalents 52,235

Cash and Cash Equivalents at the beginning of the Year 2,835

Cash and Cash Equivalents at the end of the Year $ 55,070

Supplemental Cash Flow InformationInterest paid –Income Taxes paid –


75

Notes to Financial Statements - March 31, 2003

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation of the accompanying financial statements is as follows:

1. Description of Business

Rico Auto Industries Inc. (“the company”) is a Company incorporated in Delaware, USA, and it has obtained authority to do businessin the state of Michigan. The Company is a wholly owned subsidiary of Rico Auto Industries Limited, an Indian public listed company.The Company has commenced business operations in January 2002.

The Company is primarily marketing and selling auto components manufactured by Rico Auto Industries Limited.

2. Basis of Presentation

a. The financial statements are prepared as per the generally accepted accounting principles of United States of America. Allamounts are stated in U.S. Dollars, except as otherwise specified.

b. The financial statements are for the period from April 01, 2002 to March 31, 2003.

3. Use of Estimates

In preparing the Company’s financial statements in conformity with accounting principles generally accepted in the United States ofAmerica, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities andthe disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues andexpenses during the reporting period. Actual results could differ from those estimates.

4. Cash and cash equivalents

The Company considers all highly liquid investments and deposits with an original maturity of ninety days or less to be cashequivalents. Cash and cash equivalents comprise cash, cash on deposits with banks and liquid investments.

5. Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109 (“SFAS No.109”), “Accounting for Income Taxes,” which requires recognition of deferred tax assets and liabilities for the expected future taxconsequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assetsand liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities, usingenacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established whennecessary to reduce deferred tax assets to amounts expected to be realized.

6. Revenue Recognition

The Company’s revenues are generated principally from the sale of auto components. Revenues have been recognized upondispatch of goods in adherence to the specific terms of the individual sale transaction.

7. Cost of revenues

The Company’s cost of revenues, consist of the cost of purchase of auto components and freight inward.

8. Receivables

Receivables are stated in the balance sheet at their estimated realizable value after evaluating whether any allowance for uncollectiblesis required.

9. Inventories

Inventories consist of finished goods, and are stated at lower of cost or market value. The cost of finished goods is determinedusing the first-in, first-out method.

10. Recent Accounting Pronouncements

In August 2001, the FASB issued SFAS 143, “Accounting for Asset Retirement Obligations”. SFAS 143 requires entities to recordthe fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded,the entity capitalized a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted toits present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of theliability, an entity settles the obligation for its recorded amount or incurs a gain or loss upon settlement. The standard is effective forfiscal years beginning after June 15, 2002, with earlier application encouraged. The statement is not applicable to the company forthe period under consideration.

76

In August 2001, the FASB also issued SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” that replacesSFAS 121 “Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be disposed off”. SFAS 144 requires thatthose long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuingoperations or in discontinued operations. Under this standard, discontinued operations will no longer be measured at net realizablevalue or include amounts for operating losses that have not yet occurred. The provisions of SFAS 144 are effective for financialstatements issued for fiscal years beginning after December 15, 2001 and, generally, are to be applied prospectively. The Companyhas assessed the implications of adopting this statement and believes that currently this statement has no material impact for theperiod under consideration.

In April 2002, the Financial Accounting Standards Board issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64,Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS No. 145 rescinds the requirement that all gains andlosses from extinguishment of debt be classified as an extraordinary item. Additionally, SFAS No. 145 requires that certain leasemodifications that have economic effects, similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. Since there are no transactions that get covered by the above standard, the statement is not applicable tothe company for the period under consideration.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit and Disposal Activities.” This statementrevises the accounting for exit and disposal activities under Emerging Issues Task Force Issue No. 94-3, “Liability Recognition forCertain Employee Termination Benefits and Other Costs to Exit an Activity.” Specifically, SFAS 146 requires that companies recordthe costs to exit an activity or dispose of long-lived assets when those costs are incurred. SFAS 146 requires that the measurementof the liability be at fair value. The provisions of SFAS 146 are effective prospectively for exit or disposal activities initiated afterDecember 31, 2002 and will impact any exit or disposal activities initiated after such date. The statement is not applicable to thecompany for the period under consideration.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure.” Thisstatement amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for anentity that changes to the fair value method of accounting for stock-based employee compensation. In addition, SFAS 148 amendsthe disclosure provisions of SFAS 123 to require expanded and more prominent disclosures in annual financial statements aboutthe method of accounting for stock based compensation and the pro-forma effect on reported results of applying the fair valuemethod for entities that use the intrinsic value method. The statement is not applicable to the company for the period underconsideration.

NOTE B – ACCOUNTS RECEIVABLE

Accounts receivables consist of trade debtors. The age wise break up of accounts receivable is given below:

Period of days As at March 31, 2003 (%)

0-30 1,74,139 58

31-60 1,23,842 42

> 60 – –

Allowance for doubtful debts – –

Total 2,97,981 100

NOTE C – RELATED PARTY TRANSACTIONS

The cost of revenues of the company includes primarily the cost of auto components purchased from Rico Auto Industries Limited, theParent Company, amounting to $1,476,191.

Amounts due to Rico Auto Industries Limited, the Parent Company, amounted to $ 766,025 towards the cost of purchase of componentsand is included in accounts payable.

NOTE D – CONCENTRATION OF RISK

At March 31, 2003, one customer accounted for approximately 80% of revenues and approximately 58% accounts receivables.

All of the purchases were from Rico Auto Industries Limited, which accounted for 100% of the accounts payable.

NOTE E – COMMITMENTS AND CONTINGENT LIABILITIES

The Company is subject to legal proceedings and claims, which may arise in the ordinary course of business. In the opinion of themanagement, these actions are not expected to have a material effect on the results of operations of the financial position of theCompany.

77

NOTE F – INCOME TAXES

The provision for income tax expense is as follows:

Particulars Year endedMarch 31, 2003

Current tax

Federal $ 6,215State 2,868

Deferred tax

Federal 3,446State –

NOTE G – SEGMENTAL INFORMATION

SFAS No. 131 “Disclosures About Segments of an enterprise and Related Information”, sets out the standards for the way businessenterprises report information about operating segments and related disclosures about products and services, geographical areas andmajor customers.

Business Segment:

The Company considers its principal activity of marketing and selling of auto components to be a complete segment and all revenues foryear ended March 31, 2003 have been derived from this segment.

Geographic Segment:

100% of the Company’s revenues are from North America.

Major Customers:

There is one customer who accounts for more than 80% of the total revenues and receivables.

NOTE H – STOCKHOLDERS’ EQUITY

COMMON STOCK

Voting

Each holder of common stock is entitled to one vote in respect of each share held by him in the records of the Company for all matterssubmitted to a vote.

Liquidation

In the event of liquidation of the Company, the holders of common stock shall be entitled to receive all of the remaining assets of theCompany, after distribution of all preferential amounts, if any. Such amounts will be in proportion to the number of equity shares held bythe shareholders.

Common Stock issued

Common stock includes 2,500 shares of $ 10 each. The common stock is fully subscribed by Rico Auto Industries Limited, India theParent Company.

78

AUDITORS’ REPORT

The Board of Directors,Rico Auto Industries Limited

ON THE CONSOLIDATED FINANCIAL STATEMENTS OF THECOMPANY, ITS SUBSIDIARIES AND JOINT VENTURE

We have examined the attached consolidated Balance Sheet ofRico Auto Industries Limited and its subsidiaries and Joint Ventureas at 31st March, 2003 and the consolidated Profit and LossAccount for the year then ended (these are referred to as financialstatements).

These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on thesefinancial statements based on our audit. We conducted our auditin accordance with generally accepted auditing standards in India.These Standards require that we plan and perform the audit toobtain reasonable assurance whether the financial statements areprepared, in all material respects, in accordance with an identifiedfinancial reporting framework and are free of materialmisstatements. An audit includes, examining on a test basis,evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accountingprinciples used and significant estimates made by management,as well as evaluating the overall financial statements. We believethat our audit provides a reasonable basis for our opinion.

We did not audit the financial statements of Rico Auto IndustriesInc., USA, a wholly owned subsidiary and FCC Rico Limited ajoint venture, whose financial statements reflect total assets ofRs. 4,16,51,726/- and Rs. 35,59,36,031/- respectively as at31st March, 2003 and total revenues of Rs. 7,48,49,102/- andRs.105,58,54,073/- respectively for the year then ended. These

financial statements have been audited by other auditors whosereports have been furnished to us, and our opinion, insofar as itrelates to the amounts included in respect of the subsidiaries andjoint venture, is based solely on the report of the other auditors.

We report that the consolidated financial statements have beenprepared by the Company in accordance with the requirements ofAccounting Standard (AS) 21, on Consolidated FinancialStatements and Accounting Standard (AS) 27on Consolidation ofFinancial Statements of Joint Ventures, issued by the Institute ofChartered Accountants of India, and on the basis of the separateaudited financial statements of Rico Auto Industries Limited andits subsidiaries and joint venture included in the consolidatedfinancial statements.

On the basis of the information and explanation given to us and onthe consideration of the separate audit reports on individual auditedfinancial statements of Rico Auto Industries Limited and itsaforesaid subsidiaries and joint venture, we are of the opinion that:

(a) The consolidated Balance Sheet gives a true and fair view ofthe consolidated state of affairs of Rico Auto IndustriesLimited and its subsidiaries and joint venture as at 31stMarch, 2003; and

(b) The consolidated Profit and Loss Account gives a true andfair view of the consolidated results of operations of RicoAuto Industries Limited and its subsidiaries and joint venturefor the year then ended.


Place : Gurgaon Kawal JainDated : 31st May, 2003 PARTNER

CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY

79

CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2003

As at March As at MarchSchedule 31, 2003 31, 2002

No. (Rs. in Lacs) (Rs. in Lacs)

SOURCES OF FUNDS

1. SHAREHOLDERS’ FUNDSShare Capital 1 1071.70 1071.70Reserves & Surplus 2 4870.10 3650.79

5941.80 4722.492. LOAN FUNDS 3 7478.09 7300.53

3. DEFERRED TAX LIABILITY 3A 1451.67 1360.59

TOTAL 14871.56 13383.61


1. FIXED ASSETS 4Gross Block 18928.51 17110.06Less: Depreciation 7037.47 5718.43

Net Block 11891.04 11391.63Capital Work-in-Progress 547.42 69.60

2. INVESTMENTS 5 7.81 7.81

3. CURRENT ASSETS, LOANS & ADVANCESA) Inventories 6 1966.00 1706.56B) Sundry Debtors 7 4415.92 4302.27C) Cash & Bank Balances 8 150.88 102.40D) Loans & Advances 9 1721.50 1151.69

8254.30 7262.92Less : Current Liabilities & Provisions 10 5962.90 5578.61


4. MISCELLANEOUS EXPENDITURE 11(to the extent not written off or adjusted) 133.89 230.26

TOTAL 14871.56 13383.61






80

CONSOLIDATED PROFIT & LOSS ACCOUNTFOR THE YEAR ENDED MARCH 31, 2003

As at March As at MarchSchedule 31, 2003 31, 2002

No. (Rs. in Lacs) (Rs. in Lacs)

INCOMESales & Other Income 12 50020.87 47614.18

EXPENDITUREManufacturing & Other Expenses 13 37865.93 36455.74Financial Charges 14 543.59 846.04Excise Duty 6421.36 5705.02Miscellaneous Expenditure Written Off 96.37 86.66Diminuation in Value of Investment – 58.69

44927.25 43152.15

Profit before Depreciation 5093.62 4462.03Depreciation 1516.77 1475.97Profit after Depreciation 3576.85 2986.06Provision for Taxation 1387.86 941.10Provision for Deferred Tax 91.08 97.41Profit after Tax 2097.91 1947.55Add : Previous Year Income Tax Provision written back – 0.77Less : Previous Year Income Tax 39.92

Amount Available for Appropriations 2057.99 1948.32

APPROPRIATIONSProposed Dividend on Equity Shares 795.36 643.02Corporate Dividend Tax 101.89 –Transferred to General Reserve 1099.00 450.00Depreciation of Earlier Years written Back (58.57) –Balance carried over to Balance Sheet 120.31 855.30

2057.99 1948.32

EARNING PER SHARE (Equity shares, par value Rs. 10/- each)Basic & Diluted (Rs.) 19.20 18.18

Number of shares considered for computing earning per shareBasic & Diluted 10717000 10717000






81

CONSOLIDATED SCHEDULES TO BALANCE SHEET



Schedule 1 - SHARE CAPITAL

AUTHORISED1,10,00,000 Equity Shares of Rs. 10/- each 1100.00 1100.0050,00,000 Redeemable Preference Share of Rs. 10/- each 500.00 500.00

1600.00 1600.00

ISSUED, SUBSCRIBED AND PAID-UP1,07,17,000 Equity Shares of Rs. 10/- each fully paid up 1071.70 1071.70(Previous Year 1,07,17,000 Equity Shares of Rs. 10/- each)(Out of above, 53,58,500 Equity Shares areallotted as fully paid-up by way of Bonus Shares)

1071.70 1071.70

Schedule 2 - RESERVES AND SURPLUS

CAPITAL RESERVE 0.35 0.35(On Forfeited Shares & NCD)

STATE CAPITAL SUBSIDY 20.00 20.00

SHARE PREMIUM ACCOUNT 749.36 1285.21Less : Utilised for allotment of Bonus Shares – 535.85

749.36 749.36CAPITAL REDEMPTION RESERVE 200.00 200.00

DEBENTURE REDEMPTION RESERVEAs per last Balance Sheet – 251.00Less : Teansfer to General Reserve – 251.00

– –

GENERAL RESERVEAs per last Balance Sheet 1751.00 1050.00Add: Transferred from Deb. Redemption Reserve – 251.00Add: Transferred from Profit & Loss Account 1099.00 450.00

2850.00 1751.00SURPLUSAs per last Balance Sheet 930.08 1337.96Less: Transferred to Provision for Deferred Tax – 1263.18Add: Transferred from Profit & Loss Account 120.31 855.30

1050.39 930.08

4870.10 3650.79

82

CONSOLIDATED SCHEDULES TO BALANCE SHEET (CONTD.)



Schedule 3 - LOAN FUNDS

SECURED LOANS

A. (i) Term Loans from Financial Institutions and Banks:ICICI Limited 850.00 910.00HDFC Limited 196.00 252.00Indian Overseas Bank – 721.18Lord Krishna Bank Limited 202.98 350.00Bank of Tokyo Mitusibishi Limited – 48.50

B. (ii) Loans and Advances from BanksState Bank of India 596.94 182.00IDBI Bank Limited 1249.56 824.14Standard Chartered Bank 1480.10 222.99Citi Bank N.A. 1125.07 951.90

C. (iii) Other LoansInterest Free Loan from Govt. of Haryana 1568.65 1540.08

UNSECURED LOANSFrom Banks 37.90 281.97From Companies 170.89 1015.77

7478.09 7300.53

RUPEE TERM LOANS

(i) Loan from ICICI Bank Limited is secured by way of first charge/mortgage by way of deposit of Title Deeds in respect of theCompany’s immovable properties both present and future and by way of hypothecation of the Company’s all movable assets(subject to banker’s prior charge) and also personally guaranteed by the Managing Director and the Joint Managing Director of theCompany. Term Loan from HDFC Limited is secured against exclusive charge on industrial plot measuring approximately 4 acressituated at Khandsa, Distt. Gurgaon (Haryana). Rupee term loan from Lord Krishna Bank Limited is secured by way of first chargeon the present & future fixed assets including machineries, vehicles and other implements and also secured with the corporateguarantee extended by Rico Auto Industries Limited (Holding Company) up to Rs. 350.00 Lacs.

(ii) Loans and Advances from Banks are Secured by Hypothecation of bills receivable & inventories. IDBI Banks facility uptoRs. 1700.00 Lacs is further secured by way of Second Charge over the fixed assets of the Company and SBI facilities arealso personally guaranteed by the MD & JMD.

(iii) Interest free Loan from Govt. of Haryana is partly secured against Bank Guarantees and second charge on the fixed assets of theCompany.

Schedule 3 A - DEFERRED TAX LIABILITY

As per last Balance Sheet 1360.59 –

Add : Transferred from Surplus – 1263.18

Add : Provision for the year 91.08 97.41

1451.67 1360.59

83


Schedule 4 - FIXED ASSETS (Rs. in Lacs)


Cost Addition Sale/Tfr.Total Cost For Written OnParticulars as on During During as on Up to the Back Sale/ Up to As on As on

31.03.02 the Year the Year 31.03.03 31.03.02 Year Transfer 31.03.0331.03.03 31.03.02

LAND 731.34 108.11 – 839.45 – – – – – 839.45 731.34

BUILDING 2588.77 92.45 – 2681.22 396.51 90.25 – – 486.76 2194.46 2192.25

FURNITURE & FIXTURES 291.16 23.47 1.42 313.21 83.38 23.44 13.30 0.67 92.85 220.36 207.78

PLANT & MACHINERY 11842.55 1608.69 188.77 13262.47 4751.03 1123.26 3.07 132.08 5739.14 7523.33 7091.52

OFFICE EQUIPMENT 1350.62 114.88 1.15 1464.35 353.88 224.22 37.57 0.60 539.93 924.42 996.74

VEHICLES 305.62 74.10 11.91 367.81 133.63 55.60 4.63 5.81 178.79 189.02 171.99

TOTAL 17110.06 2021.70 203.25 18928.51 5718.43 1516.77 58.57 139.16 7037.47 11891.04 11391.63

CAPITAL WORK - IN - PROGRESSCapital Work - in - progress 547.42 69.60

Note : Additions in Fixed Assets during the year includes Rs. 6.10 Lacs (Previous Year Rs. 46.09 Lacs) on account of capitalisation ofborrowing cost and Rs. 0.98 Lacs (Previous Year Rs. 3.15 Lacs) on account of foreign exchange fluctuation.



Schedule 5 - INVESTMENTS(At cost or Realisable Value whichever is less) - Unquoted

Trade - (Fully Paid-up)Hankook Motors Limited 1.81 1.816,05,000 Equity Shares of Rs.10/- each (Realisable Value Rs. 0.30/- each)(Previous Year 6,05,000 Equity Shares of Rs. 10/- each – Realisable Value Rs. 0.30/- each)

Inapex Limited 6.00 6.0060,000 Equity Shares of Rs. 10/- each(Previous Year 60,000 Equity Shares of Rs. 10/- each)

7.81 7.81

Aggregate Value :1. Cost of Quoted Investments – –2. Market Value of Quoted Investments – –3. Cost of Unquoted Investments 7.81 7.81

Schedule 6 - INVENTORIES(As valued and certified by the Management)

Goods in Transit 302.62 163.41Stores & Spares (at cost) 403.57 393.70Raw Material & Components (at cost) 631.70 885.87Work-in-process (at cost) 320.88 189.23Finished Goods (at cost or Realisable Value whichever is less) 307.23 74.35

1966.00 1706.56Schedule 7 - SUNDRY DEBTORS(Unsecured considered good)

Debts outstanding for a period exceeding six months 128.22 277.52Other debts 4287.70 4024.75

4415.92 4302.27

84




Schedule 8 - CASH AND BANK BALANCES

1. Cash on hand 7.58 7.68

2. Balances with Scheduled Banksa) In Current Accounts 124.65 76.47b) In Margin Money Accounts

– against bank guarantees 0.91 0.35– against discounting – 2.38

c) In Dividend Accounts 12.88 9.25d) In NCD Interest Accounts 4.86 6.27

150.88 102.40

Schedule 9 - LOANS AND ADVANCES

(Unsecured considered good)a) Advances recoverable in cash or in kind or for value to be received 1589.71 1017.73b) Security deposits 119.00 122.01c) Advance Income Tax 12.79 11.95

1721.50 1151.69

Schedule 10 - CURRENT LIABILITIES AND PROVISIONS

a) Sundry creditors1) Due to SSI Units 289.80 138.752) Others 3398.70 3724.37

b) Share application money refundable – 0.17c) Other liabilities

1) Expenses payable 868.51 746.252) Income Tax deducted at source payable 38.08 25.833) Interest accrued but not due 3.60 18.804) Statutory liabilities 115.19 128.665) Unclaimed Dividends 12.65 9.266) NCD Interest Due 4.89 6.69

d) Proposed Dividend 795.36 643.02e) Provision for Income Tax ( Net of Advance Tax ) 334.23 136.81f) Provision for Corporate Dividend Tax 101.89 –

5962.90 5578.61

Schedule 11 - MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)Share Issue & Deffered Revenue Expenses 230.26 316.92Less: Expenses written off during the year 96.37 86.66

133.89 230.26

85

CONSOLIDATED SCHEDULES TO PROFIT & LOSS ACCOUNT



Schedule 12 - SALES & OTHER INCOMESales 49656.31 47369.00Miscellaneous Sales 91.07 110.95Interest Received 6.94 12.51(TDS Rs. 1,27,245/- Prev. Year Rs. 98,372/- )Previous Year Expenses Written back 4.80 0.55Miscellaneous Receipts 187.68 117.08(TDS Rs. 5,24,160/- Prev. Year Rs. 3,25,584/- )Job Work ( TDS Rs. 11,550/- Prev.Year Rs. 4,386/-) 74.07 4.09

50020.87 47614.18

Schedule 13 - MANUFACTURING & OTHER EXPENSESRaw Material & Components Consumed 29489.54 28704.72Add: Opening Stock Work-in-Process 189.23 252.06 Finished Goods 74.35 263.58 35.41

29753.12 28992.19Less: Closing Stock Work-in-Process 320.88 189.23 Finished Goods 307.23 628.11 74.35

29125.01 28728.61Stores & Spares Consumed 1701.90 1923.98Power & Fuel 1781.96 1741.47Repair & Maintenance (Machinery) 259.40 209.17Personnel Expenses 2500.94 2044.54Contribution to Provident & Other Funds 136.53 120.24Labour & Staff Welfare 136.65 81.10Rent 42.45 16.67Rates & Taxes 6.19 21.28Directors’ Sitting Fees 0.56 0.54Commission to Directors 331.07 292.92Insurance 123.83 107.99Travelling & Conveyance 162.17 123.97Auditors’ Remuneration* 12.77 10.70Advertisement & Publicity 11.77 5.35Sales Promotion 38.78 2.54Repair & Maintenance (Building) 130.39 136.85Repair & Maintenance (Others) 81.01 80.02Charity & Donation 6.60 3.91Other Expenses 1222.83 777.20Loss on Sale of Assets 41.45 20.63Previous Year Expenses 11.67 6.06

37865.93 36455.74

Note: * Auditors’ Remuneration includes payments/provisions for :

Auditors’ RemunerationAudit Fee 8.50 6.75Tax Audit Fee 0.94 0.86Income Tax Matters 1.83 1.55Other Capacity 0.60 0.68Expenses Reimbursed 0.90 0.86

12.77 10.70

86

CONSOLIDATED SCHEDULES TO PROFIT & LOSS ACCOUNT (CONTD.)



Schedule 14 - FINANCIAL CHARGES

N.C.D. Interest – 63.24Term Loan Interest 237.20 446.08Interest to Bank & Others 306.39 336.72

543.59 846.04

SCHEDULE 15- ANNEXED TO AND FORMING PART OF THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED31st MARCH, 2003.

SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

A. ACCOUNTING POLICIES1. Principles of Consolidation:

(i) The Consolidated Financial statement relates to Rico Auto Industries Limited (the Parent Company), Rico SoftechLimited (Wholly owned Subsidiary Company incorporated in India), Rico Auto Industries Inc. (wholly owned SubsidiaryCompany incorporated in USA) and FCC Rico Limited (a Joint Venture Company).

(ii) The Consolidated Financial statements have been prepared on the basis of AS-21 and AS-27 issued by ICAI read withthe following basic assumptions:(a) The Financial statements of the Parent Company and its Subsidiary Companies have been combined on a line-

by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fullyeliminating intra-group transactions and resulting in unrealized profits or losses. In case of Joint Venture, propor-tionate Consolidation of the assets, liabilities, income and expenses of jointly controlled company has been done.

(b) Investments of the Parent Company in the Subsidiaries and Joint Venture are eliminated against respective stakeof the Parent Company.

(c) In respect of foreign subsidiary, the financials have been converted from US GAAP to Indian GAAP. CurrentAssets/Liabilities, income and expenses of Overseas Subsidiary have been translated in reporting currency interms of exchange rates prevailing on year-end date.

(d) Impact of exchange fluctuation, whether revenue or capital in nature appearing in the accounts of the foreignSubsidiary are directly charged to revenue in Consolidated Financial Statement.

2. Depreciation:(i) In respect of Holding Company,(Rico Auto Industries Ltd.) depreciation on Building and Plant & Machinery is provided

on pro-rata basis at the Straight Line Method rates and on rest of Fixed Assets have been provided on the WDVmethod, at the rates prescribed in Schedule XIV of the Companies Act,1956.

(ii) In respect of Rico Softech Limited, (a Subsidiary) depreciation method has been changed fromWDV method to StraightLine Method at the rates prescribed in Schedule XIV of the Companies Act,1956, during the year.There is no Fixed Assets in Rico Auto Industries Inc. (a Foreign Subsidiary Company).

(iii) In respect of Fcc Rico Limited (Joint Venture), depreciation is provided on WDV method at the rates prescribed in theSchedule XIV of the Companies Act ,1956.

B. NOTES ON ACCOUNTS1. Contingent Liabilities:

(i) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)Rs.244.02 Lacs (Previous year Rs.244.81 Lacs).

(ii) Banks have given guarantees on behalf of the Company worth of Rs. NIL (Previous year Rs.24.45 Lacs).(iii) Letters of Credit outstanding in favour of suppliers pending supplies Rs.491.59 Lacs (Previous year Rs.556.30 Lacs)(iv) The Company has given Corporate Guarantee to a Bank for Rs.350.00 Lacs on behalf of Rico Softech Limited,

Subsidiary Company (Previous year Rs.350.00 Lacs).(v) The Company has executed General Surety Bonds for Rs.1497.50 Lacs in favour of The President of India, under

Central Excise Act, 1944 and Customs Act,1962 (Previous year Rs.1137.29 Lacs).(vi) Central Excise demands pending in appeals Rs.NIL (Previous year Rs.906.77 Lacs).(vii) Sales Tax demands pending in appeals Rs.59.84 Lacs (Previous year Rs.5.52 Lacs).(viii) The Company has executed General Surety Bonds for Rs.250.00 Lacs in favour of The President of India for Importing

Equipments for a 100% Export Oriented Unit (Previous year Rs.250.00 Lacs).(ix) Videsh Sanchar Nigam Limited has raised a demand for Rs.17.78 Lacs which is disputed and liability for the same has

not been provided for (Previous year Rs. NIL).

87

2. The other Notes to Accounts containing inter-alia explanatory material & Security particulars on secured Loans have not beenincluded here as the same are disclosed with the accounts of different Companies under consolidation.

3. During the year the depreciation method of Rico Softech Limited (wholly owned subsidiary company) was changed fromWritten Down Value to Straight Line Method at the rates prescribed in Schdule XIV of Companies Act, 1956. The excessprovision of depreciation of the earlier years of Rs. 58.57 Lacs have been written back to the Profit & Loss Account.

Had the Subsidiary Company followed the depreciation method as per previous year policies, the loss of the Company havebeen higher by Rs.165.05 Lacs and Net Block of the Fixed Assets would have been lower by Rs.165.05 Lacs. Similarly,consolidated profit of the group would have been lower by Rs.165.05 Lacs and consolidated Net Block would have beenlower by Rs.165.05 Lacs.

4. In line with Accounting Standard on Segment Reporting (AS-17) the Segment information has been prepared in conformitywith the Accounting policies adopted for preparing and presenting the Financial Statements of the Company.

Information about Business Segment – Primary (Rs. in Lacs)

Reportable segments Automotive Solvent Automotive CAD/CAM Eliminations Total TotalComponent Extraction Component Designing / 2002-03 2001-02

& Oil Trading Call CenterRefining Activities

1. RevenueExternal Sales 37986.54 3669.48 748.48 272.01 – 42676.51 41328.16Internal Segment Sales 1478.09 – – 182.40 (1660.49) – (820.17)Intra Segment Sales 923.00 – – – (923.00) – (581.00)Total Revenue 40387.63 3669.48 748.48 454.41 (2583.49) 42676.51 41328.16

2. Segment Results 4573.37 (88.31) 30.90 (395.52) – 4120.44 3832.10Unallocated Corporate Expenses – –Operating Profit 4120.44 3832.10Interest Expenses(Net of Interest Income) 543.59 846.04Profit from ordinary activities 3576.85 2986.06Extraordinary Profit / (Loss) – –Net Profit 3576.85 2986.06Income Tax – Current 1387.86 941.10Income Tax – Deferred Liability /

Assets (–) 91.08 97.41Previous Year’s IncomeTax - Provision 39.92 –Previous Year’s IncomeTax - Written back – (0.77)Profit after Tax 2057.99 1948.32

3. Other InformationSegment Assets 18056.33 1195.25 416.52 1024.66 – 20692.76 18724.15Unallocated Corporate Assets – – – – – 7.81 7.81Total Assets – – – – – 20700.57 18731.96Segment Liabilities 5660.96 190.34 24.11 87.49 – 5962.90 5578.61Unallocated Corporate Liabilities – – – – – – –Total Liabilities 5660.96 190.34 24.11 87.49 – 5962.90 5578.61Capital Expenditure 1981.35 18.79 – 21.56 – 2021.70 2311.57Depreciation 1295.48 58.32 – 162.97 – 1516.77 1475.97Non Cash expenses other thandepreciation 90.57 – – 5.80 – 96.37 145.35

–Out of total External Sales of Rs. 42676.51 Lacs (Previous year Rs.41328.16 Lacs), sales outside India is Rs.1121.41Lacs(Previous year Rs.782.80 Lacs) Carrying amount of Segment Assets and Capital expenditure by location of assets in India areRs.20700.58 Lacs (Previous year Rs.18731.97 Lacs) and Rs.2021.70 Lacs (Previous year Rs.2311.57 Lacs) respectively.

–Previous year figures have been re-grouped/rearranged.

88

5. Related Party disclosure in accordance with the Accounting Standard 18 issued by the Institute of Chartered Accountants of India

(Rs. in Lacs)

Name of the related parties Description of Nature of Amount Amountwith whom the transactions relationship with Transactions 2002-2003 Outstanding ashave been made the party on 31/03/2003

Rico Auto Industries Inc., USA 100% Wholly Goods Sold 784.16 –Owned Subsidiary Job work Income 4.26 –

Equity Contribution in Cash 7.27 –Outstanding Receivable – 365.90

Rico Softech Limited 100% Wholly Paid for Services (AMCOwned Subsidiary and repairing of

Machineries, & others) 182.40 –Rent Received 24.96 –Loan given (Interest Free) – 571.73Equity Contribution in cash 249.95 –Guarantees / Collaterals given – 350.00

FCC RICO Limited Joint Venture Goods Purchased 18.55 –Goods Sold 1310.88 –Equity Contribution in cash – –Outstanding Receivable – 103.73

Managing Director/ Key Management Remuneration, Sitting Fees & 404.61 –Jt. Managing Director/ Other Directors Personnel Commission

Rico Castings Limited Group Company Goods Purchased (Semi-finished) 976.10 –Goods Sold 1.64 –Purchase of Machineries 136.88 –Sale of Machineries 11.81 –Paid for Services (AMC andRepairing of Machines & others) 35.18 –Outstanding Payable – 17.50

Kapsons Associates Private Limited Group Company Rent Paid 18.00 –

LGI International, USA One Director Goods Sold 53.19 –interested Outstanding Receivable – 57.75

Sheffler Mg. & International One Director Goods Sold 46.17 –Logistics, USA interested Outstanding Receivable – 13.44

Note :List of Parties forming part of transactions with related party :

i) Rico Auto Industries Limited

Key Mangement Personnel Relatives of Key Management Personnel

Shri Chandra Mohan – Chairman –Shri C.K.Hazari – Director –Shri Anup Singh – Director –Prof. V.K. Bhalla – Director –Shri Kanwal Monga – Director –Shri John T. Sheffler – Director –Shri Amarjit Chopra – Director –Shri Rakesh Kapur – Director Smt. Upasna Kapur

Shri Arvind KapurShri Arun Kapur

Shri Arun Kapur – Jt. Managing Director Smt. Ritu KapurShri Arvind KapurShri Rakesh Kapur

Shri Arvind Kapur – Managing Director Smt. Shalini KapurShri Arun KapurShri Rakesh Kapur

89

ii) Rico Softech Limited


Shri Rakesh Kapur – Whole Time Director Smt. Upasna KapurShri Arun KapurShri Arvind Kapur

Shri Arvind Kapur – Director Smt. Shalini KapurShri Rakesh KapurShri Arun Kapur

Shri Arun Kapur – Director Smt. Ritu KapurShri Rakesh KapurShri Arvind Kapur

Shri O.P.Aggarwal – Director –Smt. Shalini Kapur – Whole Time Director Shri Arvind KapurSmt. Ritu Kapur – Director Shri Arun KapurSmt. Upasna Kapur – Director Shri Rakesh Kapur

iii) Rico Auto Industries Inc. USA


Shri Arvind Kapur – President & Director Smt. Shalini KapurShri Rakesh KapurShri Arun Kapur

Shri Arun Kapur – Director Smt. Ritu KapurShri Rakesh KapurShri Arvind Kapur

Shri Rakesh Kapur – Director Smt. Upasna KapurShri Arun KapurShri Arvind Kapur

iv) FCC Rico Limited


Shri Wataru Nakashita – Managing Director –Shri Yoshihide Yamamoto – Director –Shri Arvind Kapur – Director –Shri N.K. Sethi – Director –Shri R.S. Kundi – Director –Shri S. Sumita – Director –

5. The Profit & Loss Account of the company includes an expense of Rs.41.62 Lacs (Net) (Previous year Income of Rs. 21.66 Lacs(Net) on account of Foreign Exchange Fluctuation relating to Imports & Exports, other than Fluctuation on Import of Machinery &Equipments.

6. Grouping and heads of accounts of the Subsidiaries and the Joint Venture have been rearranged in terms of presentation of thoseof Parent Company wherever necessary.

7. Accounting Standard (AS)27 on Consolidation of Financial Statements of Joint Venture was made mandatory w.e.f 1st April, 2002therefore, the Consolidated results for 2001-02 were prepared without taking into consideration the results of the joint venture.However, for comparability, the figures of previous year have also been re-arranged to include results of the joint venture.

SIGNATURE TO SCHEDULE 1 TO 15





90

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2003

Year endedMarch 31, 2003

(Rs. in Lacs)

A. Cash Flow From Operating ActivitiesNet Profit Before Tax and Extra-Ordinary Items 3,576.85Adjustments for:Depreciation 1,516.77Loss on Sale of Assets 41.45Interest Paid 543.59Miscellaneous Expenses Written off 96.37 2,198.18

Operating Profit Before Working Capital Changes 5,775.03Adjustments for:Trade and Other Receivables (683.46)Inventories (259.43)Trade Payable and provisions (67.36) (1,010.25)

Cash Generated From operations 4,764.78Interest Paid (543.59)Income Tax Payment for the Year (1,230.36) (1,773.95)

Net Cash From Operating Activities (A) 2,990.83

B. Cash Flow From Investing Activities

Purchase of Fixed Assets (2,499.53)Sale of Fixed Assets 22.63

Net Cash used in Investing Activities (B) (2,476.90)

C. Cash Flow From Financing ActivitiesProceeds from Short/Long Term Borrowings 3,135.71Repayment of Short/Long Term Borrowings (2,958.14)Dividend Paid - Equity Shares (643.02)

Net Cash used in Financing Activities (C) (465.45)

Net Increase in Cash and Cash Equivalents 48.48Cash and Cash Equivalents as at (Opening Balance) 102.40Cash and Cash Equivalents as at (Closing Balance) 150.88

AUDITORS’ CERTIFICATEWe have verified the above Consolidated Cash Flow statement of Rico Auto Industries Limited derived from the Audited ConsolidatedFinancial statement for the year ended 31st March, 2003 and found the same to be drawn in accordance therewith and also with therequirements of Clause 32 of the listing agreements with the Stock Exchanges.

for Gupta Vigg & Co.Chartered Accountants






91

Regd. Office: 69 KM Stone, Delhi-Jaipur Highway, Dharuhera, Distt. Rewari, Haryana

ATTENDANCE SLIP

PLEASE COMPLETE THE ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING HALL

NAME AND ADDRESS OF THE SHAREHOLDER

________________________________________

________________________________________

________________________________________

________________________________________

I hereby record my presence at the 20th Annual General Meeting of the Company held on Monday, the 15thSeptember, 2003 at 10.30 A.M. at 69 KM Stone, Delhi-Jaipur Highway, Dharuhera, Distt. Rewari, Haryana-122 106.

* Applicable for holding in electronic form** Strike out whichever is not applicable SIGNATURE OF THE SHAREHOLDER/PROXY**

Regd. Office : 69 KM Stone, Delhi-Jaipur Highway, Dharuhera, Distt. Rewari, Haryana

PROXY FORM

I/We____________________________________________________________________________________________

of_______________________________________________________________________being a member/members of

Rico Auto Industries Limited hereby appoint ____________________________________________________________

of _______________________________________________________________________________________________

or failing him______________________________________________________________________________________

of______________________________________________________________________________________________

as my/our Proxy to attend and vote for me/us and on my/our behalf, at the 20th Annual General Meeting of the Companyto be held on Monday, the 15th September, 2003 at 10.30 A.M. and/or at any adjournment thereof.

Signed___________day of___________2003

* Applicable for holding in electronic form

Affix ThirtyPaise

RevenueStamp

DP. Id.*

No. of Shares held

Client Id.*

Folio No.

DP. Id.*

Client Id.*

Folio No.

No. of Shares held

Note : The Proxy Form must be deposited at the Registered Office of the Company not less than FORTY-EIGHT HOURSbefore the time for holding the meeting. The Proxy need not be member of the Company.

Documents

Rico Annual Report 2002-03 Annual Report 2002-03.pdf · In addition to your company Rico Auto Industries Limited, we have created wholly owned subsidiaries and joint ventures to create