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Directors Report of Amara Raja Batteries Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting their report together with the audited financial statements for the financial year ended March 31, 2015.

Financial Highlights h million

Parameters 2014-15 2013-14

Net revenue 42,113 34,367

Other income 423 455

Total income 42,536 34,822

Operating profit (EBITDA) 7,241 5,758

Profit before tax (PBT) 6,099 5,367

Profit after tax (PAT) 4,109 3,674

Surplus brought forward 10,960 8,298

Amount available for appropriation 15,068 11,973

Appropriations:

Transfer to General Reserve 411 367

Dividend on equity capital

Proposed dividend 617 552

Corporate dividend tax 123 94

Surplus carried forward to balance sheet 13,917 10,960

Performance overview

- The Company continued its record of clocking highest ever turnover and profit for financial year 2014-15.

- Total revenue (net of excise duty) for the year was Rs. 42.11 billion as against Rs. 34.37 billion in the previous year registering a growth of 23%

- The operating profit (Earnings Before Interest, Tax, Depreciation and Amortisation-EBITDA) for the year stood at Rs. 7,241 million (previous year Rs. 5,758 million) representing 17.19% of net revenue.

- The Profit Before Tax (PBT) and Profit After Tax (PAT) for the year was at Rs. 6,099 million and Rs. 4,109 million as against Rs. 5,367 million and Rs. 3,674 million of the previous financial year respectively.

- The profit after tax has registered an impressive 12% growth.

Industrial battery business

The Company's Industrial Battery business registered double digit revenue growth over the previous financial year, in a challenging and competitive market conditions.

The growth in demand from telecom sector is primarily driven by data growth and the drive for energy optimisation by the tower companies. The demand for UPS batteries was moderate. Increased imports due to our country's Preferential Free Trade Agreements with ASEAN and Sri Lanka are a matter of concern, since the raw materials continue to attract higher import duty.

Amidst these challenges, the Industrial Battery Business improved the overall performance by virtue of its "preferred supplier status" with all major customers, efficient after sales service, customer relationship management and consistent product performance of its flagship brands PowerStack®, Quanta® and QRS Series batteries. The export business too registered good growth as it is more broad based in terms of geographies covered and has a much wider spread in terms of products, customers and applications.

The Company has progressively started providing total solutions to customers enabling it to forge strategic alliances.

Automotive battery business

The Company's Automotive Battery business reported double digit revenue growth supported by volume increase of 12% in four-wheeler and 52% in two-wheeler batteries, over the previous financial year, despite capacity constraints in the automotive four-wheeler batteries.

During the year, the Company commenced full year supplies to two-wheeler OEM business, consolidating its position in this space and growing at 113% over previous year. In four- wheeler OEM space, the company grew the business by 7% in spite of almost flat automobile production. In the aftermarket automotive segment, the Company's brands grew at a healthy pace of 16%. The volume growth in both four-wheeler and two-wheeler aftermarket business continued during the year due to strong preference for Company's products, supported by complete product offering, strengthening of brands Amaron® and PowerZone™, expansion of channel and leveraging customer relationships.

The volume of inverter batteries, which includes both flat and tubular plate, witnessed a good growth of 27% over previous year.

The revenue from export business grew significantly at 37% over previous year. The products of the Company and brand have started gaining recognition in overseas markets, resulting in increased business. The Company will continue its efforts to increase its exports in the Indian Ocean RIM by strengthening and expanding the distributor's network and entering into new markets.

The new four-wheeler battery plant at Nunegundlapalle village, Chittor District with capacity of 2.25 million units per annum was commissioned during the fourth quarter of FY 2015, taking the total capacity of the four-wheeler automotive battery plant to 8.25 million units per annum.

During the year, your Board approved an investment of about Rs. 500 Crores for setting up tubular batteries manufacturing plant (for Home UPS application) with a capacity of 1.44 million units per annum and the project is progressing as per schedule.

Financial position

The Company's financial position has shown immense improvement over the years. The networth as at March 31, 2015 improved to Rs. 16,996 million with the addition of Rs. 3,369 million to the reserves and surplus during the year. There is no interest bearing debt as of March 31, 2015. CRISIL had re-affirmed the ratings on the Company's long-term bank loan facilities at 'CRISIL AA /Stable' and on the short-term bank facilities at 'CRISIL A1 .'

During the year under review, the gross fixed assets including capital work-in-progress increased by Rs. 3,875 million (net of deletions of Rs. 118 million) and are at Rs. 15,277 million (previous year Rs. 11,402 million). The entire additions were funded through internal accruals. The earnings per share of Rs.1 each for the financial year 2014-15 grew by 12% at Rs. 24.05 as against Rs. 21.51 for the previous financial year, while the book value per share as at March 31, 2015 was at Rs. 99 as against Rs. 80 as at March 31, 2014.

Dividend

In line with the dividend policy of the Company, to pay dividend (excluding corporate dividend tax) upto 15% of the profit after tax of the Company, your directors have pleasure in recommending a dividend of Rs. 3.61 per equity share of Rs.1 each (361%) for the financial year ended March 31, 2015, subject to the approval of the shareholders.

The dividend, if approved, would involve a cash outflow of Rs. 616.63 million towards dividend and Rs. 123.29 million towards corporate dividend tax, resulting in a total cash outflow of Rs. 739.92 million.

Transfer to reserves

Your directors have proposed to transfer a sum of Rs. 410.86 million to the general reserve out of the profits earned by the Company. An amount of Rs. 13,917 million is proposed to be retained as surplus in the statement of Profit and Loss.

Directors and Key Managerial Personnel

Mr. Eric Stuart Mitchell (DIN: 06561619) and Mr. P Lakshmana Rao (DIN: 01463507) resigned from the Board with effect from August 6, 2014 and January 27, 2015 respectively. The Board wishes to place on record their sincere appreciation for the valuable services rendered by Mr. Eric Stuart Mitchell and Mr. P Lakshmana Rao during their tenure as directors of the Company.

Mr. Bruce Ronning Jr. (DIN: 06938974) was appointed as director in the casual vacancy caused by the resignation of Mr. Eric Stuart Mitchell (DIN: 06561619) with effect from August 6, 2014. He holds office upto the date of the ensuing annual general meeting as Mr. Eric Stuart Mitchell was liable to retire by rotation at this AGM.

Ms. Bhairavi Tushar Jani (DIN: 00185929) was appointed as an Additional Director (Independent) on the Board with effect from March 28, 2015.

The resolutions seeking your approval for the appointment(s) of Mr. Bruce Ronning Jr. as a Director and Ms. Bhairavi Tushar Jani as an independent director for a term of five years effective from August 14, 2015 are included in the notice of the ensuing annual general meeting along with brief details about them. The Company has received a notice in writing under Section 160 of the Act proposing their appointments.

All the Independent Directors have declared that each of them satisfy the criteria of the independence as stipulated under

the Section 149(6) of the Companies Act, 2013 ("Act") and Clause 49 of the listing agreement entered into with the stock exchanges and there was no change in the circumstances which may affect their independence during the year.

Pursuant to the provisions of Section 203 of the Act, Mr. Jayadev Galla, Vice Chairman and Managing Director, Mr. S V Raghavendra, Chief Financial Officer and Mr. M R Rajaram, Company Secretary are the key managerial personnel of the Company.

Auditors

M/s. E Phalguna Kumar & Co., Chartered Accountants, Tirupati and M/s. Chevuturi Associates, Chartered Accountants, Vijayawada, the joint statutory auditors of the Company who hold office until the conclusion of the ensuing annual general meeting had given notice expressing their desire to retire as auditors of the Company at the ensuing annual general meeting, in order to enable the Company to comply with the provisions of the Companies Act, 2013 governing rotation of auditors.

The Board of Directors wishes to place on record their sincere appreciation of the services of the joint statutory auditors especially in terms of ensuring timely completion and the quality of audit.

M/s. Brahmayya & Co., Chartered Accountants and M/s. Deloitte Haskins & Sells LLP, Chartered Accountants had given their consent(s), if appointed, to hold office as the joint statutory auditors for a term of five (5) years from the conclusion of this 30th annual general meeting till the conclusion of 35th annual general meeting. The said firm(s) have confirmed their eligibility under Sections 139 and 141 of the Companies Act, 2013 and rules framed there under for their appointment as the joint statutory auditors of the Company.

The Audit Committee considered, recommended and the Board of Directors propose the appointment of M/s. Brahmayya & Co., Chartered Accountants and M/s. Deloitte Haskins & Sells LLP, Chartered Accountants as the joint statutory auditors of the Company. Necessary resolution is being placed before the members for their approval.

As per Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules as amended from time to time, the Cost Audit is not applicable for the financial year 2014-15. The Cost Audit report for the financial year 2013- 14 was filed on September 16, 2014.

Pursuant to Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed R.Sridharan & Associates, Company Secretaries to undertake the secretarial audit of the company for the financial year 2014-15. The Secretarial Audit Report in Form MR-3 received from them is annexed herewith as Annexure I.

Corporate Governance

The report on corporate governance along with the certificate from practising company secretary regarding compliance of conditions of corporate governance for the year ended March 31, 2015 pursuant to clause 49 of the listing agreement is annexed hereto and forms part of the annual report. The Managing Director and the Chief Financial Officer of the Company have submitted a certificate endorsing to the Board the correctness of the financial statements and other matters as required under clause 49 (IX) of the listing agreement entered into with the stock exchanges.

Management discussion and analysis

Management discussion and analysis report, highlighting the performance and prospects of the Company's business, forms part of this annual report.

Directors' responsibility statement

Pursuant to Section 134(3)(c) and 134(5) of the Companies Act, 2013, the Board of Directors of the Company confirm to the best of their knowledge and belief that in the preparation of the statement of profit and loss for the financial year ended March 31, 2015 and the balance sheet as at that date ("financial statements"):

i) the applicable accounting standards have been followed;

ii) appropriate accounting policies have been selected and applied consistently and such judgements and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that period;

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. To ensure this, the Company has established internal control systems, consistent with its size and nature of operations, subject to the inherent limitations that should be recognised in weighing the assurance provided by any such system of internal controls. These systems are reviewed and updated on an on-going basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems. The audit committee meets at regular intervals to review the internal audit function;

iv) the financial statements have been prepared on a going concern basis.

v) the proper internal financial controls are in place and that such internal financial controls were adequate and were operating effectively

vi) the systems to ensure compliance with the provisions of all applicable laws are in place and were adequate and operating effectively.

Information and Disclosures under the Companies Act, 2013

Extract of Annual Return

The extract of Annual Return pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 ('Act') in the prescribed form MGT-9 is annexed herewith as Annexure II

Number of Meetings of the Board

During the year six meetings of the Board of the Directors of the Company were convened and held in accordance with the provisions of the Companies Act, 2013. The date(s) of the Board Meeting, attendance by the directors are given in the Corporate Governance Report forming part of this annual report.

Committees of the Board

In compliance with the provisions of Sections 135, 177,

178 of the Companies Act, 2013, the Board constituted Corporate Social Responsibility Committee, Audit Committee, Nomination and Remuneration Committee and Share Transfer and Stakeholders Relationship Committee (Committees).

The details of composition of the Committees, their meeting and attendance of the members are given in the Corporate Governance Report forming part of this annual report.

Corporate Social Responsibility (CSR)

The brief outline of the CSR Policy of the Company and the < initiatives undertaken by the Company on CSR activities during the year are given in Annexure III to this report in the format prescribed in Companies (Corporate Social Responsibility Policy) Rules, 2014. The said policy is available on the Company's « website at the link http://www.amararaja.co.in/policies/ARBL- Corporate-Social-Responsibility-Policy.pdf

Nomination and Remuneration Policy

The Board has on the recommendation of Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management Personnel and their remuneration. The Nomination and Remuneration Policy < adopted by the Board is available on the Company's website http://www.amararaja.co.in

Evaluation of the Board

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the listing agreement entered into with the Stock Exchanges, the Board had carried out an annual performance evaluation of its own performance, the directors individually as well as committees of the Board.

A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering aspects of the Board's functioning such as adequacy of the composition of the Board and its committees, execution and performance of specific duties, obligations and governance.

A separate exercise was carried out to evaluate the performance of Individual Directors including the Chairman of the Board.

The Directors performance was evaluated on parameters such as level of engagement and contribution in safeguarding the interest of the Company etc. The performance of every Director was evaluated by the Nomination and Remuneration Committee. Ms. Bhairavi Tushar Jani, additional director, being appointed on March 28, 2015 was excluded from the evaluation process.

The Independent Directors at their separate meeting reviewed the Performance of the Board as a whole, Non independent Directors and the Chairman of the Board.

Familiarisation Programme for Directors

In addition to giving a formal appointment letter to newly appointed Directors on the Board, a handbook covering the role, function, duties and responsibilities and the details of the compliance requirements expected from the Directors under the Companies Act, 2013 and Clause 49 of the listing agreement and other applicable laws were given and explained to the new Directors.

The Directors appointed by the Board are given induction and orientation with respect to Company's Vision, Core purpose, Core Values and business operations. In addition detailed presentations are made by Senior Management Personnel on business environment, performance of the Company at every Board Meeting.

The above initiatives help the Directors to understand the Company, its business and the regulatory framework in which the Company operates and enables the Directors to fulfill their roles/responsibility. The details of the familiarisation programme is available on the Company's website.

Particulars of loans, guarantees and investments

The Company has not given any loans, guarantees or security in connection with loans or made any investments falling within the ambit of Section 186 of the Companies Act, 2013.

Transactions with the Related Parties

All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of business.

During the year, the Company entered into lease agreements with Amara Raja Infra Private Limited to take on lease land admeasuring 12 acres and 62 acres situated at Nunegundlapalle village, Bangarupalyam Mandal, Chittoor District to construct hostel/canteen, amenities for workmen and also for its expansion plans, which may be deemed not to be in the ordinary course of business of the Company. The shareholders approved these proposals by way of special resolution at the AGM on August 6, 2014 and through postal ballot process. The results of the postal ballot were declared on September 24, 2014.

During the financial year 2014-15, there were no materially significant transactions with the related parties which might be deemed to have had a potential material conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus

approval of the Audit Committee is obtained for transaction with the related parties which are routine and repetitive in nature.

The summary statement of transactions entered into with the related parties pursuant to the omnibus approval so granted are reviewed and approved by the Audit Committee and the Board of Directors on a quarterly basis. The summary statements are supported by an independent audit report certifying that the transactions are at an arm's length basis and in the ordinary course of business.

As all the transactions with the related parties are on Arm's length basis and there are no material related party transactions as per policy adopted by the Company, the particulars of contracts or arrangements with the related parties under Section 188 in Form AOC-2 is not enclosed herewith.

Internal Controls

The details of internal control system and the adequacy of internal financial controls with respect to financial statements are given in the corporate governance report which forms part of the annual report.

Risk Management

During the year, the risk assessment parameters were reviewed and modified. The audit committee reviewed the element of risks and the steps taken to mitigate the risks. In the opinion of the Board, there are no major elements of risk which has the potential of threatening the existence of the Company.

Whistle Blower Policy/Vigil Mechanism

The Company has established a whistle blower policy/ vigil mechanism to provide an avenue to raise concerns. The mechanism provides for adequate safeguards against victimization of employees who avail of it and also for appointment of an Ombudsperson who will deal with the complaints received. The policy also lays down the process to be followed for dealing with the complaints and in exceptional cases, also provides for direct appeal to the Chairperson of the Audit Committee. The Whistle Blower Policy established by the Board is available on the Company's website at the link http://www.amararaja.co.in/policies/ARBL-Whistle-Blower- Policy.pdf

Deposits from Public

The Company has not accepted any deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposit) Rules, 2014 during the year under review. There are no outstanding deposits as on March 31, 2015.

Particulars of Remuneration

The information required pursuant to Section 197(12) of the Act read with Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexured hereto as Annexure IV.

A statement showing names and other particulars of the employees drawing remuneration in excess of the limits prescribed under Rule 5(2) of the said rules is also annexed to the Directors' Report. However, in terms of the provisions of Section 136(1) read with relevant proviso thereto of the Act, the annual report is being sent to the members of the Company excluding the aforesaid statement. The statement is available for inspection at the Registered Office of the Company during working hours. Any member interested in obtaining such information may write to the Company at its registered office address.

Technology Absorption and Foreign Exchange Earnings and Outgo

The information on conservation of energy, technology absorption, foreign exchange earnings and outgo as per Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules 2014, are annexed hereto as Annexure V and forms part of this annual report.

Regulatory Orders

There are no significant material orders passed by the Regulators/ Courts which would impact the going concern status of the Company and its future operations.

Awards and Recognitions

Your Company continues to get accolades and awards from its customers and other prestigious domestic/international forums. Some of the awards and recognitions your Company received during the year under review:

- Business Today in its edition "BEST CEOs" ranked Mr. Jayadev Galla, Vice Chairman and Managing Director at 6th position in the overall ranking for the mid-sized companies in India.

- Platinum award" for "Partner of the Year 2014-15" from Indus Towers Limited for customer focused approach, service delivery and product innovation.

- Received "OVERALL EXCELLENCE" award from Maruti Suzuki Limited in the field of QCDM (Quality, Cost, Delivery and Management) parameters.

- Amaron® has been awarded as 'Asia's Most Promising Brand' for the year 2013-14 under Automotive Category by World Consulting and Research Corporation (WCRC).

- The Company won second position in "National award for excellence in cost management for the year 2013 under "Private-Manufacturing-Organisation large" from the Institute of Cost Accountants of India.

- Amara Raja has been adjudged as "1st Best Employer Award" for 2014-15 by The Employer Branding Institute and has won Employer Branding Awards 2014-15 for Talent Management, HR Strategy in Line with Business, Training, Recruitment, Retention Strategy and Career Development. Amara Raja also won "Global HR Excellence Award" for "Talent Management and Innovative HR Practices."

- Amara Raja has been awarded "The Golden Globe Tigers Award 2015" for Excellence and Leadership in Training and Development in three categories. The awards were bestowed by HRD Management committee of World HRD Congress.

Transfer to the Investor Education and Protection Fund

In terms of Section 205A read with Section 205C of the Companies Act, 1956, an amount of Rs. 4,35,179 being unclaimed dividend pertaining to the financial year 2005-06 was transferred to the Investor Education and Protection Fund (IEPF) on October 16, 2014.

Health, safety and environmental protection

The Company has complied with all applicable environmental and labour laws. The Company continues to be certified under ISO-14001 and OHSAS 18001-2007 for its environment management systems and occupational health and safety management systems respectively.

Industrial relations

During the year under review, industrial relations remained cordial and stable. The directors wish to place on record their sincere appreciation for the co-operation received from employees at all levels.

Acknowledgement

The Board of Directors takes this opportunity to place on record their appreciation for the unstinted co-operation, commitment and dedication of all the employees of the Company, and the support extended by the channel partners, customers, vendors, business associates, banks, government authorities and all concerned without which it would not have been possible to achieve all round growth of the Company.

Your Directors also take this opportunity to thank the joint venture partner Johnson Controls Inc. for their valuable assistance and support. The Directors are thankful to the shareholders for their continued patronage.

On behalf of the Board

Place: Hyderabad Dr. Ramachandra N Galla Date: July 15, 2015 Chairman


Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting their report together with the audited financial statements for the financial year ended March 31, 2014.

Financial Highlights Rs. million

Parameters 2013-14 2012-13

Net revenue 34,367 29,589

Other income 455 465

Total income 34,822 30,054

Operating profit (EBIDTA) 5,758 4,658

Profit before tax (PBT) 5,367 4,218

Profit after tax (PAT) 3,674 2,867

Surplus brought forward 8,298 6,221

Amount available for appropriation 11,973 9,088 Appropriations:

Transfer to General Reserve 367 287

Dividend on equity capital

Proposed dividend 552 430

Corporate dividend tax 94 73

Surplus carried forward to balance sheet 10,960 8,298

Performance overview

The financial year 2013-14 was yet another significant year in which your company continued its record of clocking highest ever turnover and profit. The Company has recorded total revenue (net of excise duty) of Rs.34.37 billion as against Rs.29.59 billion in the previous year registering a growth of 16%. The operating profit (Earnings Before Depreciation, Interest, Tax and Amortisation-EBIDTA) for the year stood at Rs.5,758 million (previous year Rs.4,658 million) representing 16.75% of net revenue. The Profit Before Tax (PBT) and Profit After Tax (PAT) for the financial year ended March 31, 2014 was at Rs.5,367 million and Rs.3,674 million as against Rs.4,218 million and Rs.2,867 million of the previous financial year respectively. The profit after tax has registered an impressive 28% growth

Industrial battery business

The Company''s Industrial Battery business registered double digit revenue growth over the previous financial year despite capacity constraints by better product mix. The demand from the telecom sector grew during the year primarily driven by growth in data and for energy optimisation by tower companies. The adverse macro economic conditions had moderated the demand for UPS during the first three quarters and improved in the fourth quarter mainly due to finalisation of projects in the banking sector.

Amidst these challenges, our efficient after sales service, customer relationship management, consistent product performance of both PowerStack® and Quanta® batteries coupled with continued preferred supplier status accorded by all major customers resulted in the improved performance of the industrial battery business

During the year the Company had successfully introduced new range of Quanta series UPS batteries (120 AH and 150 AH), which were well received by the market resulting in improved market share in IT&ITES and Banking sector. The Quick Recharge Series large VRLA battery introduced for telecom application consolidated its position in the market.

The medium VRLA battery for Home UPS application which was introduced in the African markets helped to broad base the export business. The capacities of medium and large VRLA product lines were enhanced to 3.00 million standard equivalent units per annum and 900 million Ah in standard equivalent units per annum respectively during the Q4 of FY 2014.

Automotive battery business

The Company''s Automotive battery business reported double digit revenue growth supported by volume increase of 9% in four-wheeler and 63% in two-wheeler batteries, over the previous financial year, despite capacity constraints in the automotive four-wheeler batteries

During the year, the Company commenced bulk supplies to two-wheeler OEM business, consolidating its position in this space and witnessed a flat volume growth in four-wheeler OEM business due to slowdown in automobile production on account of various macro-economic conditions. The volume growth in both four-wheeler and two-wheeler aftermarket business continued during the year due to strong preference for Company''s products, supported by complete product offering, strengthening of brands Amaron® and PowerZone™, and leveraging customer relationship

The volume of inverter batteries witnessed a drop mainly on account of early onset of monsoon during the year. A separate task force was created to focus and develop this business vertica as the Company sees a promising future for this business

The revenue from export business grew significantly during the year aided by the quality of the product, moderation in import tariff and depreciation rupee. The Company will continue its efforts to increase the exports in the Indian Ocean RIM by strengthening and expanding the distributor''s network and entering into new markets

During the year, the capacity of two-wheeler battery and four- wheeler battery was enhanced to 8.40 million and 6.00 million units per annum respectively. The green field expansion of four- wheeler battery capacity to 8.25 million units is progressing as per schedule and is expected to commence supplies in the second half of FY 2015.

Financial position

The Company''s financial position has shown immense improvement over the years. The networth as at March 31, 2014 improved to Rs.13,627 million with the addition of Rs.3,029 million to the reserves and surplus during the year. There is no interest bearing debt as of March 31, 2014. The surplus cash as at the year end stood at Rs.2,446 million. CRISIL had re-affirmed the ratings on the Company''s loan-term bank loan facilities at ''CRISIL AA /Stable'' and on the short-term bank facilities at ''CRISIL A1 .''

During the year under review, the gross fixed assets including capital work in progress increased by Rs.3,570 million (net of deletions of Rs.161 million) and are at Rs.11,402 million (previous year - Rs.7,832 million). The entire additions were funded through internal accruals. The earnings per share of Rs.1 each for the financial year 2013-14 grew by 28% at Rs.21.51 as against Rs.16.78 for the previous financial year, while the book value per share as at March 31, 2014 was at Rs.80 as against Rs.62 as at March 31, 2013.

Dividend

The Board of Directors of the Company at their meeting held on May 19, 2010 had approved a policy on payment of dividend to shareholders i.e., to pay dividend (excluding corporate dividend tax) up to 15% of the profit after tax of the Company. In line with the said dividend policy your directors have pleasure in recommending a dividend of Rs.3.23 per equity share of Rs.1 each (323%) for the financial year ended March 31, 2014, subject to the approval of the shareholders

Transfer to reserves

As stipulated under the provisions of the Companies Act, 1956 read with Companies (Transfer to Reserves) Rules, 1975, your directors have proposed to transfer a sum of Rs.367.44 million to the general reserve out of the profits earned by the Company. A sum of Rs.10,959.62 million is proposed to be retained as surplus.

Directors

In accordance with the provisions of the Companies Act, 2013, Mr. Shu Qing Yang, Dr. Ramachandra N Galla and Mr. N Sri Vishnu Raju, directors are liable to retire by rotation at the ensuing annual general meeting and being eligible offer themselves for re-appointment.

In accordance with the provisions of Section 149 of the Companies Act, 2013, the present independent directors i.e Mr. P Lakshamana Rao, Mr.Nagarjun Valluripalli, Mr. N Sri Vishunu Raju, Mr. T R Narayanaswamy and Mr. Raymond J Brown are being proposed for appointment as an independent directors of the Company to hold office for a term of five consecutive years effective from August 6, 2014.

Necessary resolutions for appointment/re-appointment of the above directors are being placed before the members for their approval

During the year, Mr. Ravi Bhamidipati resigned from the office of Executive Director and as director with effect from August 31, 2013. The Board wishes to place on record their appreciation for the valuable services rendered by Mr. Ravi Bhamidipati during his tenure as director of the Company.

Auditors

M/s. E Phalguna Kumar & Co., Chartered Accountants, Tirupati and M/s. Chevuturi Associates, Chartered Accountants, Vijayawada, the joint statutory auditors of the Company who hold office until the conclusion of the ensuing annual general meeting and being eligible, have offered themselves for re-appointment.

The Central Government had approved the appointment of M/s. Sagar & Associates, Cost Accountants, Hyderabad as cost auditors for the financial year 2013-14. The cost audit report will be filed with Central Government within 180 days from the close of the financial year. The cost audit report for the previous financial year 2012-13 signed by M/s. Nageswara Rao & Co., Cost Accountants, Hyderabad was filed in extensible Business Reporting Language (XBRL) mode on September 24, 2013, within due date.

Corporate Governance

The report on corporate governance along with the certificate from practising company secretary regarding compliance of conditions of corporate governance for the year ended March 31, 2014 pursuant to clause 49 of the listing agreement is annexed hereto and forms part of the annual report. The Managing Director and the Chief Financial Officer of the Company have submitted a certificate endorsing to the Board the correctness of the financial statements and other matters as required under Clause 49 (V) of the listing agreement entered into with the stock exchanges.

Management discussion and analysis

Management discussion and analysis report, highlighting the j performance and prospects of the Company''s business, forms j part of this annual report.

Transfer to the Investor Education and j Protection Fund

In terms of Section 205A read with Section 205C of the j Companies Act, 1956, an amount of Rs.305,957 being j unclaimed dividend pertaining to the financial year 2005-06 j was transferred to the Investor Education and Protection Fund j (IEPF) on September 30, 2013.

Fixed deposits

The Company has not accepted any deposits from the public j in terms of Section 58A of the Companies Act, 1956, during j the year under review and hence there were no outstanding j deposits as on March 31, 2014.

Health, safety and environmental protection The Company has complied with all applicable environmental and labour laws. The Company continues to be certified under ISO-14001 and OHSAS 18001-2007 for its environment management systems and occupational health and safety : management systems respectively.

Industrial relations

During the year under review, industrial relations remained cordial and stable. The directors wish to place on record their sincere appreciation for the co-operation received from employees at all levels.

Disclosures

The particulars of conservation of energy, technology absorption, foreign exchange earnings and outgo prescribed under Section 217(1 )(e) of the Act read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are annexed hereto and forms part of this report.

The statement giving particulars of employees who were in receipt of remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in the annexure to the Directors'' Report.

However, in terms of the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Directors'' Report is being sent to all the members of the Company, excluding the aforesaid information. The said information would be filed with the Registrar of Companies and also would be available for inspection by the members at the registered office of the Company. Any member interested in obtaining such particulars may write to the Company at its registered office.

Awards and Recognitions

Your Company continues to get accolades and awards from its customers and other prestigious domestic/international forums Some of the awards and recognitions your Company received during the year under review:

- Two Excellence awards at International level Quality Circle competitions (ICQC) organised by the Association of Pioneer Quality Control Research (PQCRA) in Taiwan

- Won "Best Organisation Supporting QC movement" award, (fourth time in a row) along with seven Gold awards and two Silver awards at Regional level QC competitions organised by Quality Circle Forum of India (QCFI)

- Won "Best Organisation Supporting QC movement" award in Private Sector for the first time at the National Level along with four par excellence and four excellence awards from QCFI at National Level

- Received "Operational Excellence in Warehousing" award at Asia Manufacturing Supply Chain Summit.

- Won "Most Preferred Battery Brand - Telecom" award from FROST & SULLIVAN at India Back-up Power Industry Excellence Awards 2013

- "Platinum award" for "Partner of the Year 2013-14" from Indus Towers Limited for customer focused approach, i service delivery and product innovation.

- "Consistent high quality performance" award from Maruti Suzuki Limited.

- The Company won first position in "National award for excellence in cost management" for the year 2012 under "Private-Manufacturing-Organisation large" from the Institute of Cost Accountants of India.

Directors'' responsibility statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of Directors of the Company confirm to the best of their knowledge and belief that in the preparation of the statement of profit and loss for the financial year ended March 31, 2014 and the balance sheet as at that date ("financial statements"),:

i) the applicable accounting standards have been followed;

ii) appropriate accounting policies have been selected and applied consistently and such judgements and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that period;

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. To ensure this, the Company has established internal control systems, consistent with its size and nature of operations, subject to the inherent limitations that should be recognised in weighing the assurance provided by any such system of internal controls. These systems are reviewed and updated on an on-going basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems. The audit committee meets at regular intervals to review the internal audit function,

iv) the financial statements have been prepared on a going concern basis

Acknowledgement

The Board of Directors takes this opportunity to place on record their appreciation for the unstinted co-operation, commitment and dedication of all the employees of the Company, and the support extended by the channel partners, customers, vendors, business associates, banks, government authorities and all concerned without which it would not have been possible to achieve all round growth of the Company.

Your directors also take this opportunity to thank the joint venture partner Johnson Controls Inc. for their valuable assistance and support. The directors are thankful to the shareholders for their continued patronage.

On behalf of the Board

Place: Hyderabad Dr. Ramachandra N Galla

Date: May 28, 2014 Chairman


Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting their report together with the audited financial statements for the financial year ended March 31, 2013.

Financial Highlights Rs. Million

Parameters 2012-13 2011-12

Net revenue 29,614 23,645

Other income 465 280

Total income 30,079 23,925

Operating profit (EBIDTA) 4,658 3,570

Profit before tax (PBT) 4,218 3,186

Profit after tax (PAT) 2,867 2,151

Surplus brought forward 6,221 4,661

Amount available for appropriation 9,088 6,812

Appropriations:

Transfer to General Reserve 287 215

Dividend on equity share capital

Proposed dividend 430 323

Corporate dividend tax 73 52

Surplus carried forward to balance sheet 8,298 6,221

Performance overview

The Company has recorded total revenue (net of excise duty) of Rs.29.61 billion as against Rs.23.64 billion in the previous year showing a remarkable 25% growth. The operating profit (Earnings Before Depreciation, Interest, Tax and Amortisation-EBIDTA) for the year stood at Rs.4,658 million (previous year Rs.3,570 million) representing 15.73% of net revenue. The Profit Before Tax (PBT) and Profit After Tax (PAT) for the financial year ended March 31, 2013 was at Rs.4,218 million and Rs.2,867 million as against Rs.3,186 million and Rs.2,151 million of the previous financial year respectively. The profit after tax has registered an impressive 33% growth. The financial year 2012-13 was a yet another significant year in terms of highest ever turnover and profit in the history of the Company.

Industrial battery business

The Company''s Industrial Battery business registered double digit revenue growth over the previous financial year and improvement in price realisation, despite capacity constraint and challenging & competitive market conditions. The demand from the telecom sector is primarily from replacement. This sector during the year has witnessed significant slowdown in both network expansion and up-gradation plans. The growth rate of UPS demand has moderated by the country''s adverse macro-economic conditions. Amidst these challenges, the industrial battery business improved the overall performance by virtue of its "preferred supplier status" with all major customers, backed by timely supplies, efficient after sales service, customer relationship management and consistent product performance of both PowerStack® and Quanta® batteries. During the year the Company has successfully introduced a new range of large VRLA battery (Quick Recharge Series - QRS) for telecom application which offers reliable performance enabling customers to optimise power cost.

The Company continues to retain dominant market share both in telecom and UPS battery businesses. The Company is investing on the capacity enhancement in medium and large VRLA product lines to meet the growing demand and also to sustain the growth momentum. The greenfield capacity expansion (from 1.80 million units to 3.60 million units per annum) project in medium VRLA product line and brownfield capacity expansion (to 900 million Ah per annum) project in large VRLA product line are progressing as per schedule and will commence supplies in Q3/Q4 FY 2014. The ultimate large VRLA product line capacity will be 1.00 billion Ah. The total capital commitment for the said expansions is Rs.2.40 billion.

Automotive battery business

The Company''s Automotive Battery business reported strong double digit revenue growth supported by good volume increase of 20% in four-wheeler and 37% in two-wheeler batteries, over the previous financial year, despite capacity constraints in automotive four-wheeler batteries during the year. The year under review witnessed double digit volume growth in automotive OEM business, notwithstanding depressed automobile production in the country due to unfavorable macro-economic conditions.

Substantial volume growth in both four-wheeler and two-wheeler replacement segments was due to strong demand for Company''s products, ably supported by focused action around the product offering, brand, channel and customer relationship. The continuing consumer preference for Amaron® and PowerZone™ enabled gains in market share both in aftermarket and OEM. The Company is well on course towards bulk supplies to two-wheeler original equipment manufacturers.

The launch of Amaron® and PowerZone™ branded tubular inverter batteries and Home UPS under private label program facilitated the Company to fill the gap in product offering to the channel and helped to improve volume and market share. The pan-India consumer response to these products has been very encouraging and this vertical will aid to grow the revenue and profits of the Company in the years to come.

During the year, the Board of Directors has approved investments of Rs.5.05 billion for enhancing automotive four-wheeler battery capacity from 5.60 million units to 8.25 million units per annum and two-wheeler battery capacity from 4.80 million units to 8.40 million units per annum through green and brownfield projects to meet the growing demand and to improve market share.

Financial position

The Company''s financial position has shown immense improvement over the years. The networth as at March 31, 2013 improved to Rs.10,598 million with the addition of Rs.2,363 million to the reserves and surplus during the year. There is no interest bearing debt as of March 31, 2013. The surplus cash as at the year end stood at Rs.3,652 million. The Company has parked the surplus funds in fixed deposits with reputed banks to ensure utmost safety, liquidity and return. The debt to equity ratio as at March 31, 2013 is 0.08 times, without adjusting for surplus cash. The Company is confident of funding the recently announced various capacity expansions, at the current location and at a strategic second location, through surplus cash, estimated internal accruals during 2013-14 and with moderate debt.

CRISIL has upgraded the ratings on the Company''s long- term bank loan facilities to ''CRISIL AA /Stable'' from ''CRISIL AA/Stable'' and has re-affirmed the ratings on the short- term bank facilities at ''CRISIL A1 ''.

During the year under review, the gross fixed assets including capital work in progress increased by Rs.1,304 million (net of deletions of Rs.155 million) and are at Rs.7,832 million (previous year - Rs.6,528 million). The entire additions were funded through internal accruals. The earnings per share of Rs.1 each for the financial year 2012-13 grew by 33% at Rs.16.78 as against Rs.12.59 for the previous financial year, while the book value per share as at March 31, 2013 was at Rs.62 against Rs.48 as at March 31, 2012.

Sub-division of Shares

Pursuant to the approval of the shareholders at the twenty seventh annual general meeting of the Company held on August 14, 2012, the face value of the equity shares of the Company was sub-divided from Rs.2 per equity share to Rs.1 per equity share, with effect from September 26, 2012. Consequent to this sub- division, shareholders were issued two equity shares of Rs.1 each in lieu of one equity share of Rs.2 each held by them as on the record date i.e. September 26, 2012, fixed for this purpose. Subsequent to the sub-division, the total number of shareholders has significantly increased to over 21,000 from about 16,500.

Dividend

The Board of Directors of the Company at their meeting held on May 19, 2010 had approved a policy on payment of dividend to shareholders i.e., to pay dividend (excluding corporate dividend tax) up to 15% of the profit after tax of the Company. In line with the policy your directors recommend a dividend of Rs.2.52 per equity share of Rs.1 each (252%) for the financial year ended March 31, 2013, subject to the approval of the shareholders.

The dividend, if approved, would involve a cash outflow of Rs.430.45 million towards dividend and Rs.73.15 million towards corporate dividend tax, resulting in a total cash outflow of Rs.503.60 million.

Transfer to reserves

As stipulated under the provisions of the Companies Act, 1956 read with Companies (Transfer to Reserves) Rules, 1975, your directors have proposed to transfer a sum of Rs.287 million to the general reserve out of the profits earned by the Company.

A sum of Rs.8,298 million is proposed to be retained as surplus.

Awards and Recognitions

Your Directors have pleasure in reporting the following awards and recognitions that your Company received during the year under review:

- "Gold award for excellence" in SME (Subject Matter Expertise) services from Indus Towers Limited

- Automotive battery plant won 5S sustenance award from CII Southern Region

- Won 3 star award in International Convention on Quality Circles

- Quality award from Bosch India Limited

- "World excellence award" under the category of warranty improvement from Ford, USA

- Special prize for "Good TPM Practices" by ABK AOTS DOSOKAI

- Won "Most Preferred Battery Brand - Telecom" award from FROST & SULLIVAN at India Back-up Power Industry Excellence Awards 2013

The Company won third position (back to back recognition) in "National award for excellence in cost management" for the year 2012 under "Private-Manufacturing-Organisation large" from the Institute of Cost Accountants of India.

Directors

In accordance with the provisions of Section 256(1) of the Companies Act, 1956 and Article 105(a) of the Articles of Association of the Company, Mr. T R Narayanaswamy, Mr. P Lakshmana Rao and Mr. Nagarjun Valluripalli, directors are liable to retire by rotation at the ensuing annual general meeting and being eligible offer themselves for re-appointment.

Mr. Ravi Bhamidipati was appointed as an additional director with effect from October 8, 2012 and has been designated as an Executive Director of the Company for the period from October 8, 2012 to March 31, 2014, subject to the approval of the shareholders.

Mr. Craig W Rigby resigned from the Board with effect from April 18, 2013 and Mr. Eric Stuart Mitchell was appointed as an additional director with effect from April 18, 2013 who will hold office upto the date of the ensuing annual general meeting.

Necessary resolutions for appointment/re-appointment of the above directors are being placed before the members for their approval.

The Board wishes to place on record their appreciation and acknowledgement for the valuable services rendered by Mr. Craig W Rigby, the outgoing director, during his tenure as director of the Company.

Auditors

M/s. E Phalguna Kumar & Co. Chartered Accountants, Tirupati and M/s. Chevuturi Associates, Chartered Accountants, Vijayawada, the joint statutory auditors of the Company who hold office until the conclusion of the ensuing annual general meeting and being eligible, have offered themselves for re-appointment. The Board recommends their re-appointment as the joint statutory auditors of the Company.

The Central Government had approved the appointment of M/s. Nageswara Rao and Co. Cost Accountants, Hyderabad as cost auditors for the financial year 2012-13. The cost audit report will be filed within 180 days from the close of the financial year. The cost audit report for the previous financial year 2011-12 signed by Mr. A.V.N.S Nageswara Rao, Cost Accountant, Hyderabad was filed in extensible Business Reporting Language (XBRL) mode on December 31, 2012, within due date.

Corporate Governance

The report on corporate governance along with the certificate from practising company secretary regarding compliance of conditions of corporate governance for the year ended March 31, 2013 pursuant to Clause 49 of the listing agreement is annexed hereto and forms part of the annual report. The Managing Director and the Chief Financial Officer of the Company have submitted a certificate endorsing to the Board the correctness of the financial statements and other matters as required under Clause 49 (V) of the listing agreement.

Management discussion and analysis

Management discussion and analysis report, highlighting the performance and prospects of the Company''s business, forms part of this annual report.

Transfer to the Investor Education and Protection Fund

In terms of Section 205A read with Section 205C of the Companies Act, 1956, an amount of Rs.307,659 being unclaimed dividend pertaining to the financial year 2004-05 was transferred to the Investor Education and Protection Fund (IEPF) on October 1, 2012.

Fixed deposits

The Company has not accepted any deposits from the public in terms of Section 58A of the Companies Act, 1956, during the year under review and hence there were no outstanding deposits as on March 31, 2013.

Health, safety and environmental protection

The Company has complied with all applicable environmental and labour laws. The Company continues to be certified under ISO-14001 and OHSAS 18001-2007 for its environment management systems and occupational health and safety management systems respectively.

Industrial relations

During the year under review, industrial relations remained cordial and stable. The directors wish to place on record their appreciation for the excellent co-operation received from all employees at all levels.

Particulars of employees

The statement giving particulars of employees who were in receipt of remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in the annexure to the Directors'' Report.

However, in terms of the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Directors'' Report is being sent to all the members of the Company, excluding the aforesaid information. The said information would be filed with the Registrar of Companies and also would be available for inspection by the members at the registered office of the Company. Any member interested in obtaining such particulars may write to the company secretary at the corporate operations office of the Company.

Conservation of energy, technology and foreign exchange

The particulars of conservation of energy, technology absorption, foreign exchange earnings and outgo prescribed under Section 217(1)(e) of the Act read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are annexed hereto and forms part of this report.

Directors'' responsibility statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the directors confirm that, to the best of their knowledge and belief:

i) In the preparation of the statement of profit and loss for the financial year ended March 31, 2013 and the balance sheet as at that date ("financial statements"), applicable accounting standards have been followed;

ii) Appropriate accounting policies have been selected and applied consistently and such judgements and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that period;

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. To ensure this, the Company has established internal control systems, consistent with its size and nature of operations. In weighing the assurance provided by any such system of internal controls its inherent limitations should be recognised. These systems are reviewed and updated on an on-going basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems. The audit committee meets at regular intervals to review the internal audit function;

iv) The financial statements have been prepared on a going concern basis.

Acknowledgement

The Board of Directors takes this opportunity to place on record their appreciation for the unstinted co-operation, hard work and dedication of all the employees of the Company, and the support extended by the channel partners, customers, vendors, business associates, banks, government authorities and all concerned without which it would not have been possible to achieve all round growth of the Company.

Your directors also take this opportunity to thank the joint venture partner for their valuable assistance and support. The directors are thankful to the shareholders for their continued patronage.

On behalf of the Board

Place: Milwaukee Dr. Ramachandra N Galla

Date: May 13, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting their report together with the audited financial statements for the financial year ended March 31, 2012.

Financial highlights Rs Million

Parameters 2011-12 2010-11

Net revenue 23,674 17,611

Other income 152 78

Total income 23,826 17,689

Operating profit (PBDIT) 3,580 2,588

Profit before interest & tax (PBIT) 3,115 2,171

Profit before tax (PBT) 3,186 2,204

Profit after tax (PAT) 2,151 1,481

Surplus brought forward 4,661 3,786

Amount available for appropriation 6,812 5,267 Appropriations:

Transfer to general reserve 215 148 Dividend on equity capital

Interim dividend - 171

Final dividend 323 222

Dividend tax 52 65

Surplus carried forward 6,222 4,661

Performance overview

The Company has posted gross sales of Rs26,057 million for the financial year 2011 -12 (previous year Rs19,443 million), a 34% growth over the previous financial year. The net sales for the year ended March 31, 2012 grew by 34% at Rs23,674 million (previous year Rs17,611 million). The export sales improved from Rs834 million in 2010-11 to Rs1,170 million in 2011-12 - 40% | growth.

The operating profit (Earnings Before Interest, Depreciation, Tax and Amortisation-EBIDTA) for the year stood at Rs3,580 million (previous year Rs2,588 million) representing 1 5.12% of net sales, The Profit Before Tax (PBT) and Profit After Tax (PAT) for the financial year ended March 31, 2012 was at Rs3,186 million and 2,151 million as against Rs2,204 million and Rs1,481 million of the previous financial year respectively. The profit after tax has registered an impressive 45% growth. The financial year 2011-12 was a significant year in terms of highest ever turnover and profit in the history of the Company.

Industrial battery business

The Company's Industrial Battery business registered 14% volume growth over the previous financial year amidst challenging and competitive market conditions. During the financial year 2011 -12, the telecom sector witnessed significant slowdown in network expansion and up-gradation plans. Lack of growth in 3G business and delay in roll out of Broadband Wireless Access (BWA) networks also affected the growth in telecom business. Despite these challenges, the Company increased the volume and market share by virtue of its "preferred supplier status" with all major customers, backed by timely supplies; efficient after sales service; customer relationship management and product performance of both Powerstack@ and Amaron VoltTM batteries.

During the year under review, the Company has capitalised on the growing demand for UPS batteries in India. The continuous demand for Quanta® batteries and better price realisation from various customers in the UPS sector contributed significantly for the improved performance in the Industrial Battery business. The Company continues to retain dominant market share in UPS battery business. During the year, the distribution channel (AQuA) of Quanta® batteries has been expanded from 75 to 100 dealers to augment sales in UPS battery replacement market.

Exports in the Industrial battery business have been growing significantly in the last couple of years aided by surge in demand through the expansion of Bharti Airtel's network in Africa. The Company has also made significant inroads into Bangladesh and Srilanka.

While the Company is focusing on strengthening the businesses in the sectors in which it currently operates, it is also exploring new opportunities in emerging areas viz., renewable energy and power control sectors, to ensure that the leadership position in the Industrial Battery business is sustained. The Company is investing a sum of Rs1900 million on the capacity enhancement in the medium VRLA product line during the next 12-1 6 months to meet the growing needs and also to sustain the growth momentum.

Automotive battery business

The Company's Automotive Battery business witnessed significant volume growth of 19% and 26% in 4-wheeler and 2- wheeler batteries respectively, over the previous financial year.

During the period under review, the Company clocked a healthy double digit volume growth in automotive OEM business, despite muted automobile production in the Country due to adverse macro-economic conditions. The Aftermarket business saw substantial volume growth in 4-wheeler and 2-wheeler due to strong demand for Amaron'® and PowerZone™ batteries from the customers. The aggressive advertisement campaigns and

effective promotional activities for brand Amaron'® and the launch of Amaron'® and PowerZone™ branded tubular inverter batteries and Home UPS under private label program has helped the Company to increase volume and market share.

During the year, the Company has expanded the Amaron® channel with the addition of 34 franchisees and initiated various activities around the channel to enhance the number of active retailers among the 18,000 retailers in Amaron'®channel. The number of retail partners in PowerZone™ channel has increased to 900 in semi-urban and rural locations across the country.

The export business continues to grow in the Middle East with enrollment of more distributors. The Amaron'® brand is well accepted in various countries across the Indian Ocean Rim, built through focused effort over the years.

In a short span of 4 years, the first ever VRLA motorcycle battery in India (Amaron Pro Bike Rider™) carved out an impressive share of about 24% of 2-wheeler organised replacement battery market. With the introduction of PowerZone™ branded batteries in the two wheeler segment, the Company is confident of garnering more volumes in the replacement market. The Company is well on course towards bagging the first few bulk orders from two wheeler original equipment manufacturers.

During the year, the 4-wheeler and 2-wheeler battery capacities were enhanced to 5.60 million units per annum and 4.80 million units per annum respectively to cater to the growing demand for the Company's products. The 4-wheeler battery capacity will be enhanced further to 6.00 million units per annum during 2013- 14 to meet the capacity requirement of financial year 2013-14.

Financial position

The Company's financial position has vastly improved over the years. The net worth as at March 31, 2012 improved to Rs8,235 million with the addition of Rs1,776 million to the reserves during the year. During the financial year 2011-12, the Company has repaid in full the balance of term loan availed from BNP Paribas (ECB) and as at March 31, 2012 there are no interesting bearing debts in the books.

The debt to equity ratio as at March 31, 2012 stands at 0.10 times, without adjusting for cash and bank balances of Rs2,292 million. The Company has parked the surplus funds in fixed deposits with reputed banks to ensure utmost safety, liquidity and return. The Company is confident of funding the recently announced capacity expansion at a strategic second location through the surplus cash and internal accruals. During the year under review, CRISIL reaffirmed the ratings for bank loan facilities for long-term at "CRISIL AA/stable" and for short-term at "CRISIL A1 ."

During the year under review, the gross fixed assets including capital work in progress increased by Rs765 million and are at Rs6,528 million (previous year - Rs5,763 million). The entire additions were funded through internal accruals.

The earnings per share of Rs2/- each for the financial year 2011 -12 was at Rs25.18/- as against Rs17.34/- for the previous financial year 2010-11, while the book value per share as at March 31, 2012 was at Rs96/- against Rs76/- as at March 31, 2011.

Dividend

In line with the dividend policy adopted by the Board of Directors at their meeting held on May 19, 2010 to pay dividend (excluding dividend tax) up to 1 5% of the Profit After Tax (PAT) of the Company, your directors recommend a dividend of Rs3.78/- per equity share of Rs2/- each for the financial year ended March 31, 2012, subject to the approval of the shareholders.

The dividend, if approved, would involve a cash outflow of Rs322.84 million towards dividend and Rs52.37 million towards dividend tax, resulting in a total cash outflow of Rs375.21 million.

Transfer to reserves

As stipulated under the provisions of the Companies Act, 1956 read with Companies (Transfer to Reserves) Rules, 1975, your Directors have proposed to transfer a sum of Rs21 5.06 million to the general reserve out of the profits earned by the Company. A sum of Rs1,560.36 million is proposed to be retained as surplus.

Sub-division of shares

With a view to enhance the shareholders' wealth, easy accessibility and liquidity of the Company's equity shares to small shareholders, the board at their meeting held on May 28, 2012 recommended, subject to the approval of the shareholders, the

sub-division of the face value of the equity shares from Rs2/- each to Rs1/- each. The notice of the ensuing annual general meeting contains necessary resolutions for approval of the shareholders in this regard.

Awards & recognitions

Your Directors have pleasure in reporting the following awards and recognitions that your Company received during the year under review:

The Employer Branding Institute, a premier industry body on assessment of best people practices, has recognised Amara Raja as 3rd best employer in India for the year 2011 and conferred the following awards at the National Level:

- "Best HR Strategy in line with business."

- "Continuous Innovation in HR Strategy at work."

- "Excellence in HR through technology."

- "Excellence in Training."

- "Innovation in Recruitment."

- "Talent Management."

The Company received the "World Excellence Award - Recognition of Achievement" under the category of Warranty

Improvement for the year 2011 from Ford Motor Company at its annual world excellence awards function.

The Company received the first prize in "Best Organisation for Quality Movement" consecutively for the second time from Quality Control Forum of India (QCFI) and bagged two gold category awards at regional level (south) for QCC and excellence level awards at the national level in the automotive battery business.

The Company won third position in "National award for Excellence in Cost Management" for the year 2011 under 'Private-Manufacturing-Organisation-Large' from The Institute of Cost Accountants of India.

The Company's Amaron® "Life Saver" media commercial has won Silver Medal under 'Automotive Vehicles and Accessories' category in the Creative ABBY Award - 2012.

Directors

In accordance with the provisions of Section 256(1) of the Companies Act, 1956 and Article 105(a) of the Articles of Association of the Company, Dr. Ramachandra N Galla and Mr. N. Sri Vishnu Raju, directors are liable to retire by rotation at the ensuing annual general meeting and being eligible offer themselves for re-appointment.

Mr. Jorge A Gonzalez resigned from the board with effect from May 28, 2012 and Mr. Craig W Rigby was appointed as a director to fill the casual vacancy caused by the resignation of Mr. Jorge A Gonzalez, with effect from May 28, 2012.

Mr. Raymond J Brown was appointed as an additional director (independent) with effect from May 28, 2012 and will hold office upto the date of the ensuing annual general meeting.

The board wishes to place on record their appreciation and acknowledgement for the valuable services rendered by Mr. Jorge A Gonzalez, the outgoing director, during his tenure as director of the Company.

Auditors

M/s. E. Phalguna Kumar & Co, Chartered Accountants, Tirupati and M/s. Chevuturi Associates, Chartered Accountants, Vijayawada, the joint statutory auditors of the Company retire at the conclusion of the ensuing annual general meeting and are eligible for re-appointment.

The Central Government has approved the appointment of Mr.A.V.N.S. Nageswara Rao, Cost Accountant as the Cost Auditor for the financial year 2011 -12. The cost audit report will be filed within 180 days from the close of financial year.

In respect of previous financial year 2010-11, the cost audit report from Mr.A.V.N.S. Nageswara Rao, Cost Accountant was filed on September 20, 2011 within due date of September 27, 2011.

Corporate governance

The Company's Corporate Governance practices have been detailed in a separate section and are annexed to and forms part of this annual report. The certificate from a practising company

secretary on the compliance of conditions of corporate governance as per clause 49 of the listing agreement is also attached as an annexure and forms part of this report.

Management discussion and analysis

Management discussion and analysis report, highlighting the performance and prospects of the Company's business, forms part of this annual report.

CEO and CFO Certification

As required under clause 49 (V) of the listing agreement, the CEO/CFO certification on the financial statements of the Company as given by Mr. Jayadev Galla, Managing Director and Mr. K. Suresh, Chief Financial Officer forms part of this annual report.

Transfer to the investor education and protection fund

In terms of Section 205A read with Section 205C of the Companies Act, 1956, an amount of Rs300,107/- being unclaimed dividend pertaining to the financial year 2003-04 was transferred to the Investor Education and Protection Fund (IEPF) on October 1, 2011.

Fixed deposits

The Company has not accepted any deposits from the public in terms of Section 58A of the Companies Act, 1956, during the year under review and hence there were no outstanding deposits as on March 31, 2012.

Health, safety and environmental protection

The Company has complied with all the applicable environmental and labour laws. The Company continues to be certified under ISO-14001 and OHSAS 18001-2007 for its environment management system and occupational health and safety management systems respectively.

Industrial relations

During the year under review, industrial relations remained cordial and stable. The Directors wish to place on record their appreciation for the excellent cooperation received from all employees at all levels.

Particulars of employees

The statement giving particulars of employees who were in receipt of remuneration in excess of the limits prescribed under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in the annexure to the Directors' Report.

However, in terms of the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Director's Report is being sent to all the members of the Company, excluding the aforesaid information. The said information would be filed with the Registrar of Companies and also would be available for inspection by the members at the registered office of the Company. Any member interested in obtaining such particulars may write to the company secretary at the corporate operations office of the Company.

Conservation of energy, technology and foreign exchange

The particulars of conservation of energy, technology absorption, foreign exchange earnings and outgo required to be disclosed under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are annexed hereto and forms part of this report.

Directors' responsibility statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the directors confirm that, to the best of their knowledge and belief:

- In the preparation of the statement of profit & loss for the financial year ended March 31, 2012 and the balance sheet as at that date ("financial statements"), applicable accounting standards have been followed;

- Appropriate accounting policies have been selected and applied consistently and such judgements and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that period;

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. To ensure this, the Company has established internal control systems, consistent with its size and nature of operations. In weighing the assurance provided by any such system of internal controls its inherent limitations should be recognised. These systems are reviewed and updated on an on-going basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems. The Audit Committee meets at regular intervals to review the internal audit function;

- The financial statements have been prepared on a going concern basis.

Acknowledgement

The Board wishes to place on record its sincere appreciation for the continued support extended to the Company by the customers, vendors, investors, business associates, banks, government authorities and employees.

Your Directors acknowledge with gratitude the encouragement and support extended by joint venture partner and the shareholders.

On behalf of the Board

Place: Hyderabad Dr. Ramachandra N Galla

Date: May 28, 2012 Chairman


Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting their report together with the audited accounts for the financial year ended March 31, 2011.

Financial highlights

(Rs million)

Parameters / Year 2010-11 2009-10

Gross sales 20,765 16,904

Net sales 17,611 14,645 Profit before depreciation,

interest and tax (PBDIT) 2,588 2,965

Profit before interest and tax (PBIT) 2,171 2,536

Profit before tax (PBT) 2,210 2,546

Profit after tax (PAT) 1,481 1,670

Surplus brought forward 3,786 2,573

Amount available for appropriation 5,267 4,243 Appropriations:

Transfer to General Reserve 148 167 Dividend on equity capital:

Special dividend 171 -

Proposed dividend 222 248

Dividend tax 65 42

Surplus carried to balance sheet 4,661 3,786

Performance overview

The Company recorded gross sales of Rs20,765 million in 2010-11, a 23% growth over the previous fiscal year. The net sales for the year ended March 31, 2011 was at Rs17,611 million as against Rs14,645 million for the financial year 2010, an increase of 20%. The export sales improved from Rs522 million to Rs834 million – 60% growth.

The operating profit (earnings before interest, depreciation, tax and amortisation - EBIDTA) for the year stood at Rs2,588 million (previous year Rs2,965 million) representing 14.69% of net sales against 20.24% in financial year 2009-10. The lower profit was primarily on account of significant drop in price realisations in the telecom sector, despite good volume growth.

The Profit Before Tax (PBT) and Profit After Tax (PAT) for the financial year ended March 31, 2011 was at Rs2,210 million and Rs1,481 million as against Rs2,546 million and Rs1,670 million of the previous financial year respectively.

The average LME lead price was at USD 2,245/MT for the year 2010-11 as compared with USD 1,985/MT for the year 2009-10.

Industrial battery business

The Company's industrial battery unit registered a 20% volume growth during the year, amidst highly competitive market conditions. The Company touched the first ever one billion ampere hour (Ah) volume mark in 2010-11 and emerged as the market leader in both telecom and UPS businesses with 42% and 32% market share respectively.

Slowdown in network expansion and sharing of tower infrastructure reduced the market potential in telecom. This presented significant challenges both in volume and in price realisations. The Company was able to partially minimise this impact by continuing to increase its market share in the telecom sector by virtue of its ‘preferred supplier status’ with all the major telecom customers, backed by product performance of its leading brand PowerStack® and service. The Company benefited from the growing demand for its QuantaTM batteries in the UPS sector, resulting in substantial growth in sales volume during the financial year 2010-11. While the price erosion in telecom segment impacted revenues and margins significantly, favourable overall business mix aided by higher share of UPS battery volume and aggressive cost management strategies helped the Company achieve better than planned margins.

During the year, the Company introduced Amaron VoltTM Hi-Life range of premium batteries for critical application requirements in telecom networks, renewable energy sector and power control business. The Company expanded its footprint in African countries by partnering with Bharti Airtel, Africa for supplying its products to power their African telecom network.

Automotive battery business

The Company's automotive battery unit sales volume grew by 20% and 58% in four- wheeler and two-wheeler batteries respectively, over the previous financial year. Consequent to the significant increase in sales volume, the Company's market share improved to 30% in the organised automotive aftermarket. The overall growth in sales volume was achieved due to various initiatives around channel expansion in the Indian aftermarket, robust demand from OEMs and the addition of new geographies in international markets. The improved operational performance of the automotive battery unit was due to increased volumes and efficiency thereof.

During the year, the Company doubled its two-wheeler battery capacity from 1.80 million units to 3.60 million units per annum in line with market potential. The Company also placed orders for manufacturing equipment to enhance the capacity of both four-wheeler and two-wheeler batteries during 2011-12. The four-wheeler battery capacity will be enhanced from 4.20 million units to 5.60 million units per annum and two-wheeler battery capacity from 3.60 million units to 5.00 million units per annum by end September 2011.

Financial position

The Company's net worth as at March 31, 2011 was at Rs6,459 million. During the year under review, Rs1,023 million was added to the reserves. The debt of Rs950 million, as at the date of balance sheet, comprises Rs89.44 million (USD 2 million) 'External Commercial Borrowing', Rs710 million 'Interest free sales tax deferment' and Rs151 million short-term working capital borrowing. The debt to equity ratio as at March 31, 2011 was at 0.15 times, without adjusting for cash and bank balances of Rs402 million. During the year under review, CRISIL reaffirmed the rating for term loan and cash credit at "AA/Stable" and for letter of credit and bank guarantee at P1 .

The gross fixed assets (including capital work in progress) increased by Rs625 million during the year to be at Rs5,763 million (previous year - Rs5,138 million). During the year, the Company embarked on a capacity expansion programme, both in four-wheeler and two-wheeler battery plants, with a capital outlay of about Rs850 million to be completed by September 2011. The entire capital expenditure will be funded through internal accruals.

During the year under review, despite an increase in lead price and significant volume growth, the Company maintained its working capital well within the targeted limits to improve the overall working capital ratio and optimise costs.

The earnings per share for the year was at Rs17.34 as against Rs19.56 in financial year 2010, while the book value per share was at Rs76 compared with Rs64 as at March 31, 2010.

Dividend

During the year, the Company paid a special dividend (100%) of Rs2 per equity share of Rs2 each to commemorate the silver jubilee occasion. Further, your Directors are pleased to recommend a final dividend (130%) of Rs2.60 per equity share of Rs2 each for the financial year ended March 31, 2011. With this, the total dividend declared for the year is Rs4.60 per equity share – 230% dividend.

The final dividend, if approved, would involve a cash outflow of Rs222.06 million towards dividend and Rs36.88 million towards dividend tax, resulting in a total additional cash outflow of Rs258.94 million.

Transfer to reserves

In accordance with the provisions of the Companies Act, 1956 read with Companies (Transfer to Reserves) Rules, 1975, your Directors have proposed to transfer a sum of Rs148.10 million to the general reserve out of the profits earned by the Company. A sum of Rs4,661.08 million is proposed to be retained in the profit and loss account.

Awards & recognitions

Your Directors have pleasure in reporting the following awards and recognitions that your Company received during the year under review:

- First prize under the discrete manufacturing category at the CII- 4th National conference and competitions on Six Sigma.

- Employer Branding Institute a premier industry body on assessment of best people practices awarded Amara Raja the following awards:

Regional round (Southern region):

- Award for 'Best HR Strategy in line with Business'

- Award for 'Continuous Innovation in HR Strategy at Work'

- Award for 'Excellence in HR Through Technology'

National rounds:

- Award for 'Best HR Strategy in line with Business'

- Award for 'Continuous Innovation in HR Strategy at Work'

- The Supply Chain Leader 2011 award under the category dry cells and storage batteries by Industry 2.0 India SCM Conclave.

Directors

In accordance with the provisions of Section 256(1) of the Companies Act, 1956 and Article 105(a) of the Articles of Association of the Company, Mr. Shu Qing Yang and Mr. Jorge A Gonzalez, are liable to retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

A brief resume, expertise and details of other directorship(s) etc., relating to re-appointment of Directors is provided in the notice of the ensuing Annual General Meeting.

Mr. Rohit Kochhar who acted as an alternate Director to Mr. Shu Qing Yang, Director, vacated his office in terms of Section 313 of the Companies Act, 1956 with effect from July 29, 2010.

Mr. Anthony Wu Huang who acted as an alternate Director to Mr. Jorge A Gonzalez, Director, vacated his office in terms of Section 313 of the Companies Act, 1956 with effect from January 24, 2011.

The Board wishes to place on record its grateful appreciation and acknowledgement for the valuable contributions rendered by Mr. Rohit Kochhar and Mr. Anthony Wu Huang during their tenure as alternate Directors of the Company.

Auditors

M/s. E. Phalguna Kumar & Co, Chartered Accountants, Tirupati and M/s. Chevuturi Associates, Chartered Accountants, Vijayawada, the joint auditors of the Company retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

The Board, on the recommendation of the Audit Committee, proposed that M/s. E.Phalguna Kumar & Co, Chartered Accountants, Tirupati and M/s. Chevuturi Associates, Chartered Accountants, Vijayawada, be re-appointed as the joint auditors of the Company. Necessary resolution is being placed before the shareholders for their re-appointment at the ensuing Annual General Meeting. The Company also received from the auditors, certificates to the effect that their re-appointment, if made, would be in accordance with the limits as prescribed in Section 224 (1B) of the Companies Act, 1956.

Cost auditor

In terms of Section 233B of the Companies Act, 1956 and as per the directives of the Central Government,

Mr. A. V. N. S. Nageswara Rao, Hyderabad, was appointed as Cost Auditor of the Company to conduct the cost audit for the financial year 2010-11.

The Company re-appointed Mr. A. V. N. S. Nageswara Rao as Cost Auditor for the year 2011-12. The Company received the approval of the Central Government for re-appointment of Mr. A. V. N. S. Nageswara Rao as the Cost Auditor of the Company for auditing the cost records for the financial year 2011-12.

Corporate governance

The Company's Corporate Governance practices have been detailed in a separate section and are annexed to and forms part of this annual report. The certificate from a Practising Company Secretary on the compliance of Corporate Governance Code embodied in Clause 49 of the Listing Agreement is also attached as annexure and forms part of this report.

Management discussion and analysis

Management discussion and analysis report, highlighting the performance and prospects of the Company's business, forms part of this annual report.

CEO/CFO certification

As required under Clause 49 (V) of the Listing Agreement, the CEO/CFO certification on the accounts of the Company as given by Mr. Jayadev Galla, Managing Director and Mr. K. Suresh, Chief Financial Officer, forms part of this annual report.

Transfer to the investor education and protection fund

In terms of Section 205A read with Section 205C of the Companies Act, 1956, an amount of Rs2,60,321 being unclaimed/unpaid dividend pertaining to the financial year 2002-03 was transferred to the Investor Education and Protection Fund (IEPF) on September 17, 2010.

Further, the unclaimed/unpaid dividend relating to the financial year 2003-04 is due for remittance on September 16, 2011 to IEPF, during the financial year 2011-12.

Conservation of energy, technology and foreign exchange

The particulars of conservation of energy, technology absorption, foreign exchange earnings and outgo required to be disclosed under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are annexed hereto and forms part of this report.

Directors' responsibility statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that, to the best of their knowledge and belief:

- In the preparation of the profit and loss account for the financial year ended March 31, 2011 and the balance sheet as at that date ("financial statements"), applicable accounting standards have been followed;

- Appropriate accounting policies have been selected and applied consistently and such judgements and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that period;

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. To ensure this, the Company established internal control systems, consistent with its size and nature of operations. In weighing the assurance provided by any such system of internal controls its inherent limitations should be recognised. These systems are reviewed and updated on an ongoing basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems. The Audit Committee meets at regular intervals to review the internal audit function;

- The financial statements have been prepared on a going concern basis.

Acknowledgement

The Board wishes to place on record its sincere appreciation for the continued assistance and support extended to the Company by its customers, vendors, investors, business associates, banks, government authorities and employees.

Your Directors acknowledge with gratitude the encouragement and support extended by the joint venture partner and the shareholders.

On behalf of the Board

Dr. Ramachandra N Galla Chairman

Place: Milwaukee, USA Date: May 16, 2011


Mar 31, 2010

The directors have pleasure in presenting their report together with the audited accounts for the financial year ended March 31, 2010.

Financial highlights

(Rs. million) Particulars For the year ended March 31, March 31, 2010 2009 Profit after tax 1,670.33 804.79 Add: Profit brought forward 2,572.80 1,928.43 from last year Profit available for appropriation 4,243.13 2,733.22 Appropriation General reserve 167.03 80.48 Dividend (Including dividend tax) 289.77 79.94 Surplus carried to balance sheet 3786.33 2,572.80

Performance

During the year under review, the Company achieved a gross turnover of Rs. 16,910.84 million as against Rs.15,794.10 million. Other income for the year was at Rs. 170.17 million as against Rs. 80.56 million of the previous year.

The net sales for the year ended March 31, 2010 was Rs.14,652.10 million, as against Rs.13,131.79 million for the corresponding period of the previous year thereby achieving a growth of 12%. The Profit Before Tax (PBT) stood at Rs. 2,546.35 million as against Rs.1,226.59 million and Profit After Tax (PAT) at Rs. 1,670.33 million as against Rs. 804.79 million.

The financial year 2009-10 was a significant year for the Company in terms of growth in profitability. The net profit during

the year has grown by 107% over the previous financial year.

Industrial battery unit

The Company’s industrial battery unit witnessed double digit growth in sales volume during the financial year 2010. During the year, the installed capacity of Medium VRLA was enhanced from 1.20 million to 1.80 million units per annum. The Company continues to enjoy its preferred supplier status from leading telecom operators. The industrial battery unit’s two leading brands viz., PowerstackTM and QuantaTM have continued its brand preference in Telecom, UPS and other user segments viz., ITES, Railways, Power Control, Solar etc. The Company’s market share in telecom continued to increase during the year under review and was at 32% at the end of the financial year.

Automotive battery unit

During the year, the Company’s automotive battery unit revenue and volume grew by 20% over the previous financial year 2008- 09. The growth in sales volume outpaced the industry growth both for automotive and motor cycle batteries. The Company was able to maintain its market share both in OEM and aftermarket aided by its focus on channel building, realignment of its product portfolio and brand awareness programmes. The Company received the permit to use the “Diamond Mark” from the Kenya Bureau of Standards and received “Gulf Standard Organisation Certification” from the Directorate General of Specifications and Measurements, Ministry of Commerce and Industry, Sultanate of Oman, for its automotive batteries.

During the year the Company launched its second variant in the category of motor cycle batteries (with VRLA technology) under the name of “Amaron Pro Bike RiderTM BETA series” with 48 months warranty in the aftermarket. The BETA series would enhance the product portfolio in addition to the existing variant - ALPHA with 60 months warranty.

In 2009-10, the Company expanded its Amaron® network to over 200 franchisees and 18000 retailers and strengthened the presence through 700 PowerZoneTM outlets in semi-urban and rural locations.

A detailed report on both industrial and automotive battery businesses and their outlook is covered under Management Discussion and Analysis Report (MDAR) which is part of the directors’ report.

Finance

The Company’s financial position continues to be comfortable with its debt equity ratio at 0.17:1. As at March 31, 2010 the Company’s cash balance was healthy at Rs. 624.67 million. During the year under review, the Company has reduced its long term liabilities (secured loans) to Rs. 272.95 million as against Rs. 2,078.32 million of previous year. The Company pre closed the term loans availed from Citibank and Bank of Nova Scotia aided by improved cash flow.

Credit rating

During the year under review, CRISIL based on its evaluation, upgraded the rating for term loan and cash credit to “AA/Stable” from AA-/Stable and reaffirmed the ratings for the letters of credit and bank guarantees as P1+.

The improved rating affirms the Company’s financial strength and positive business scenario.

Dividend

The board of directors at their meeting held on May 19, 2010 adopted a dividend policy to pay dividend (excluding dividend tax) upto 15% of the net profit after tax (PAT) of the Company.

The board of directors recommended a dividend @ 145% on the paid up equity share capital of the Company, i.e. Rs. 2.90 per

equity share of Rs. 2/- each for the financial year ended March 31, 2010.

The dividend, if approved, would involve an outflow of Rs. 248 million towards dividend and Rs. 42 million towards dividend tax, resulting in a total cash outflow of Rs. 289 million.

The register of members and share transfer books of the Company will remain closed from July 22, 2010 to July 29, 2010 (both days inclusive) for the purpose of determination of the members entitled for dividend. The annual general meeting of the Company is scheduled to be held on Thursday, July 29, 2010 at 3.00 PM at the registered office of the Company.

Transfer to reserves

In accordance with the provisions of the Companies Act, 1956 read with Companies (Transfer to Reserves) Rules, 1975, your directors propose to transfer a sum of Rs. 167.03 million to the general reserve out of the profits earned by the Company. A sum of Rs. 3786 million is proposed to be retained in the profit and loss account.

Awards and recognitions

Your directors have pleasure in reporting the following awards and recognitions the Company received during the year under review:

1. Best Employer Award in the Electronics Industry category by ‘Employer Branding Institute of India’.

2. “Continuous Innovation in HR Strategy at Work” (National Round) and for “Excellence in HR through Technology” (Regional round) by ‘Employer Branding Institute of India’

3. “Best Telecom Equipment Manufacturer” under the category of VRLA battery by BSNL (a government undertaking) Telecom Quality Assurance Circle, Bangalore.

4. “Quality Excellence” for the year 2009 by Indus Towers Limited.

Directors

In accordance with the provisions of Section 256(1) of the Companies Act, 1956 and Article 105(a) of the Articles of Association of the Company, Mr. P. Lakshmana Rao and Mr. Nagarjun Valluripalli, are liable to retire by rotation at the ensuing annual general meeting and being eligible offer themselves for re-appointment.

The board has recommended the re-appointment of Mr. Jayadev Galla as the Managing Director of the Company for a further period of five years commencing from September 1, 2010, subject to the approval of shareholders at the ensuing annual general meeting. Necessary resolutions are being placed before the shareholders at the ensuing annual general meeting for their consideration and approval.

A brief resume, expertise and details of other directorship(s) etc., relating to appointment and reappointment of directors are provided in the notice of the ensuing annual general meeting.

Mr. Jorge A Gonzalez was appointed as director of the Company with effect from November 1, 2009 in the casual vacancy caused by the resignation of Mr. Raymond J Brown in terms of Section 262 of the Companies Act, 1956.

Mr. Raymond J. Brown had tendered his resignation and the same was accepted by the board with effect from November 1, 2009.

Mr. Frank E. Kraick, who was appointed as alternate director to Mr. Raymond J. Brown vacated his office in terms of Section 313 and related provisions of the Companies Act, 1956 with effect from November 1, 2009.

The board wishes to place on record its grateful appreciation and

acknowledgement for the valuable contributions rendered by the outgoing directors during their tenure.

Mr. Tony. W. Huang was appointed as an alternate director to Mr. Jorge A Gonzalez in terms of Section 313 of the Companies Act, 1956 with effect from May 19, 2010.

Mr. Rohit Kochhar was appointed as an alternate director to Mr. Shu Qing Yang in terms of Section 313 of the Companies Act, 1956 with effect from May 19, 2010.

Auditors

The board, on the recommendation of the audit committee, has proposed that M/s. E.Phalguna Kumar & Co, Chartered Accountants, Tirupati and M/s. Chevuturi Associates, Chartered Accountants, Vijayawada, be re-appointed as the joint statutory auditors of the Company. Necessary resolution is being placed before the shareholders for their re-appointment at the ensuing annual general meeting. The Company has also received from the auditors confirmation to the effect that their re-appointment, if made, would be in accordance with the limits as prescribed in Section 224 (1B) of the Companies Act, 1956.

Cost auditor

In terms of Section 233B of the Companies Act, 1956 and as per the Government’s directives, Mr. A.V.N.S. Nageswara Rao, was appointed as the cost auditor of the Company to conduct the cost audit for the financial year 2009-10.

For the year 2010-11 the Company re-appointed Mr. A.V.N.S. Nageswara Rao as the Cost Auditor of the Company. The Company has since received the approval of the Central Government for the appointment of Mr. A.V.N.S. Nageswara Rao as the cost auditor of the Company for auditing the cost records of the Company for the financial year 2010 -11.

Corporate Governance

The Company’s corporate governance practices have been detailed in a separate section and are annexed to and forms part of this annual report. The certificate from the auditors’ on the compliance of corporate governance code as required under clause 49 of the listing agreement is also attached as annexure and forms part of this report.

Management Discussion and Analysis

Management Discussion and Analysis Report, highlighting the performance and prospects of the Company’s business, forms part of this annual report.

CEO and CFO Certification

As required under clause 49 (V) of the listing agreement, the CEO/CFO certification on the accounts of the Company as given by Mr. Jayadev Galla, Managing Director and Mr. K. Suresh, Chief Financial Officer forms part of this annual report.

Transfer to the Investor Education and Protection Fund

In terms of Section 205A read with Section 205C of the Companies Act, 1956, an amount of Rs. 616,911/- being unpaid/unclaimed dividend pertaining to the financial year 2001-02 was transferred to the Investor Education and Protection Fund (IEPF) on October 13, 2009.

Further the unclaimed/unpaid dividend relating to the financial year 2002-03 is due for remittance on September 05, 2010 to the Investor Education and Protection Fund during the financial year 2010-11.

Fixed deposits

The Company has not accepted any deposits from the public in terms of Section 58A of the Companies Act, 1956 during the year under review and hence there were no outstanding deposits as on March 31, 2010

Health, safety and environmental protection

The Company has complied with all the applicable environmental laws and labour laws. The Company continues to be certified under ISO–14001 for its environment management system. The Company has been complying with the relevant laws and has been taking all necessary measures to protect the environment and maximise employee health and safety.

Industrial relations

During the year under review, the industrial relations remained cordial and stable. The directors wish to place on record their appreciation for the excellent cooperation received from all employees at all levels.

Particulars of Employees

The statement giving particulars of employees who were in receipt of remuneration in excess of the limits prescribed under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in the annexure to the directors’ report.

However, in terms of the provisions of section 219 (1) (b) (iv) of the Companies Act, 1956, the directors’ report is being sent to all the members of the Company, excluding the aforesaid information. The said information would be filed with the Registrar of Companies and also would be available for inspection by the members at the corporate operations office of the Company. Any member interested in obtaining such particulars may write to the Company Secretary of the Company.

Conservation of energy, technology and foreign exchange

The particulars of conservation of energy, technology absorption, foreign exchange earnings and outgo required to be disclosed under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are annexed hereto and forms part of this report.

Directors’ Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the directors confirm that, to the best of their knowledge and belief: in the preparation of the profit & loss account for the financial year ended March 31, 2010 and the balance sheet as at that date (“financial statements”), applicable accounting standards have been followed; appropriate accounting policies have been selected and applied consistently and such judgements and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that period;

proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. To ensure this, the Company has established internal control systems, consistent with its size and nature of operations. In weighing the assurance provided by any such system of internal controls its inherent limitations

should be recognised. These systems are reviewed and updated on an ongoing basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems. The audit committee meets at regular intervals to review the internal audit function; the financial statements have been prepared on a going concern basis.

Acknowledgement

The board wishes to place on record its sincere appreciation for the continued assistance and support extended to the Company by its customers, vendors, investor’s, business associates, banks, Government authorities and employees.

The directors acknowledge with gratitude the encouragement and support extended by the shareholders.

On behalf of the Board Place: Hyderabad Dr. Ramachandra N Galla Date: May 19, 2010 Chairman

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