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Directors Report of HMT Ltd.

Mar 31, 2023

The Board of Directors have pleasure in presenting the 70th Annual Report on the Business & Operations of your Company and Annual Accounts of the Company for the year 2022-23 along with the Auditors'' Report. The Comments of the Comptroller & Auditor General of India are attached to this Report.

Financial Highlights/Performance of the Company (Standalone)

Rs. in Crore
Particulars	2022-23	2021-22
Gross Revenue from Continuing Operations	51.59	12.58
Other Income	48.38	69.16
Total Income	99.97	81.74
Profit Before Depreciation and Finance Costs	17.15	48.80
Depreciation	2.11	1.95
Gross Profit/(Loss)	15.04	46.85
Finance Cost	0.13	8.50
Net profit before exceptional Items	14.91	38.35
Add: Exceptional Items	-	-
Net Profit before Tax	14.91	38.35
Provision for Tax	7.85	(0.01)
Net Profit After Tax	7.06	38.36
Profit/Loss from discontinued operations	-	-
Net Profit/(Loss) for the year	7.06	38.36
Other Comprehensive Income	0.21	1.17
Total Comprehensive Income	7.27	39.53

OPERATING RESULTS

The company''s main business portfolios included a product range of Food Processing Machines. The Food Processing Unit recorded a Production of Rs.7.00 Crore as against Rs. 6.53 Crore in the previous year,

and Sales of Rs. 43.55 Crore (including Revenue from Powder Project Rs.36.80 Cr.) compared to Rs. 6.82 Crore in the previous year. Auxiliary Business Division, Bangalore has registered a Production (Assembly of Watches) of Rs.7.25 Crore during the FY 2022-23 & registered Sales of Rs.8.04 Crore during the year 2022-23 against Rs.2.86 Crore and Rs.5.76 Crores during the previous year respectively and sales includes the Sale of Watches and tractor spare parts. The total turnover of the Company for the year 202223 stands at Rs.51.59 Crore as against Rs.12.58 Crore during 2021-22. The Profit Before Tax during the year 2022-23 is Rs. 14.91 Crore as against Rs.38.35 Crore in the previous year. The reduction of profit is mainly on account of bad debts during the year and income accounted for in the previous year in respect of withdrawal of investment provision in HMT Bearings Limited as per the dissolution order issued by NCLT. HMT Group along with its Subsidiaries achieved an aggregate production of Rs. 130.83 Crore. Revenue from the operations reported as Rs. 203.81 Crore for the year 2022-23 against Rs. 175.74 Crore of previous year. HMT Group has reported a loss of Rs. 122.98 Crore in the current year against a profit of Rs. 534.09 Crore during the previous year. The decrease in profit during the year is mainly on account of the waiver of GoI liabilities to the extent of Rs. 657.14 Crore consequent to dissolution of HMT Chinar Watches Limited and HMT Bearings Limited vide orders issued by Hon''ble National Company Law Tribunal (NCLT), accounted in the previous year.

FUTURE OUTLOOKDairy Processing Equipment Market

According to a report by IMARC Group, the dairy industry in India is expected to exhibit a CAGR of 13.2% during 2023-2028. The Indian government''s National Action Plan for Dairy Development aims to increase organised milk production from the current 20-21% to 50% by 2023-2024. The dairy industry in India is aiming to build a $355 billion industry by 2025.

However, according to a report by Expert Market Research, the Indian dairy market attained a value of USD 203.3 Billion in 2022 and is projected to reach USD 472.7 Billion by 2028. The market growth in Dairy requires support of significant infrastructure investment across processing, chilling, logistics, cattle feed etc.

The dairy machinery industry in India is expected to see steady growth in the coming years. India is the largest milk-producing country in the world, and the demand for dairy products is expected to increase in the future due to population growth, rising incomes, and changing dietary habits.

The Government of India has also taken several initiatives to support the dairy industry, such as promoting the use of modern machinery, providing subsidies to farmers for purchasing dairy equipment, and establishing milk processing plants. The dairy machinery industry in India is also adopting new technologies to improve efficiency and productivity. For example, automated milking systems, advanced milk processing technologies, and IoT-based monitoring systems are being introduced to optimize the production process and reduce costs.

Moreover, the Indian dairy industry is also becoming more organized, with the emergence of large dairy companies and cooperatives. These companies are investing in modern machinery and equipment to improve their processing capacity and meet the growing demand for dairy products.

In conclusion, the future outlook of the dairy machinery industry in India looks promising, driven by increasing demand for dairy products, government support, adoption of new technologies and the emergence of organized players in the industry.

Machine Tools Market

India''s machine tool market has grown significantly over the past decade, with a compound annual growth rate (CAGR) of over 13% from 2013 to 2019, according to a report by Research and Markets. The

market size reached USD 1.4 billion in 2022 and is expected to reach USD 2.5 billion by 2028, growing at a CAGR of around 9.4% during 2023-2028.

The growth of the machine tool market in India is primarily driven by the increasing demand for machine tools from various end-use industries such as automotive, aerospace, defence, and medical equipment manufacturing. India''s growing population and rising disposable income have also led to an increase in consumer spending on durable goods such as automobiles, which in turn has driven demand for machine tools.

The Indian government has also been taking steps to support the growth of the machine tool industry. For instance, the government launched the "Make in India" initiative in 2014 to encourage domestic manufacturing and attract foreign investment. Additionally, the government has implemented various policies to improve the ease of doing business in India, including streamlining the process for obtaining business licenses and permits.

The future of the machine tools market in India looks promising, with several factors contributing to its growth. Here are some key trends that are likely to shape the future of the machine tools market in India:

1. Government Initiatives: The Indian government has been taking several initiatives to promote domestic manufacturing, including the ''Make in India'' program. The government''s focus on boosting manufacturing in India is likely to drive demand for machine tools in the coming years.

2. Industry 4.0 and Automation: The global trend towards Industry 4.0 and automation is expected to drive demand for advanced machine tools in India. Companies in various sectors are increasingly adopting automation technologies to improve productivity, reduce costs, and enhance product quality. This is expected to create opportunities for manufacturers of advanced machine tools in India.

3. Emerging Sectors: India is witnessing the

emergence of new sectors such as electric vehicles (EVs), renewable energy, and defence manufacturing. These sectors are expected to drive demand for specialized machine tools and create new opportunities for manufacturers in the Indian machine tools market.

4. Increasing Investment: Several global companies have been investing in the Indian machine tools market, either through partnerships or by setting up manufacturing facilities in India. This is expected to drive technology transfer, enhance the capabilities of domestic manufacturers, and boost the competitiveness of the Indian machine tools market.

5. Growing Exports: India has emerged as a major exporter of machine tools, with several Indian companies exporting machine tools to various countries. The government''s focus on promoting exports is likely to create new opportunities for Indian machine tool manufacturers and further boost the growth of the industry.

In conclusion, the machine tools market in India is expected to witness robust growth in the coming years, driven by government initiatives, emerging sectors, increasing investment, and growing exports. The industry is likely to continue to evolve, with an increasing focus on automation, Industry 4.0, and specialized machine tools.

SHARE CAPITAL

The Authorized Equity Share Capital of the Company is Rs.1230 Crore and paid-up Equity Share Capital is Rs. 355.60 Crore (355601640 Equity Shares of Rs.10/- each fully paid up).

DEPOSITS

The Company has not accepted any deposits from the public and hence there is no violation of Chapter V of Companies Act 2013, and the corresponding rules made thereunder.

DIVIDEND

In view of the operating conditions of the Company, the Board has decided not to propose any dividend

to the Shareholders. Dividend Distribution Policy is available at link https://www.hmtindia.com/ policies/.

DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

During the Financial year 2022-23, the Company has not received any complaints of Sexual Harassment and no cases are pending.

FRAUD REPORTING

There was no incident of fraud reported during the year under review.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Board level CSR Committee was constituted on 12th August, 2019. The composition of the CSR Committee is provided in the Corporate Governance Report. The CSR policy is placed on the website of the Company at https://www. hmtindia.com/policies/.

The average net profits of the Company during the three immediately preceding financial years is Rs.3045.45 Lakhs, as such, the Company is required to spend at least two per cent of Rs.3045.45 Lakhs,

i.e., Rs.60.91 Lakhs on CSR activities during the FY2022-23 as per the provisions of section 135 (5) of the Companies Act, 2013.

The CSR Annual report for the FY 2022-23 are provided as Annexure-1 in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 and amendments. Details of the CSR activities undertaken during FY2022-23 are enclosed as Annexure-1A.

ENTERPRISE RISK MANAGEMENT

In terms of section 134 (3) (n) of the Companies Act, 2013 & the SEBI (LODR) Regulations 2015, the Company has formulated a "Risk Management Policy" which is placed on the Company''s website https://www.hmtindia.com/policies/.

The Board of Directors of the Company constituted the Risk Management Committee of the Board

on 12.07.2021. The composition of the Risk Management Committee is provided in the Corporate Governance Report.

PARTICULARS OF EMPLOYEES

No employees of the Company received remuneration in excess of the limits prescribed under Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 during the Financial Year 2022-23.

SUBSIDIARY COMPANIES HMT Machine Tools Limited

The Subsidiary achieved Sales of Rs.142.24 Crore during 2022-23 against Rs. 152.53 Crore in the previous year and registered Production of Rs.116.58 Crore as against Rs. 117.12 Crore in the previous year. Net loss reported is Rs. 131.65 Crore during the year 2022-23 against reported loss of Rs. 145.73 Crore in the previous year.

HMT (International) Limited

The Subsidiary achieved a turnover of Rs. 14.15 Crore during the year 2022-23 as against Rs.10.91 Crore recorded in the previous year 2021-22. The Subsidiary reported Profit Before Tax (PBT) of Rs. 0.31 Crore against Rs. 0.28 Crore reported in previous year.

SUBSIDIARIES UNDER CLOSURE

As per the Cabinet Committee of Economic Affairs (CCEA) decision during the year 2016, the operations of the subsidiaries namely HMT Watches Limited and HMT Bearings Limited have been closed.

The revenue achieved has been on account of sales/transfer of movable assets of these Subsidiaries. During the year Profit after Tax reported by HMT Watches Limited is Rs. 1.50 Crore.

DISSOLUTION OF SUBSIDIARY COMPANIES

Hon''ble National Company Law Tribunal (NCLT), Hyderabad Bench, Hyderabad passed an order for dissolution of HMT Bearings Limited from the date of order dated 20.04.2022 under section 271-272 of the Companies Act, 2013. As per NCLT order,

HMT Limited is in the process of discharge of the obligation relating to the return of capital to the minority shareholders / contributories.

ASSOCIATE /JOINT VENTURE COMPANY SUDMO-HMT Process Engineers (India) Limited

This Joint Venture Company could not transact any business during the year under review. For the financial year 2022-23, this Company incurred Net Loss of Rs 1.57 Lakhs.

Gujarat State Machine Tools Corporation Limited (GSMTC)

This Associate Company between HMT Limited and GIIC Limited has been discontinued its operations since long. Now, the Board of Directors of GIIC Limited has approved for liquidation of GSMTC which will be subject to approval from Government of Gujarat. The Board of Directors of the Company has also approved In-principal for Liquidation of GSMTC subject to the approval of the Administrative Ministry. Matter is under process.

Salient features of the financial statement of subsidiaries/associate companies/joint ventures are provided in Form AOC-1 as Annexure -2.

INDIAN ACCOUNTING STANDARDS

The Financial Statement have been prepared to comply in all material aspects with the Indian Accounting Standards ("Ind AS") notified under section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standard) Rules, 2015 and relevant amendment rules issued thereafter, as applicable to the Company and other provisions of the Act.

REDUCTION IN SHARE CAPITAL

Hon''ble National Company Law Tribunal (NCLT) vide its Order dated 16.10.2018 has confirmed/ approved reduction in share capital of the Company from Rs.1204.09 Crores to Rs.355.60 Crores by reduction of 848490000 Equity Shares of Rs.10/- each held by President of India (as per the Cabinet Approval). Registrar of Companies,

Karnataka (ROC) has registered the NCLT order on 17.11.2018 and issued "Certificate of Registration confirming the Reduction of Share Capital of HMT Ltd". However, the process of reduction of share capital in the records of Stock Exchanges, Depositories is pending for procedural compliances which are under process in consultation with Registrar and Share Transfer Agent ("RTA"). The shareholding of President of India is 279566626 of Rs.10/- each, equivalent to 78.62% shareholding in the Company as against 1128056626 equity share of Rs.10/- each shown as per RTA records. Hence there is a difference between Paid up Share Capital of the Company as per Audited Financial Statements and Shareholding Pattern provided by RTA.

CONSOLIDATED FINANCIAL STATEMENTS

As required under the Companies Act 2013 and SEBI (LODR) Regulation, 2015, Consolidated Financial Statements of the Company along with that of the Subsidiaries for the financial year 202223, conforming to the applicable Accounting Standards, are attached to this Report along with the Auditors'' Report on the same.

The financial information of each of the subsidiary companies has been furnished as part of the Consolidated Balance Sheet of the Company. Separate audited accounts of the subsidiary Companies will be made available upon request by any member of the Company interested in obtaining the same. The annual accounts and other information of each of the subsidiary companies will be available for inspection by any member at the Registered Office of the Company & on the Company''s website www.hmtindia.com.

HUMAN CAPITAL

The employee strength of the Company (HMT Limited) as on March 31, 2023, stood at 63 Nos. comprising of various categories of employees in manufacturing plants and other offices.

The number of employees on the rolls of the

Company as on March 31, 2023 in SC/ST, Exservicemen, Physically Handicapped and Women Employee Categories etc. is detailed below:

Scheduled Castes	12
Scheduled Tribes	03
Other Backward Classes	10
Ex-Servicemen	0
Persons with Disabilities	0
Women employees	16
Minorities	03

INDUSTRIAL RELATIONS

The overall Industrial Relations situation in the Company during the year remained cordial.

IMPLEMENTATION OF OFFICIAL LANGUAGE

Continuous efforts are being made by the Company towards implementation of the Official Language Act, Rules & Policy as per the directives of the Government to enhance the levels of usage of Official language in the Company. The Official Language Implementation Committee has been constituted in the Units of the Company and its Subsidiaries, including the Corporate Office at Bengaluru to monitor the implementation of the Official Language Act, Rules and Policy in the Company and its Subsidiaries.

In order to propagate the usage of Hindi as the Official Language, "HINDI DIWAS/HINDI WEEK" was observed during the month of September 2022 at all units of the Company. Various competitions in Hindi such as Chitrakatha, Impromptu Speech, Official Language Written Quiz, and Vividha competition were organized during Hindi Week for the employees of HMT Limited and its Subsidiaries working at the Corporate Head Office and participants were awarded prizes during the Grand Hindi Day celebration in the Company. A workshop was also organized during the above period for Hindi Typing. The Hindi Word of the day is displayed in a prominent place in the Company and Hindi Newspapers are being procured on daily basis to propagate the usage

of the official Language among employees. The Officers/ employees of the Company regularly take part in the meetings/ programs, Online webinars and Hindi Month Celebration of the Town Official Language Implementation Committee (TOLIC).

VIGILANCE ACTIVITIES

The Chief Vigilance Officer appointed by the Government of India heads the Corporate Vigilance Department of the company. Ministry of Heavy Industry vide its order No. 5(47)/2010-P.E.X (e.3152) dated 18.08.2023 has conveyed the extension of entrustment of additional charge of the post of Chief Vigilance Officer, HMT Limited to Ms. Kalyani Sethuraman, IRAS (94), CVO, Hindustan Aeronautics Ltd. (HAL), Bengaluru for a further period of one-year w.e.f. 04.04.2023 to 03.04.2024 or till the appointment of a regular CVO or until further order, whichever is the earliest.

The Corporate Vigilance Department carries out vigilance function in the Holding Company as well as Subsidiary Companies. Vigilance functions in the Manufacturing Units and Marketing Offices are looked after by Vigilance Officers, under the guidance of Chief Vigilance Officer.

All the Unit Vigilance Officers send their monthly Vigilance/Inspection Reports and Surprise Inspection reports to CVO. Reports so received are scrutinized at CVO Office for further action. Unit Vigilance Officers also verify Annual Property Returns submitted by the employees of the Unit.

Apart from regular inspections by Unit Vigilance Officers, CVO conducts CTE (Chief Technical Examiner at CVC) type surprise and regular inspections of high value purchase/contracts and systems by visiting various subsidiaries and Units.

Violations of rules and procedures observed during the inspection of files by CVO/DCVO/ Unit VOs were recorded and depending upon the seriousness of the deviations further actions are taken. Unit Vigilance Officers are advised to discuss deviations noticed by them during their inspection; in the quarterly Vigilance Workshop and

advice the concerned officers that the violations of rules and procedures pointed out by the Vigilance Department should not be repeated.

Emphasis was laid on preventive vigilance by striving towards strict adherence to all rules and procedures and all norms of transparency in tendering process. Some of the systems put in place by the company are:

1. Open tenders and high value limited tenders are uploaded in www.eprocure.gov.in.

2. Publishing details regarding all purchase orders /contracts concluded during the month and above the threshold value (presently Rs 5.00 lakhs). This is generally implemented by all units.

3. Application form for vendor registration along with list of items required by different Units of HMT Limited and Subsidiaries are made available on Company Website to enable the interested vendors to download the application form and submit the same to the Unit of their choice.

4. Registered with ''TREDS'' (Trade Receivables Discounting Systems) for better MSME payment process.

5. Initiative of tech platform to enhance technical expertise and capability through exchange of knowledge, experience for overall techno economic propose.

6. Efforts are being made to adopt E-Procurement process of procurement.

7. Emphasis is made towards adopting E payment mode for release of payment to suppliers and contractors. Necessary direction is issued to achieve compliance level of 80%. Presently in many units the compliance level is more than 40%.

8. Management is being persuaded to adopt integrity Pact. The matter was taken up in the 326th meeting of Board of Directors of HMTL held on 8.6.2017 and the decision of the board was "Adoption of Integrity pact in HMT Limited

and subsidiary companies and authorized the Chairman and Managing Director of the company to decide the basis for adoption of integrity pact and to do necessary acts and things as may be required for implementation of integrity pact and to inform the Board."

9. Recommended on Allotment of township quarters to be made online and implementation is in progress.

10. Quarterly vigilance workshops were organized at all manufacturing units to enhance the level of vigilance awareness among the employees and other stakeholders.

11. Efforts are made for effective implementation and usage of ''GEM'' by Training and Awareness to the departments.

12. Awareness initiatives on Vigilance to fight corruption in the organization have been uncalculated efficiently.

13. Vigilance Awareness Week 2022, Preventive

Vigilance Measures cum housekeeping activities was campaigned for 3 months from 16th Aug 2022 to 15th Nov 2022 as a precursor to VAW with the theme "Corruption free India for a developed Nation" âPTSTcnr QW PnUrTâ IX)d PTTUrTâ was observed in all Units

and Offices of HMT Limited and Subsidiary Companies as per the guidelines of CVC.

The number of inspections including surprise inspections carried out by CVC and Unit Vigilance Officers along with the number of property returns scrutinized between April 2022 to March 2023 is tabulated below:-

Inspection	Total carried out between April 2022-March 2023 (by Unit Vigilance Officers)
Periodic Inspection of Purchase Files	456
Surprise Inspection	84
Scrutiny of Annual Property Returns	1126

MANAGEMENT DISCUSSION AND ANALYSIS

A Report on Management Discussion and Analysis is appended to this Report separately as Annexure-3.

CORPORATE GOVERNANCE

Pursuant to Regulation 34 of the SEBI (LODR) Regulation, 2015, a Report on the Corporate Governance is appended as Annexure-4 to this Report along with the Compliance Certificate from the Auditor as Annexure-5.

INFORMATION REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under the Companies (Accounts) Rules, 2014 are appended as Annexure-6

DIRECTORS RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(C) of the Companies Act, 2013:

V that in the preparation of the annual financial statements for the year ended 31.03.2023, the applicable accounting standards has been followed along with proper explanation relating to material departures;

V that such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for the year ended on that date;

V that 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;

V that the annual financial statements have been prepared on a going concern basis;

V that proper internal financial controls were in place and are adequate and were operating effectively;

V that proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively;

V Since the overall performance of the Company is evaluated against the annual MoU targets set by the Department of Public Enterprises (DPE), no specific criteria is laid down for the evaluation of Board and of its Committees and the individual Directors. Since your Company being a Central Public Sector Enterprise (CPSE), the personnel policies and guidelines issued by DPE are being adopted in line with other CPSEs. Accordingly, your Company has not formulated any separate policy in respect of appointment or evaluation of senior management and key managerial personnel.

ANNUAL RETURN

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, the Company has placed a copy of the Annual Return as at March 31, 2023 on its website at https://www.hmtindia.com/ investor-relation/ar/.

AUDITORS

M/s. S.S.B & Associates, Chartered Accountants, Bengaluru were appointed as Statutory Auditors of the Company for the year 2022-23 by the Comptroller & Auditor General of India. M/s. V D Abhyankar & Associates, Chartered Accountants, was also appointed as Branch Auditor for the Food Processing Machinery Division, Aurangabad of the Company.

Replies to the observations by the Statutory Auditors in their Report are given by way of an addendum to this Report as Annexure-7

SECRETARIAL AUDIT REPORT

In terms of Section 204 of the Companies Act 2013 and rules made thereunder, the Company has appointed Shri D. Venkateswarlu, Practicing Company Secretary, to undertake the Secretarial Audit of the Company for the year 2022-23. The report of the Secretarial Auditor is appended as Annexure-8 to this report. The reply to observations of Secretarial Auditor is attached as addendum to Director''s report as Annexure-9.

SECRETARIAL AUDIT REPORT OF UNLISTED MATERIAL SUBSIDIARY

Pursuant to the provisions of Regulation 24A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Secretarial Audit Report for the Financial Year 2022-23 of HMT Machine Tools Limited & HMT (International) Limited, an Unlisted Material Subsidiaries of the Company along with replies to observations are appended as Annexure-10, 11,12 & 13 to this report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

The Company''s Business Responsibility & Sustainability Report for the year 2022-23 is appended as Annexure-14 to this report.

BOARD MEETINGS AND CHANGE IN DIRECTORS /KEY MANAGERIAL PERSONNEL

During the financial year, Ten Board meetings were held and the details are given in Corporate Governance Report.

Shri. Vijay Mittal, Joint Secretary, Ministry of Heavy Industries was appointed as Part time Official Director on the Board of HMT Limited with effect from 25th March 2022, until further orders vice Shri. Jeetendra Singh, Joint Secretary, Ministry of Heavy Industries.

Shri. A.K. Jain, Executive Director, M/s. Bharat Heavy Electricals Limited has been entrusted with the additional charge of the post of Chairman & Managing Director & Director (Finance), HMT Limited upto 24th August, 2022.

Shri. Pankaj Gupta, Executive Director, M/s. Bharat Heavy Electricals Limited has been entrusted with the additional charge of the post of Chairman & Managing Director, HMT Limited w.e.f. 25th August, 2022 to 24th November 2023, or till the joining of a regular incumbent, or until further order, whichever is earlier., by the Ministry of Heavy Industries.

Dr. Renuka Mishra, Economic Advisor, Ministry of Heavy Industries was appointed as Government Nominee Director on the Board of HMT Limited with effect from 12th September 2022, until further orders vice Shri. Vijay Mittal, Joint Secretary, Ministry of Heavy Industries.

Shri. Ramji Lal and Shri. Vishweshwar Bhat ceased to be Independent Directors in view of completion of term of three years on close of business hours on 26th January 2023.

Ms. Arti Bhatnagar, Additional Secretary & Financial Adviser, Ministry of Heavy Industries was appointed as Government Nominee Director on the Board of HMT Limited with effect from 14th February 2023, until further orders vice Shri. Shashank Priya, exSpecial Secretary & Financial Adviser, Ministry of Heavy Industries.

Except as stated above, there are no other changes to the composition of Board of Directors of the Company during the financial year.

Subsequent to the financial year, Ministry of Heavy Industries, Government of India, vide its Order No. 1-05/7/2019-PE-X (e-19281) dated 24th August, 2023, has entrusted the additional charge of the post of Director (Finance), HMT Limited, Bengaluru to Ms. Rita Saxena, General Manager (Internal Audit), BHEL, Bengaluru for a period upto 24.05.2024 or till the appointment of a regular incumbent or till further orders, whichever is the earliest, subject to

the approval of Appointments Committee of the Cabinet (ACC). Ms. Rita Saxena (DIN: 10294769), General Manager (Internal Audit), BHEL, Bengaluru has assumed the additional charge of the post of Director (Finance), HMT Limited, Bengaluru on 25th August, 2023.

Further, Ms. Mukta Shekhar (DIN: 10118859), Joint Secretary, Ministry of Heavy Industries was appointed as Government Nominee Director on the Board of HMT Limited with effect from 4th September 2023, until further orders vice Dr. Renuka Mishra, Economic Advisor, Ministry of Heavy Industries.

Ms. Arti Bhatnagar (DIN: 10065528), Ms. Rita Saxena (DIN: 10294769) and Ms. Mukta Shekhar (DIN: 10118859) are proposed for appointment as Director in terms of Article 67(4) of the Article of Association of the Company read with Section 160 of the Companies Act, 2013 in the ensuing Annual General Meeting. The Nomination and Remuneration Committee and Board of Directors has recommended their appointments.

Shri. Pankaj Gupta, Chairman and Managing Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. The Board recommends his reappointment.

Shri. Pankaj Gupta, Chairman and Managing Director (Additional Charge), Smt. Kamna Mehta, Chief Financial Officer and Shri. Kishor Kumar S, Company Secretary are the KMP''s as defined under Section 2(51) of the Companies Act, 2013 as on 31.03.2023.

DECLARATION FROM INDEPENDENT DIRECTOR & REGISTRATION IN THE DATA BANK MAINTAINED BY IICA

As per section 149(7) of the Companies Act, 2013, during FY2022-23, the Company has received declaration from Shri. R. Vishweshwar Bhat & Shri. Ramji Lal, Independent Directors of the Company.

Regarding proficiency, the Company has adopted requisite steps towards the inclusion of the

names of all Independent Directors in the data bank maintained with the Indian Institute of Corporate Affairs, Manesar (''IICA''). Accordingly, all the Independent Directors of the Company have registered themselves with IICA for the said purpose. In terms of Section 150 of the Act read with the Companies (Appointment & Qualification of Directors) Rules, 2014, as amended vide Notification No. GSR.774(E), dated 18.12.2020, since Independent Directors of the Company have served as Directors for a period of less than three (3) years on the Board of Listed Company as on the date of inclusion of their names in the database, they are required to undertake online proficiency self-assessment test unless exempted. Independent Directors have informed the Company that they will undertake the online assessment test before the due date unless exempted from the test.

CODE OF CONDUCT

A declaration by the Chairman & Managing Director for having obtained affirmation of compliance of the Code of Conduct by the Board Member (s) and Senior Management for the year ended March 31, 2023 is appended to this report as Annexure-15.

INTERNAL FINANCIAL CONTROLS

With reference to financial statements, the Company has in place adequate internal financial controls. A detailed note with respect to Internal Financial controls is given in the Management Discussion and Analysis Report.

EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

There are no Material changes and commitments affecting the financial position of the company which occurred between 31st March 2023 and date of signing of this Report.

RELATED PARTY TRANSACTIONS

The details of related party transactions are given in

the notes to the Financial Statements.

All Related Party Transactions entered into during the year were in Ordinary Course of the Business and at Arm''s Length basis. No Material Related Party Transactions, i.e., transactions exceeding 10% of the annual consolidated turnover as per the last audited financial statement, were entered into during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013, in Form AOC-2 is not applicable.

However, Board has approved to transfer the Immovable assets (Book value Rs.296.06 lakhs), accept all the legal cases and uncrystallized Contingent Liabilities upto Rs.80 crores from HMT Watches Limited, wholly owned subsidiary Company under closure, consequent to administrative approval of Ministry of Heavy Industries. Approval from the Shareholders of the Company obtained on 18th December 2022. Necessary disclosures have been made in the note to the Financial Statements.

Further, Company shall continue with the activity of disposal of immovable assets of HMT Watches Limited and transfer the sale proceeds received in this regard to Administrative Ministry/Government of India as per the Cabinet Committee of Economic Affairs ("CCEA") approval dated 13.01.2016 after deducting the applicable taxes and related expenses thereon.

PARTICULARS OF LOANS, GUARANTEES & INVESTMENTS

During FY2022-23, there were no instances of providing Guarantees and making Investments covered under the provisions of Section 186 of the Companies Act, 2013. Details of Loans covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements

DETAILS OF DIFFERENCE BETWEEN AMOUNT

OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF

There are no instances of one-time settlement during the financial year 2022-23.

STATUS ON COMPLIANCE WITH THE INSOLVENCY AND BANKRUPTCY CODE, 2016

There are no applications made or any proceeding pending against the Company under Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the financial year 2022-23

OTHER DISCLOSURES

The Register of Members and Share Transfer records both in respect of the shares held in physical and depository form are maintained by M/s. KFin Technologies Limited, the Registrars & Share Transfer Agents of the Company.

No significant and material orders have been passed by any Regulator(s) or Court(s) or Tribunal(s) impacting the going concern status and Company''s operations in future.

As on 31st March 2023, no amount is required to

be transferred to Investor Education and Protection Fund (IEPF).

During FY2022-23, maintenance of cost records as specified by the Central Government under subsection (1) of section 148 of the Companies Act, 2013 is not applicable to the Company.

ACKNOWLEDGEMENTS

Your Directors gratefully acknowledge and are thankful to the various Departments and Ministries in the Government of India, particularly the Ministry of Heavy Industry, Ministry of Corporate Affairs, Comptroller and Auditor General of India, Principal Director-Commercial Audit, Statutory and Branch Auditors, various State Governments, Foreign Collaborators, the Subsidiary Companies, Suppliers, Reserve Bank of India, UCO Bank and the valued Customers of the Company both in India and abroad for their continued co-operation and patronage.

Your Directors'' would also like to take this opportunity to express their appreciation for the hard work and sincere contributions and commitment of all the HMT employees and look forward to their continued services in pursuit of building a world class HMT.

Mar 31, 2021

recorded a Production of Rs. 15.39 Crore as against Rs.20.99 Crore in the previous year, and Sales of Rs. 18.91 Crore compared to Rs.22.02 Crore in the previous year.

Rs. In Cr.
Year	2020-21	2019-20
Production	15.39	20.99
Sales	18.91	22.02

The Board of Directors has pleasure in presenting the 68^th Annual Report on the Business & Operations of your Company and Annual Accounts of the Company for the year 2020-21 along with the Auditors'' Report. The Comments of the Comptroller & Auditor General of India are attached to this Report.

Financial summary or highlights/Performance of the Company (Standalone)

Rs. in Lakhs
Particulars	2020-21	2019-20
Gross Revenue from Continuing Operations	2346	2613
Other Income	6510	4331
Total Income	8856	6944
Profit Before Depreciation and Finance Costs	5090	2833
Depreciation	202	27
Gross Profit/(Loss)	4888	2806
Finance Cost	1730	2
Net profit before exceptional Items	3158	2804
Add: Exceptional Items	-	-
Net Profit before Tax	3158	2804
Provision for Tax	409	-
Net Profit After Tax	2749	2804
Profit/Loss from discontinued operations	_-	22014
Net Profit/(Loss) for the year	2749	24818
Other Comprehensive Income	(135)	(440)
Total Comprehensive Income	2614	24378

OPERATING RESULTS

Companyâs main business portfolios included product range of Food Processing Machines. The Company

The total turnover of the Company for the year 2020-21 stands at Rs. 23.46 Crore as against Rs.26.13 Crore during 2019-20. The Profit Before Tax during the year 2020-21 is Rs. 31.58 Crore as against Rs.28.04 Crore in the previous year.

HMT Group along with its Subsidiaries achieved an aggregate production of Rs. 176.59 Crore. Revenue from the operations reported as Rs. 203.89 Crore for the year 2020-21 against Rs. 260.30 Crore of previous year. HMT Group has incurred a loss of Rs. 110.03 Crore in the current year against a profit of Rs. 147.31 Crore during the previous year.

FUTURE OUTLOOK

Dairy Processing Equipment Market

The growth of food processing industry is fuelling the demand for equipment for the sector. The Indian food processing market has the presence of most of the global equipment manufacturing companies. The market has a promising growth potential due to several factors, including the rising production and consumption of milk and other dairy products along with increased automation in dairy product manufacturing.

Dairy processing equipment performs various operations in modern dairy farms. Some of these operations include storing, filtering, pasteurizing, and homogenizing raw milk. Dairy processing equipment can also conduct a wide range of dairy-related processes ranging from chilling raw milk, cream separation, and packaging to producing processed beverages, cultured products, concentrates and powders. In recent years, the demand for dairy processing equipment has increased, as it helps in reducing manual labour, lowering the processing time and improving the overall plant efficiency.

India has been the leading producer and consumer of dairy products worldwide since 1998 with a sustained growth in the availability of milk and milk products. Dairy activities form an essential part of the rural Indian economy, serving as an important source of employment and income. India also has the largest bovine population in the world. However, the milk production per animal is significantly low as compared to the other major dairy producers. Moreover, nearly all of the dairy produce in India is consumed domestically, with the majority of it being sold as fluid milk. Therefore, the Indian dairy industry holds tremendous potential for value-addition and overall development. According to the latest report by IMARC Group, titled âDairy Industry in India 2021 Edition: Market Size, Growth, Prices, Segments, Cooperatives, Private Dairies, Procurement and Distributionâ, the dairy market in India reached a value of INR 11,357 Billion in 2020.

Along with offering profitable business opportunities, the dairy industry in India serves as a tool of socioeconomic development. Keeping this in view, the Government of India has introduced various schemes and initiatives aimed at the development of the dairy sector in the country. Further, the Indian dairy market is expected to exhibit strong growth during the next five years. Our Company is exploring all opportunities to tap the potential.

Machine Tools Market

The engineering sector is the largest of the industrial sectors in India. It accounts for 27% of the total factories in the industrial sectors and represents 63% of the overall foreign collaborations. Indiaâs engineering sector has witnessed a remarkable growth over the last few years driven by increased investment in infrastructure and industrial production. The engineering sector, being closely associated with the manufacturing and infrastructure sectors, is of strategic importance to Indiaâs economy.

The machine tool market in India has the potential to grow by USD 1.9 billion during 2020-2024, and the marketâs growth momentum will accelerate at a CAGR of 12.78%.

The production of machine tools has been influenced by their demand across the automotive, industrial, and transportation machinery. Moreover, suppliers are focusing on the digital transformation of the machinery, owing to the shift of the era from conventional to CNC machines & further to multitasking machine. This transformation is the result of the demand for high productivity, high quality, and reduced cycle time across the end-user industry with Industry 4.0 implementation along with robotics and automation.

The machine tool industry now needs to intensify its R&D initiatives and manufacture products that user industries are looking for and which can also be sold globally. Vibrant manufacturing is vital for the countryâs growth and the measures announced in the economic package will provide much-needed liquidity for industries, promote local manufacturing, spur demand and help them steer away from uncertainties.

Development and proliferation of automation, robotics, artificial intelligence, machine learning and control solutions are presenting significant opportunities for the manufacturing industry.

While government is stressing on a self-reliant India, machine tool industry needs to continue working with new and emerging sectors such as healthcare and medical equipment, infrastructure, aerospace, defence, food processing, agricultural machinery and equipment, textile machinery, railways, power, electronics, and others.

Some of the major projects supported by the Government of India, to create investment opportunities in Indian machine tools sector are as follows:

â¢ âMake in Indiaâ is a programme designed by the Government of India to facilitate investment, foster innovation, enhance skill development, protect intellectual property and improve the manufacturing infrastructure in the country. One of the primary objectives of this initiative is to attract investments from around the world and strengthen Indiaâs manufacturing sector. It will directly impact the machine tools industry as the

industry is at the core of manufacturing. Indiaâs vision to emerge as a global manufacturing hub is closely linked to its capability in machine tools. The machine tool industry will play a significant role in making the âMake in Indiaâ initiative successful. The government is also planning large projects to enhance the infrastructure in tier 2 cities, that will directly involve the metal forming segment of the machine tool industry. Under the âMake in Indiaâ initiative, the Government of India aims to increase the share of manufacturing sector to 25% by 2022 and create 100 Mn new jobs by 2022.

â¢ The machine tools sector is included in the National Capital Goods Policy that aims at making the Indian capital goods sector competitive globally. The policy will consider the major capital goods sub-sectors such as machine tools, textile machinery, earthmoving and mining machinery, heavy electrical equipment, plastic machinery, process plant equipment, dies, moulds and press tools, printing and packaging machinery and food processing machinery as priority sectors to be developed under the ''Make in India'' initiative.

â¢ Mini Tool Room and Training Centre Scheme Government of India has planned to assist the state governments to set up âMini Tool Roomâ and training centres to meet the growing demand of machine tools and dies in the country, especially in the MSME sector.

IMPACT OF COVID-19 ON HMT LIMITED & SUBSIDIARIES

HMT being a manufacturer of Capital Goods, the impact of COVID 19 has been considerable. The impact is on three fronts

Domestic Demand

User sectors of HMT Products deferred their investments based on the economic situation. This had an impact on the performance of the Company.

Issues with Imports

The machines manufactured by the Company have an imported content of around 40% by value. For items like

CNC Controllers and Drives, Spindle Bearings, Linear Motion Guides etc., there are no domestic manufacturers and have to depend on imports. The manufacturers are also facing similar problems due to the pandemic in their countries. The schedules for receipt of items have got postponed which in turn has affected the sales performance of the Company.

International Projects

HMT (International) has secured orders for international projects some of which are in the final stages. Due to the restrictions on international travel, HMT was not able to depute their personnel for completion. Further, in some cases, customerâs representatives are to visit our units for training /pre dispatch inspection which also did not happen due to ban on international travel.

SHARE CAPITAL

The Authorized Equity Share Capital of the Company is Rs.1230 Crore and paid-up equity Share Capital is Rs. 355.60 Crore (355601640 equity shares of Rs. 10/-each fully paid up).

FIXED DEPOSITS

The Company has not accepted any deposits from the public and hence there is no violation of Chapter V of Companies Act 2013, and the corresponding rules made thereunder.

DIVIDEND

In view of the operating conditions of the Company, the Board has decided not to propose any dividend to the shareholders

DISCLOSUREAS PER THE SEXUALHARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

During the Financial year 2020-21, the Company has not received any complaints of Sexual Harassment and no cases are pending.

FRAUD REPORTING

There was no incident of fraud reported during the year under review.

during the year 2020-21 against reported loss of Rs. 98.72 Crore in previous year.

HMT (International) Limited

The Subsidiary achieved a turnover of Rs. 19.83 Crore during the year 2020-21 as against Rs. 67.15 Crore recorded in the previous year 2019-20. Continuing the trend of achieving profits, Subsidiary reported Profit Before Tax (PBT) of Rs. 1.20 Crore against Rs. 3.88 Crore reported in previous year.

SUBSIDIARIES UNDER CLOSURE

As per the CCEA decision, the operations of the subsidiaries namely HMT Watches Ltd, HMT Chinar Watches Ltd and HMT Bearings Ltd have been closed. There has been no production during the year. Revenue achieved has been on account of sales/transfer of movable assets of these Subsidiaries. During the year Profit after Tax reported by HMT Watches Limited is Rs.2.70 Crore. HMT Bearings Limited (upto 16-122020) and HMT Chinar Watches Ltd (upto 6-8-2020) have incurred a net loss of Rs. 0.08 Crore and Rs 0.11 Crore respectively during the year.

HMT Chinar Watches Limited, a wholly owned subsidiary, has been approved for voluntary liquidation on March 25, 2019, under section 59 of Insolvency and Bankruptcy code 2016 (IBC 2016). After completion of closure compliances, Insolvency Professional (IP) appointed for the purpose, has remitted the final dividend of Rs. 609.28 Lakhs and the Share Capital of Rs. 166.01 Lakhs to HMT Limited. Audited Financials as at August 6, 2020 along with the petition has been submitted before Honâble National Company Law Tribunal, Chandigarh on August 26, 2020 for dissolution of M/s. HMT Chinar Watches Limited in terms of section 59 of the Insolvency and Bankruptcy Code, 2016 read with the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulation, 2017 and waiting further directions from Honâble NCLT.

HMT Bearings Limited, a Subsidiary has submitted petition under section 271-272 of the Companies Act, 2013 before Honâble National Company Law Tribunal, Hyderabad on 19.06.2020 for voluntary winding up of the Company. Honâble NCLT, Hyderabad vide its order

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The average net profits of the Company during the three immediately preceding financial years is Rs.760 Lakhs, as such, the Company is required to spend at least two per cent of Rs.760 Lakhs, i.e., Rs.15.2 Lakhs on CSR activities during the FY2020-21 as per the provisions of section 135 (5) of the Companies Act, 2013.

The CSR activities undertaken by the Company during the Financial Year 2020-21 is provided as Annexure-1 in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 and amendments.

ENTERPRISE RISK MANAGEMENT

In terms of section 134 (3) (n) of the Companies Act, 2013 & the SEBI (LODR) Regulations 2015, the Company has formulated a âRisk Management Policyâ which is placed on the Companyâs website https://www. hmtindia.com/policies/.

Subsequent to the FY2020-21, the Board of Directors of the Company has constituted the Risk Management Committee of the Board on 12.07.2021 in line with the SEBI (LODR) Regulations, 2015.

PARTICULARS OF EMPLOYEES

SUBSIDIARY COMPANIES HMT Machine Tools Limited

The Subsidiary achieved Sales of Rs. 166.19 Crore against Rs. 176.23 Crore and attained Production of Rs. 161.20 Crore as against Rs. 213.42 Crore, in the previous year. Net loss reported is Rs. 132.79 Crore dated 16.12.2020 allowed petition and passed order for winding up of HMT Bearings Limited and also appointed Shri. Sai Ramesh Kanuparthi, Insolvency Professional (IP), from Hyderabad to act as Company Liquidator for the purpose. The Insolvency Professional has initiated the winding up proceeding.

ASSOCIATE /JOINT VENTURE COMPANY

SUDMO-HMT Process Engineers (India) Ltd.

This Joint Venture Company could not transact any business during the year under review. For the financial year 2020-21, this Company incurred Net Loss of Rs. 0.06 Lakhs.

Gujarat State Machine Tools Corporation Ltd.

This Joint Venture Company between HMT and GIIC Ltd has discontinued its operations since long. It is therefore proposed to divest from this Associate Company jointly with the JV Partner. The process of disinvestment from this Company is under consideration by the Company in consultation with the JV Partner.

Salient features of the financial statement of subsidiaries/ associate companies/joint ventures are provided in Form AOC-1 as Annexure -2.

INDIAN ACCOUNTING STANDARDS

As required under Companies (Indian Accounting Standard) Rules, 2015 (Notification No. 111(E) dated 16.02.2015 issued by Ministry of Corporate Affairs) the Company has prepared the financial statements in accordance with Indian Accounting Standards (Ind AS) with effect from financial year 2016-17.

REDUCTION IN SHARE CAPITAL

Honâble National Company Law Tribunal (NCLT) vide its Order dated 16.10.2018 has confirmed/ approved reduction in share capital of the Company from Rs. 1204.09 Crores to Rs.355.60 Crores by reduction of 848490000 Equity Shares of Rs.10/- each held by President of India (as per the Cabinet Approval). Registrar of Companies, Karnataka (ROC) has registered the NCLT order on 17.11.2018 and issued âCertificate of Registration confirming the Reduction of Share

Capital of HMT Ltdâ. However, the process of reduction of share capital in the records of Stock Exchanges, Depositories is pending for procedural compliances which are under process in consultation with Registrar and Share Transfer Agent (âRTAâ). The shareholding of President of India is 279566626 of Rs.10/- each, equivalent to 78.62% shareholding in the Company as against 1128056626 equity share of Rs.10/- each shown as per RTA records. Hence there is a difference between Paid up Share Capital of the Company as per Audited Financial Statements and Shareholding Pattern provided by RTA

CONSOLIDATED FINANCIAL STATEMENTS

As required under the Companies Act 2013 and SEBI (LODR) Regulation, 2015, Consolidated Financial Statements of the Company along with that of the Subsidiaries for the financial year 2020-21, conforming to the applicable Accounting Standards, are attached to this Report along with the Auditors'' Report on the same.

The financial information of each of the subsidiary companies has been furnished as part of the Consolidated Balance Sheet of the Company. Separate audited accounts of the subsidiary Companies will be made available upon request by any member of the Company interested in obtaining the same. The annual accounts and other information of each of the subsidiary companies will be available for inspection by any member at the registered office of the Company & in companyâs website www.hmtindia.com.

HUMAN CAPITAL

Information in accordance with the Companies Act, 2013 read with the Companies (Particulars of Employees), Rules, 1975, as amended, is NIL for the year 2020-21.

The employee strength of the Company (HMT Limited) as on March 31, 2021, stood at 80 Nos.comprising of various categories of employees in manufacturing plants and other offices.

The number of employees on the rolls of the Company as on March 31,2021, in SC/ST, Ex-servicemen, Physically Handicapped and Women Employee Categories etc. is detailed below:

Scheduled Castes	14
Scheduled Tribes	02
Other Backward Classes	15
Ex-Servicemen	01
Persons with Disabilities	02
Women employees	16
Minorities	05

INDUSTRIAL RELATIONS

The overall Industrial Relations situation in the Company during the year remained cordial.

IMPLEMENTATION OF OFFICIAL LANGUAGE

Continuous efforts are being made by the Company towards implementation of the Official Language Act, Rules & Policy as per the directives of the Government to enhance the levels of usage of Official Language in the Company. The Official Language Implementation Committee has been constituted in all the Units of the Company and its Subsidiaries, including the Corporate Office at Bengaluru to monitor implementation of the Official Language Act, Rules, Policy, etc. which meets at regular intervals in every quarter.

In order to propagate the usage of Hindi as Official Language, âHINDI DIWAS/HINDI FORTNIGHTâ was observed during the month of September 2020. Various competitions in Hindi such as Chitrakatha, Impromptu Speech, Official Language Quiz, Hindi Song Competition were organized during Hindi Fortnight and participants were awarded prizes during the grand Hindi Day celebration in the Company. A workshop was also organized during the above period for Hindi Typing. The Hindi Word of the day is displayed in prominent place in the Company and Hindi Newspapers are being procured on daily basis to propagate the usage of official Language among employees. The Officers/ employees of the Company regularly take part in the meetings/ programs, Online webinars, Hindi Month Celebration of the Town Official Language Implementation Committee (TOLIC). The Company regularly take part in the meetings, Workshop, Online webinars organized by Town Official Language Implementation Committee (TOLIC). The Employees of the Company participated

in the Joint Hindi Month Celebrated of TOLIC during August 2020 and also contributed by their Poem, Article in the Deepika Hindi Magazine Published by the TOLIC (Undertaking) Bengaluru.

Reporting on the progress of Hindi proliferation in the Company is being done periodically on Rajabhasha Vibhag portal.

VIGILANCE ACTIVITIES

The Chief Vigilance Officer appointed by the government of India heads the corporate vigilance Department of the company. Presently the post of Chief Vigilance Officer is vacant and Department of Heavy Industry vide its order No. 5(47)/2010-P.E.X dated 06.12.2019 has assigned the charge of CVO, HMT Limited to Shri Vidya Bhushan Kumar, CVO, BEML, Bangalore. The term of current CVO got expired on December 11,2020.

The Corporate Vigilance Department carries out vigilance function in the Holding Company as well as Subsidiary Companies. Vigilance function in the manufacturing Units and Marketing Offices are looked after by Vigilance Officers, under the guidance of Chief Vigilance Officer.

Violations of rules and procedures observed during the inspection of files by CVO/DCVO/Unit VOs were recorded and depending upon the seriousness of the deviations further actions are taken. Unit Vigilance Officers are advised to discuss deviations noticed by them during their inspection; in the quarterly Vigilance Workshop and advice the concerned officers that the violations of rules and procedures pointed out by the Vigilance Department should not be repeated.


Inspection	Total carried out between April 2020-March 2021 (by Unit Vigilance Officers)
Periodic Inspection of Purchase Files	1348
Surprise Inspection	298
Scrutiny of Annual Property Returns	577

Emphasis was laid on preventive vigilance by striving

towards strict adherence to all rules and procedures and

all norms of transparency in tendering process. Some of

the systems put in place by the company are:

1. Open tenders and high value limited tenders are uploaded in www.eprocure.gov.in.

2. Publishing details regarding all purchase orders / contracts concluded during the month and above the threshold value (presently Rs 5.00 lakhs). This is generally implemented by all units.

3. Application form for vendor registration along with list of items required by different Units of HMT Limited and Subsidiaries are made available on Company Website so as to enable the interested vendors to download the application form and submit the same to the Unit of their choice.

4. Registered with âTedsâ (Trade Receivables Discounting Systems) for better MSME payment process.

5. Initiative of tech platform to enhance technical expertise and capability through exchange of knowledge, experience for overall techno economic propose.

6. Efforts are being made to adopt E- Procurement process of procurement.

8. Management is being persuaded to adopt integrity Pact. The matter was taken up in the 326^th meeting of Board of Directors of HMTL held on 8.6.2017 and the decision of the board was âAdoption of Integrity pact in HMT Limited and subsidiary companies and authorized the chairman and managing Director of the company to decide the basis for adoption of integrity pact and to do necessary acts and things as may be required for implementation of integrity pact and to inform the Boardâ

9. Recommended on Allotment of township quarters to be made online and implementation is in progress.

10. Quarterly vigilance workshops were organized at all manufacturing units to enhance the level of vigilance awareness among the employees and other stakeholders.

11. Efforts are made for effective implementation and usage of âGEMâ by Training and Awareness to the departments.

12. Awareness initiatives on Vigilance to fight corruption in the organization have been uncalculated efficiently.

13. Vigilance Awareness Week 2020 with the theme âVigilant India, Prosperous India (Satark Bharat, Samriddh Bharat)â was observed in all Units and Offices of HMT Limited and Subsidiary Companies as per the guidelines of CVC.

MANAGEMENT DISCUSSION AND ANALYSIS

A Report on Management Discussion and Analysis is appended to this Report separately as Annexure-3.

CORPORATE GOVERNANCE

INFORMATION REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under the Companies (Disclosures of Particulars) Rules, 1988 are appended as Annexure-6

DIRECTORS RESPONSIBILITY STATEMENT

â¢ that in the preparation of the annual financial statements for the year ended 31.03.2021, the applicable accounting standards has been followed along with proper explanation relating to material departures;

â¢ that such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for the year ended on that date;

â¢ that 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;

â¢ that the annual financial statements have been prepared on a going concern basis;

â¢ that proper internal financial controls were in place and are adequate and were operating effectively;

â¢ that proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively;

â¢ Since the overall performance of the Company is evaluated against the annual MoU targets set

by the Department of Public Enterprises (DPE), no specific criteria is laid down for the evaluation of Board and of its Committees and the individual Directors. Since your Company being a Central Public Sector Enterprise (CPSE), the personnel policies and guidelines issued by DPE are being adopted in line with other CPSEs. Accordingly, your Company has not formulated any separate policy in respect of appointment or evaluation of senior management and key managerial personnel.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, the Company has placed a copy of the Annual Return as at March 31, 2021 on its website at https://www.hmtindia.com/annual-general-meeting/.By virtue of amendment to Section 92(3) of the Companies Act, 2013, the Company is not required to provide extract of Annual Return (Form MGT-9) as part of the Boardâs report.

AUDITORS

M/s. S.S.B & Associates, Chartered Accountant, Bengaluru were appointed as Statutory Auditors of the Company for the year 2020-21 by the Comptroller & Auditor General of India. M/s. Modi & Agrawal, Chartered Accountant, was also appointed as Branch Auditor for the Food Processing Machinery Division, Aurangabad of the Company.

Replies to the observations by the Statutory Auditors in their Report are given by way of an addendum to this Report as Annexure-7

SECRETARIAL AUDIT REPORT

In terms of Section 204 of the Companies Act 2013 and rules made thereunder, the Company has appointed M/s.S.Kedarnath & Associates, Practicing Company Secretary, to undertake the Secretarial Audit of the Company for the year 2020-21. The report of the Secretarial Auditor is appended as Annexure-8 to this report. The reply to observations of Secretarial Auditor is attached as addendum to Directorâs report as Annexure-9.

BUSINESS RESPONSIBILITY REPORT

The Companyâs Business Responsibility Report for the year 2020-21 is appended as Annexure-10 to this report.

BOARD MEETINGS AND CHANGE IN DIRECTORS/KEY MANAGERIAL PERSONNEL

During the financial year, Four Board meetings were held and the details are given in Corporate Governance Report.

Shri. Amit Varadan, Joint Secretary, Ministry of Heavy Industries was appointed as Part time Official Director on the Board of HMT Limited with effect from 1^st September 2020 until further orders vice Shri. Pravin Agrawal,Joint Secretary.

Ms. Sujata Sharma,Sr. Economic Adviser, Ministry of Heavy Industries was appointed as Part time Official Director on the Board of HMT Limited with effect from 30th September 2020, until further orders vice Shri. Amit Varadan, Joint Secretary.

Except as stated above, there are no other changes to the composition of Board of Directors of the Company during the financial year.

Subsequent to the financial year, Shri. Jeetendra Singh, Joint Secretary, Ministry of Heavy Industries was appointed as Part time Official Director on the Board of HMT Limited with effect from 18th June 2021, until further orders vice Smt. Sujata Sharma, Sr. Economic Adviser, Ministry of Heavy Industries.

Shri. S. Girish Kumar ceases to be Chairman & Managing Director of the Company upon attaining the age of superannuation w.e.f. 31.07.2021. Shri. S. Girish Kumar, Chairman & Managing Director of the Company was holding the Additional Charge of the post of Director (Finance), HMT Limited upto 31.07.2021.

Ministry of Heavy Industries vide its order dated 30th July, 2021 has conveyed the approval of the Competent Authority for entrusting the additional charge of the post of Chairman & Managing Director of HMT Limited to Shri. A.K. Jain, Executive Director, Bharat Heavy Electricals Limited, Electronic Division, Bengaluru for a

period of six months w.e.f. 01.08.2021 to 31.01.2022, or until further order, whichever is earlier.

Shri Jeetendra Singh (DIN:09207792) and

Shri. A.K.Jain (DIN: 09262984) are proposed for appointment as Directors in terms of Article 67(4) of the Article of Association of the Company read with Section 160 of the Companies Act, 2013 in the ensuing Annual General Meeting for which a notice has been received from the Member.

Shri. Shashank Priya, Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. The Board recommends his re-appointment.

Shri. S Girish Kumar, Chairman and Managing Director, Ms. Kamna Mehta, Chief Financial Officer and Shri. Kishor Kumar S, Company Secretary are the KMPâs as defined under Section 2 (51) of the Companies Act, 2013 as on 31.03.2021.

DECLARATION FROM INDEPENDENT DIRECTOR

As per section 149(7) of the Companies Act, 2013, During the FY2020-21, the Company has received declaration from Smt. Neera Tomar, Shri. R.Vishweshwar Bhat & Shri. Ramji Lal, Independent Directors of the Company. Independent Directors of the Company have registered themselves with Independent Directors databank in compliance with Companies (Creation and Maintenance of database of Independent Directors) Rules, 2019 and Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019.

CODE OF CONDUCT

INTERNAL FINANCIAL CONTROLS

EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

There are no Material changes and commitments affecting the financial position of the company which have occurred between 31^st March 2021 and date of signing of this Report.

RELATED PARTY TRANSACTIONS

The details of related party transactions are given in the notes to the Financial Statements.

All Related Party Transactions entered into during the year were in Ordinary Course of the Business and at Armâs Length basis. No Material Related Party Transactions, i.e., transactions exceeding 10% of the annual consolidated turnover as per the last audited financial statement, were entered into during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act, 2013, in Form AOC-2 is not applicable.

PARTICULARS OF LOANS, GUARANTEES & INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements

DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF

There are no instances of one-time settlement during

tha financial \/oar OHOH-OI

STATUS ON COMPLIANCE WITH THE INSOLVENCY & BANKRUPTCY CODE, 2016

There are no applications made or any proceeding pending against the Company under Insolvency & Bankruptcy Code, 2016 (31 of 2016) during the financial year 2020-21.

OTHER DISCLOSURES

The Register of Members and Share Transfer records both in respect of the shares held in physical and depository form are maintained by M/s. KFin Technologies Pvt. Ltd, the Registrars & Share Transfer Agents of the Company.

No significant and material orders have been passed by any Regulator(s) or Court(s) or Tribunal(s) impacting the going concern status and Company''s operations in future

As on 31st March 2021, no amount is required to be transferred to Investor Education and Protection Fund (IEPF).

ACKNOWLEDGEMENTS

Your Directors would also like to take this opportunity to express their appreciation for the hard work and sincere contributions and commitment of all the HMT employees and look forward to their continued services in pursuit of building a world class HMT.

For and on behalf of the Board of Directors

Place: Bengaluru (A.K. Jain)

Date: 04.10.2021 Chairman & Managing Director

(Addl. Charge)

Mar 31, 2018

DIRECTORSâ REPORT

The Members,

HMT Limited Bangalore

Dear Members,

The Board of Directors has pleasure in presenting the 65^th Annual Report on the Business & Operations of your Company and Annual Accounts of the Company for the year 2017-18 along with the Auditorsâ Report. The Comments of the Comptroller & Auditor General of India are attached to this Report.

Financial summary or highlights / Performance of the Company (Standalone)

Rs. in Lakhs

Particulars	2017-18	2016-17
Gross Revenue from continuing Operations	1480	1043
Profit Before Depreciation and Finance Costs	603	(4227)
Depreciation	25	32
Gross Profit/(Loss)	578	(4259)
Finance Cost	212	288
Net profit before exceptional Items and PPA	366	(4547)
Add : Exceptional Items	-	531
Less : Prior Period Adjustments
Net Profit before Tax	366	(4016)
Provision for Tax	-	(1861)
Net Profit After Tax	366	(2155)
Profit/Loss from discontinued operations	(1083)	(21794)
Net Profit/(Loss) for the year	(717)	(23949)
Other Comprehensive Income	512	349
Total Comprehensive Income	(205)	(23600)

BUSINESS SCENARIO:

As per the provisional estimates of national income released by Central Statistics Office on 31st May 2018, the growth rate of Gross Domestic Product (GDP) at constant (2011-12) prices for the year 2017-18 is estimated at 6.7 per cent, as compared to the growth of 7.1 per cent in 2016-17.

The growth in Gross Value Added (GVA) at constant basic prices for the year 2017-18 is estimated at 6.5 per cent, as compared to 6.6 per cent in 2016-17. At the sectoral level, agriculture, industry and services sectors grew at the rate of 3.4 per cent, 5.5 per cent and 7.9 per cent respectively in 2017-18.

The growth in overall IIP (with base 2011-12) was 4.9 per cent in April 2018, as compared to a growth of 3.2 per cent recorded in April 2017. The IIP growth during 2017-18, was 4.3 per cent, as compared to growth of 4.6 per cent during

2016-17. Production of eight core infrastructure industries grew by 4.7 per cent in April 2018, as compared to 2.6 per cent in April 2017.

The manufacturing sector grew by 5.2 per cent in April 2018, as compared to the growth of 2.9 per cent in April 2017. The manufacturing sectorâs growth during 2017-18 was 4.5 per cent, as compared to growth of 4.4 per cent during 2016-17.

Production of eight core infrastructure industries grew by 4.7 per cent in April 2018, as compared to 2.6 per cent in April 2017. During 2017-18, the production in eight core industries grew by 4.3 per cent, as compared to the growth of 4.8 per cent in corresponding period of previous year.

The value of merchandise exports and imports increased by 20.2 per cent and 14.9 per cent respectively in US dollar terms in May 2018. During May 2018, oil imports increased by 49.5 per cent and non-oil imports increased by 6.0 per cent over May 2017.

OPERATING RESULTS:

Companyâs main business portfolios included product range of Food Processing Machines. The Company recorded a Production of Rs.12.53 Crore (121 Nos of Food Processing Machines) as against Rs. 9.58 Crore (437 Nos of Food Processing Machines), in the previous year, and Sales of Rs 11.32 Crore (107 Nos of Food Processing Machines) compared to Rs 10.14 Crore (excluding Excise Duty) (475 Nos of Food Processing Machines) in the previous year.

Rs. In Cr.

Year	2017-18		2016-17
	Nos.	Value	Nos.	Value
Production	121	12.53	437	9.58
Sales	107	11.32	475	10.14

Further, consequent upon closure of business operations of HMT Watches Limited, the stock of finished goods (Watches and Watch components) lying at Global Warehouse of HMT Watches Limited was transferred to the Common Service Division of Holding Company and the Company has taken up sale of watches through two Company owned Showrooms as well as through online sales. The sales of watches generated revenues of Rs. 3.45 Crore during the year 2017-18.

The total turnover of the Company for the year 2017-18 stands at Rs. 14.77 Crore as against Rs. 10.14 Crore (excluding Excise Duty) during 2016-17. The PBT for the year 2017-18 is Rs. 3.66 Crore as against loss of Rs. (40.16) Crore in the previous year.

HMT Group along with its Subsidiaries achieved an aggregate Production of Rs.175.20 Crore. Revenue from the operations reported as Rs 202.41 Crore for the year 2017-18 against Rs. 215.36 Crore of previous year. HMT Group incurred loss of Rs.142.13 Crore against previous year loss of Rs. 540.97 Crore.

FUTURE OUTLOOK:

Food Processing Machinery

The contribution of the food processing sector to Gross Value Added (GVA), employment and investments is significant. It is estimated that the gross value of plant and machinery deployed in food processing sector, by the year 2024-25 will be Rs. 344867 Cr.

The sub sector manufacturing dairy products over seven years, from 2008-09 to 2014-15 had a compounded annual growth rate of 13 per cent in fixed capital and 16 per cent in total output. This reflects huge capital deployment in the segment as well as growth in the output for the segment. Projecting the growth of the segment for the next 10 years at the current growth rate of 13 per cent, the investment in fixed capital is estimated to be Rs. 66124 Cr. by the year 2024-25.

The growth of food processing industry is fuelling the demand for equipment for the sector. The Indian food processing market has the presence of most of the global equipment manufacturing companies. Factoring the growth for gross value of dairy plant and machinery at 81 per cent of fixed capital, the expected size of the segment is estimated to be Rs. 53566 Cr. by the year 2024-25.

According to the database of the Department of Commerce, Government of India, India imported Rs. 1092 Cr. worth of food processing plant and machinery in the year 2016-17, out of which the import for dairy sector equipment was Rs. 113 Cr.

Machine Tools Market in India:

The continued investment by the government in public infrastructure is helping the economy to grow. The automotive sector is also steadily picking up which is expected to give boost to MSMEâs in the country. The development of MSMEâs is also one of the principle objectives of the Government. All this in turn is expected to boost the demand for machine tools during 2018-19.

India stands 12^th in production and 8^th in the consumption of machine tools in the world as per the 2017 Gardner Business Media survey. Demand for machine tools accrues from the manufacturers of primary goods and intermediate goods. The primary user industries include the automotive sector, capital goods sector and consumer durables sector. Prominent users of machine tools in the intermediate goods sector include the auto components, the ball and roller bearings and electronic components. Sectors like defense and industrial intermediates recorded a good growth in turnover during 2017-18.

The increasing domestic demand which is not currently met by domestic production indicates the vast business potential available within the country for machine tools. Further as per IMTMA during the year 2017-18 there is growth of around 25% in Indian Machine Tools Industry and indications show a good order book going into 2018-19 which augurs well for the industry. IMTMA projected good growth of Automobiles and auto components sectors as well as investments in infrastructure section, hence machine tool industry can expect a healthy growth in the near terms from customer segments such as Defence, Aerospace, Railways etc in addition to particularly strengthening Machine Tool Industry to meet challenges of disruptions such as additive Manufacturing, EVs etc. This growth in various sectors presents a positive outlook for improving the companyâs business during 2018-19.

DIVIDEND & PROVISIONS

Owing to the losses incurred during the year, the Directors are unable to recommend any dividend on the paid up equity share capital of the Company.

SHARE CAPITAL

The Authorized Share Capital of the Company is Rs. 2100 Crore and Paid up equity Share Capital is Rs. 1204.09 Crore (120,40,91,640 equity shares of Rs. 10/- each fully paid up).

FIXED DEPOSITS

The Company has not accepted any deposits from the public and hence there is no violation of Chapter V of Companies Act 2013, and the corresponding rules made there under

Disclosure pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended

The statement showing the details of top ten employees in terms of remuneration drawn as per rule 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule 2014 is in the Annexure.

Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has adopted a policy on prevention, prohibition and redressal of Sexual Harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. During the Financial year 2017-18, the Company has not received any complaints of Sexual Harassment.

FRAUD REPORTING

There was no incident of fraud reported during the year under review.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Every Company having Net worth of Rs. 500 Crore or more, or turnover of Rs. 1000 Crore or a net profit of Rs. 5 Crore or more during the immediately preceding financial year shall constitute the CSR Committee of the Board. The Company does not meet any of these criteria during immediately preceding financial year. Hence, CSR Committee has not been constituted.

ENTERPRISE RISK MANAGEMENT

In order to have a better reporting system on various risk faced by the Company and to assess such risk for taking appropriate action in a timely manner, the Company has in place Guidelines on Risk Management. In terms of section 134 (3) (n) of the Companies Act, 2013 & the SEBI (LODR) Regulations 2015, the Company has formulated âRisk Management Policyâ on 19.06.2018 and the policy is placed on the Companyâs website www.hmtindia.com.

PARTICULAR OF EMPLOYEES

No employees of the Company received remuneration in excess of the limits prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

SUBSIDIARY COMPANIES

HMT Machine Tools Limited

The Subsidiary achieved Sales of Rs.168.83 Crore against Rs. 176.90 Crore (excluding excise duty) in the previous year and Production attained is of Rs. 163.15 Crore as against Rs. 183.30 Crore, in the previous year. Net loss reported is Rs. 125.42 Crore during the year 2017-18 against reported loss of Rs 127.95 Crore in previous year.

HMT (International) Limited

The Subsidiary achieved a turnover of Rs. 24.95 Crore during the year 2017-18 as against Rs. 23.98 Crore recorded in the previous year 2016-17. New Order procurement during the year is Rs. 36.73 Crore as against Rs. 20.19 Crore achieved in the previous year. Continuing the trend of achieving profits, Subsidiary reported Profit before Tax (PBT) of Rs. 0.01 Crore against Rs. 0.26 Crore reported in previous year.

SUBSIDIARIES UNDER CLOSURE:

As per the CCEA decision, the operations of the subsidiaries namely HMT Watches Ltd, HMT Chinar Watches Ltd and HMT Bearings Ltd have been closed. There has been no production during the year. Revenue achieved has been on account of sales/transfer of movable assets of these Subsidiaries. During the year net loss incurred by HMT Watches Limited is Rs.13.67 Crore and by HMT Bearings Limited is Rs.1.27 Crore. HMT Chinar Watches Limited has achieved profit of Rs. 0.01 Crore.

ASSOCIATE /JOINT VENTURE COMPANY

SUDMO-HMT Process Engineers (India) Limited

This Joint Venture Company could not transact any business during the year under review. For the financial year 2017-18, this Company showed a Profit after tax of Rs 0.65 Lakhs only on account of the interest income of Rs 3.31 Lakhs, on the fixed deposits kept with the Banks.

Gujarat State Machine Tools Corporation Ltd

Salient features of the financial statement of subsidiaries/ associate companies/joint ventures are provided in Form AOC-1 as annexure.

INDIAN ACCOUNTING STANDARDS

As required under Companies (Indian Accounting Standard) Rules, 2015 (Notification No. 111(E) dated 16.02.2015 issued by Ministry of corporate affairs) the Company has prepared the financial statements in accordance with Indian Accounting Standards(Ind AS) with effect from Financial year 2016-17 along with comparatives for the previous year 2015-16.

CONSOLIDATED FINANCIAL STATEMENTS

As required under the Companies Act 2013 and SEBI (LODR) Regulation, 2015, Consolidated Financial Statements of the Company along with that of the

Subsidiaries for the financial year 2017-18, conforming to the applicable Accounting Standards, are attached to this Report along with the Auditorsâ Report on the same.

The financial information of each of the subsidiary companies has been furnished as part of the Consolidated Balance Sheet of the Company. Separate audited accounts of the subsidiary Companies will be made available upon request by any member of the Company interested in obtaining the same. The annual accounts and other information of each of the subsidiary companies will be available for inspection by any member at the registered office of the Company & also available at companyâs website www.hmtindia.com.

HUMAN CAPITAL

Information in accordance with the Companies Act, 2013 read with the Companies (Particulars of Employees), Rules, 1975, as amended, is NIL for the year 2017-18.

The employee strength of the Company as on March 31, 2018, stood at 103 Nos comprising of various categories of employees in manufacturing plants and other offices in technical and other professional areas.

The number of employees on the rolls of the Company as on March 31, 2018 in SC/ST, Ex-servicemen, Physically Handicapped and Women Employee Categories etc. is detailed below:

Scheduled Castes	17
Scheduled Tribes	02
Other Backward Classes	15
Ex-Servicemen	01
Persons with Disabilities	04
Women employees	13
Minorities	06

INDUSTRIAL RELATIONS

The overall Industrial Relations situation in the Company during the year remained cordial.

IMPLEMENTATION OF OFFICIAL LANGUAGE

Continuous efforts are being made by the Company towards implementation of Official Language Act, Rules & Policy as per the directives of the Government to enhance the levels of usage. The Official Language Implementation Committee have been constituted in all the Units of the Company and its Subsidiaries, including the Corporate Office at Bangalore to monitor implementation of Official Language Act, Rules, Policy, etc. which meets at regular intervals in every quarter.

In order to propagate the usage of Hindi as Official Language, âHINDI DIWAS/HINDI FORTNIGHTâ was observed during the month of September. Various competitions in Hindi such as Hindi Story narration, Hindi News Paper Reading, Hindi Quiz, Hindi Conversation, Hindi Antakshari, etc., were organized and participants were awarded prizes. A workshop was organised during the above period. The Hindi Magazines/ Newspapers are being procured to propagate the usage of Hindi among employees. The concerned Officers of the Company regularly take part in the meetings of the Town Official Language Implementation Committee.

Reporting on progress of Hindi proliferation in the Company is being done periodically on Rajabhasha Vibhag portal.

VIGILANCE ACTIVITIES

Chief Vigilance Officer (CVO) appointed by the Government of India heads the Corporate Vigilance Department of the Company. Presently, CVO, Engineering Projects India Limited (EPIL) has been assigned with the additional charge of CVO HMT Limited.

All the Unit Vigilance Officers send their monthly Vigilance / Inspection Reports and Surprise Inspection reports to CVO. Reports so received are scrutinized at CVO Office for further action. Unit Vigilance Officers also verify Annual Property Returns submitted by the employees of the Unit.

Apart from regular inspections by Unit Vigilance Officers, CVO conducts CTE (Chief Technical Examiner at CVC) type surprise and regular inspections of high value purchase/ contracts and systems by visiting various subsidiaries and Units.

Violations of rules and procedures observed during the inspection of files by CVO/Dy. CVO/Unit VOs were recorded and depending upon the seriousness of the deviations, further actions are taken. Unit Vigilance Officers are advised to discuss deviations noticed by them during their inspection, in the quarterly Vigilance Workshop and advice the concerned officers that the violations of rules and procedures pointed out by the Vigilance Department should not be repeated and all the concerned officers should comply with CVC and Company Purchase Manual guidelines.

Emphasis was laid on preventive vigilance by striving towards strict adherence to all rules and procedure and all norms of transparency in tendering process. Based on CVCâs guidelines for âImproving Vigilance administration by leveraging technology and increasing transparency through effective use of websiteâ necessary directions were given by CVO for implementation of the same. Some of the systems put in place by the Company are:

1. Uploading of all open tenders and high value Limited Tenders on www.tenders.gov.in (Website of GOI).

2. Publishing details regarding all purchase orders / contracts concluded during the month of and above the threshold value (presently Rs 5.00 lakhs). This is generally followed by all manufacturing Units.

3. Application form for vendor registration along with list of items required by Units of HMT Limited and Subsidiaries are made available on Company Website so as to enable the interested vendors to download the application form and submit the same to the Unit of their choice.

4. Management is in a process of adopting E-procurement process.

5. Management is in a process of adopting Integrity Pact.

6. In many of the units / Subsidiary, E-payment mode to suppliers is adopted and compliance level is 30 to 85%.

7. Quarterly vigilance workshops were organized at all manufacturing units to enhance the level of vigilance awareness among the employees.

8. Vigilance Awareness Week 2017 with the theme âMy Vision-Corruption Free Indiaâ was observed in all Units and Offices of HMT Limited and Subsidiary Companies as per the guidelines of CVC.

9. Number of inspections including surprise inspections carried out by Unit Vigilance Officers and number of Annual Property Returns scrutinized between April

2017 to March 2018 is tabulated below:-

Inspection	Total carried out between April 2017-March 2018 (by Unit Vigilance Officers)
Periodic Inspection of purchase files	1082
Surprise Inspection	225
Scrutiny of Annual Property Returns	685

CORPORATE GOVERNANCE

Pursuant to Regulation 34 of the SEBI (LODR) Regulation, 2015, a Report on the Corporate Governance is annexed as part of this Report along with the Compliance Certificate from the Auditor. A Report on Management Discussion and Analysis is also appended to this Report separately. Further, a declaration by the Chairman & Managing Director for having obtained affirmation of compliance of the Code of Conduct by the Board Member (s) and Senior Management for the year ended March 31, 2018, is also appended.

The Register of Members and Share Transfer Records both in respect of the shares held in physical and depository form are maintained by Karvy Computershare Private Limited, the Registrars & Share Transfer Agents of the Company.

INFORMATION REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

DIRECTORS RESPONSIBILITY STATEMENT

- that in the preparation of the annual financial statements for the year ended 31.03.2018, the applicable accounting standards has been followed along with proper explanation relating to material departures;

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

- that 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;

-that the annual financial statements have been prepared on a going concern basis;

- that proper internal financial controls were in place and are adequate and were operating effectively;

- that proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively;

- Since the overall performance of the Company is evaluated against the annual MoU targets set

EXTRACT OF ANNUAL RETURN

In terms of Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in the prescribed form are placed as annexure MGT-9 to this Report

AUDITORS

M/s. B. K. Ramadhyani & Co., LLP were appointed as Statutory Auditors of the Company for the year 2017-18 by the Comptroller & Auditor General of India. Two firms of Chartered Accountants were also appointed as Branch Auditors for the other Units/Divisions of the Company.

Replies to the observations by the Statutory Auditors in their Report are given by way of an addendum to this Report.

SECRETARIAL AUDIT REPORT

In terms of Section 204 of the Companies Act 2013 and Rules made thereunder Mr. S. Viswanathan, Practicing Company Secretary has been appointed as Secretarial Auditor of the Company. The report of the Secretarial Auditors is enclosed as Annexure to this report along with replies. The report is self-explanatory and do not call for any further comments.

BOARD MEETINGS AND CHANGE IN DIRECTORS/KEY MANAGERIAL PERSONNEL

During the financial year, Four Board meetings were held and the details are given in Corporate Governance Report.

As stated in the previous year Directorsâ Report, Shri. S. Girish Kumar, Managing Director of HMT (International) Limited was assigned the additional charge of the post of Chairman and Managing Director of HMT Limited with effect from 1st December, 2013. Further, vide Administrative Ministryâs Order No. I-05/18/2015-PE.X dated 3rd April, 2017, Shri. S. Girish Kumar has been appointed as Chairman & Managing Director of the Company for a period of five years, who has assumed charge of the post on 21st April, 2017.

Except as stated above, there are no other changes to the composition of Board of Directors of the Company during the financial year.

Smt. Shashi B Srivastava, Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for reappointment.

Further, the Company has appointed Mr. Kishor Kumar S as Company Secretary of the Company with effect from 8th June, 2017 and designated as Compliance Officer. Shri. Bhaskara Gowdar, Assistant General Manager - Corporate Finance of the Company as the Chief Financial Officer (CFO) with effect from 29th August, 2017.

Shri. S Girish Kumar, Chairman and Managing Director, Smt. Shashi B Srivastava, Director Finance, Shri. Bhaskara Gowdar, Chief Financial Officer and Shri. Kishor Kumar S, Company Secretary are the KMPâs as defined under the Section 2 (51) of the Companies Act, 2013 during the financial year.

Subsequent to the financial year, the Company has appointed Shri CA. Hitesh Goyal, Deputy Manager (Finance) as Chief Financial Officer of the Company with effect from July 1, 2018 in place of Shri. Bhaskara Gowdar.

DECLARATION FROM INDEPENDENT DIRECTOR

As per section 149(7) of the Companies Act, 2013, the Company has received declaration from Shri. Ravindra Singh, Independent Director of the Company.

INTERNAL FINANCIAL CONTROLS

EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

There are no Material changes and commitments affecting the financial position of the company which have occurred between 31st March 2018 and date of signing of this Report.

RELATED PARTY TRANSACTIONS

The details of related party transactions are given in the notes to the Financial Statements.

All Related Party Transactions entered during the year were in Ordinary Course of the Business and at Armâs Length basis. No Material Related Party Transactions, i.e. transactions exceeding 10% of the annual consolidated turnover as per the last audited financial statement, were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013, in Form AOC-2 is not applicable.

PARTICULARS OF LOANS, GUARANTEES & INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements

ACKNOWLEDGEMENTS

Your Directors are thankful to the various Departments and Ministries in the Government of India, particularly the Department of Heavy Industry, Ministry of Corporate Affairs, Comptroller and Auditor General of India, Principal Director-Commercial Audit, Statutory and Branch Auditors, various State Governments, Foreign Collaborators, the Subsidiary Companies, Suppliers, Reserve Bank of India, the Consortium of Banks lead by UCO Bank and the valued Customers of the Company both in India and abroad for their continued co-operation and patronage.

Your Directors would also like to take this opportunity to express their appreciation for the contributions made by the Companyâs employees and look forward to their continued services in pursuit of building a world class Indian Company.

For and on behalf of the Board of Directors

(S.Girish Kumar)

Chairman & Managing Director

Place: New Delhi

Date: 09-08-2018

Mar 31, 2017

The Members,

HMT Limited Bangalore

Dear Members,

The Board of Directors has pleasure in presenting the 64^th Annual Report on the Business & Operations of your Company and Annual Accounts of the Company for the year 2016-17 along with the Auditorsâ Report. The Comments of the Comptroller & Auditor General of India are attached to this Report.

Financial summary or highlights / Performance of the Company (Standalone)

Rs. in Lakhs

Particulars	2016-17	2015-16
Gross Revenue from continuing Operations	1043	726
Profit Before Depreciation and Finance Costs	(4227)	9375
Depreciation	32	27
Gross Profit/(Loss)	(4259)	9348
Finance Cost	288	297
Net profit before exceptional Items and PPA	(4547)	9051
Add : Exceptional Items	531	-
Less : Prior Period Adjustments
Net Profit before Tax	(4016)	9051
Provision for Tax	(1861)	-
Net Profit After Tax	(2155)	9051
Profit/Loss from discontinued operations	(21794)	(10765)
Net Profit/(Loss) for the year	(23949)	(1714)

OPERATING RESULTS:

Consequent to the decision of the Government for closure of the Companyâs Tractor Business, the main business portfolio now is Food Processing Machinery. The Food Processing Machinery business recorded a positive Gross Margin with a growth of 35% in production (Rs.9.58 Crore in 2016-17 as against Rs.7.10 Crore in the previous year), and 47% in Sales (Rs.10.14 Crore in 2016-17 as against Rs.6.94 Crore in the previous year without excise duty).

However, your Company had to face severe pressure on performance during the year due to lack of working capital.

Your Company recorded a Production of Rs.19.38 Crore (188 Nos. of Tractors & 437 Nos of Food Processing Machineries) as against Rs.37.18 Crore (633 Nos. of Tractors & 210 Nos of Food Processing Machineries), in the previous year, and Sales of Rs 22.90 Crore (215 Nos. of Tractors and 475 Nos of Food Processing Machineries) compared to Rs 45.43 Crore (733 Tractors and 185 Nos. Food Processing Machines) in the previous year.

HMT Group along with its Subsidiaries achieved an aggregate Production of Rs. 193.41 Crore. Revenue from the operations reported as Rs.215.36 Cr. for the year 2016-17 against Rs. 251.91 Cr. of previous year including excise duty. HMT Group incurred loss of Rs.544.03 Cr. against previous year loss of Rs.278.50 Cr.

FUTURE OUTLOOK:

Food Processing Machinery

Over the years, India has emerged as one of the worldâs biggest producers of milk, with the total milk production rising from 122 Million Metric Tons in 2010-11 to 162 Million Metric Tons in 2016-17. With an increase in the working population, hectic lifestyles and increasing health consciousness among the consumers, there has been a shift towards healthy and ready-to-eat dairy products. Apart from this, a large number of affluent consumers who prefer value-added and premium dairy products, have further facilitated the growth of the organised dairy sector.

Fortunately, the government and other stakeholders seem to be alive to the situation and efforts to increase milk production have been intensified. Transformations in the sector are being induced by factors like newfound interest on the part of the organized sector, new markets, easy credit facilities, dairy friendly policies by the government, etc. Dairy farming is now evolving from just an agrarian way of life to a professionally managed industry - the Indian dairy industry. With these positive signals, there is hope that the sector may eventually march towards another white revolution.

In view of the positive signals in industry, the Company has set a Sales target of Rs.11.00 Crore for the year 2017-18 and increase production of its fast moving products viz., Continuous Butter Making Machine, Centrifugal Pumps, Homogenizers and Pasteurizers.

Machine Tools

The domestic consumption of machine tools for the year 2016-17 is around Rs.11616 Cr. as against Rs.10376 Cr. during 2015-16 a growth of 12%. The consumption is expected to be around Rs 12800 Cr during the 2017-18 a growth of 10%. The countryâs production during 2016-17 is around Rs.5803 Cr. as against Rs.4727 Cr. in 2015-16 a growth of around 23%.

As per IMTMA during the year 2016-17 there is a growth of 22% in export of Machine Tools with respect to corresponding period of last year which indicates that there is demand for Indian Machines abroad.

India is emerging as fastest growing economy in the world. According to The World Bank, the Indian economy is likely to grow at 7.6 % in 2017-18 and 7.8 % in 2018-19. The industry output grew by 5.0 % during 2016-17 as against 3.4 % during 2015-16 led by a good performance in the capital goods sector which registered a growth of 3.1 % and manufacturing sector registering a growth of 4.9 %. Demonetisation had a positive impact on the Indian Economy, which has helped to foster a clean and digested economy on the long run.

The continued investment by the government in public infrastructure is helping the economy to grow. The automotive sector is also steadily picking up which is expected to give fillip to MSMEâs in the country. The development of MSMEâs is also one of the principle objectives of the Government. All this in turn is expected to boost the demand for machine tools during 2017-18.

Demand for machine tools accrues from the manufacturers of primary goods and intermediate goods. The primary user industries include the automotive sector, capital goods sector and consumer durables sector. Prominent users of machine tools in the intermediate goods sector include the auto components, the ball and roller bearings and electronic components. Only sectors like defence and industrial intermediates recorded a good growth in turnover during 201617. This growth in various sectors presents a positive outlook for improving the companyâs business during 2017-18.

During the current year, the Company has set a Sales target of Rs.260 Crore and it proposes to achieve the same through encashing the business opportunity available in Aerospace and Nuclear power and growing market in other sectors, concentrating more on indigenization of imports for defence equipments and reduction of manufacturing cycle time by high productive machines.

DIVIDEND & PROVISIONS

Owing to the losses incurred during the year, the Directors are unable to recommend any dividend on the paid up equity share capital of the Company.

SHARE CAPITAL

The Authorised Share Capital of the Company is Rs. 2100 Crore and Paid up equity Share Capital is Rs. 1204.09 Crore

FIXED DEPOSITS:

The Company has not accepted any deposits from the public and hence there is no violation of Chapter V of Companies Act 2013, and the corresponding rules made there under

Disclosure pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended:

The Statement showing the details of top ten employees in terms of remuneration drawn as per Rule 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule 2014- is in the Annexure.

Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has adopted a policy on prevention, prohibition and redressal of Sexual Harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. During the Financial year 2016-17, the Company has not received any complaints of Sexual Harassment.

FRAUD REPORTING

There was no incident of fraud reported during the year under review.

CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

Pursuant to sub-section (3) (o) of Section 134 of the Companies Act, 2013 consequent upon appointment of Independent director on the Board of the Company, the CSR Committee is being constituted.

ENTERPRISE RISK MANAGEMENT:

Establishment of Risk Management System in terms of regulation 34 (3) of the SEBI (LODR) Regulation, 2015 and the provisions of the Companies Act, 2013 is under process.

PARTICULAR OF EMPLOYEES

No employees of the Company received remuneration in excess of the limits prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

SUBSIDIARY COMPANIES

HMT Machine Tools Limited

This company executed orders for several critical Machines and procured prestigious orders from strategic sectors & auto sectors during the year. The Company also initiated various product developments, Technology development & Technology Tie-ups making it an eventful year. The Subsidiary achieved Sales of Rs.197.52 Crore against Rs.217.83 Crore (including excise duty). Production attained is of Rs. 183.83 Crore as against Rs.201.44 Crore, in the previous year. Net loss reported is Rs. 127.59 Crore during the year 2016-17 against reported loss of Rs. 106.66 Crore in previous year.

HMT (International) Limited

The Subsidiary achieved a turnover of Rs.23.98 Crore during the year 2016-17 as against Rs. 33.91 Crore recorded in the previous year 2015-16. The Order procurement during the year is Rs.20.19 Crore as against Rs.9.43 Crore achieved in the previous year. Continuing the trend of achieving profits, Subsidiary could report Profit Before Tax (PBT) of Rs.0.26 Crore achieved against Rs. 0.90 Crore reported in previous year.

HMT Watches Limited

This Subsidiary could not show significant improvement in performance during the year under review. This Subsidiary could achieve a Sales level of Rs. 7.29 Crore (Including excise duty) and Production of Rs. NIL Crore during the year under review. The Net Loss for the year stood at Rs. 203.56 Crore.

HMT Chinar Watches Limited

The performance reported is; Sales to Rs. 2.24 Crore (Including excise duty) during the year with NIL Production for the year. In view of the non operative status level, the Subsidiary achieved a Net Profit of Rs.0.91 Cr.

HMT Bearings Limited

During the year under review, the Subsidiary was able to achieve Sales of Rs.2.66 Crore, against the Previous Yearâs Sales of Rs.11.83 Crore (Including excise duty). In terms of Production the Company was able to achieve Rs. 0.95 Crore compared to the Previous Yearâs Production level of Rs. 10.14 Crore. The loss for the year registered Rs. 3.66 Cr during 2016-17 as against net loss of Rs. 8.93 Cr. reported during previous year.

ASSOCIATE /JOINT VENTURE COMPANY SUDMO-HMT Process Engineers (India) Limited

This Joint Venture Company could not transact any business during the year under review. For the financial year 2016-17, this Company showed a Profit after tax of Rs.0.66 Lakhs only on account of the interest income of Rs.3.33 Lakhs, on the fixed deposits kept with the Banks.

Gujarat State Machine Tools Corporation Ltd

This Joint Venture Company between HMT and GIIC Ltd has discontinued its operations since long. It is therefore proposed to divest from this Associate Company jointly with the JV Partner. The process of disinvestment from this Company, is under consideration by the Company in consultation with the JV Partner.

Salient features of the financial statement of subsidiaries/ associate companies/joint ventures are provided in Form AOC-1 as annexure.

Indian Accounting standards

As required under Companies( Indian Accounting Standard) Rules, 2015 (Notification No. 111(E) dated 16.02.2015 issued by Ministry of corporate affairs) the Company has prepared the financial statements in accordance with Indian Accounting Standards(Ind AS) with effect from Financial year 2016-17 along with comparatives for the previous year 2015-16.

CONSOLIDATED FINANCIAL STATEMENTS

As required under the Companies Act 2013 and SEBI (LODR) Regulation, 2015, Consolidated Financial Statements of the Company along with that of the Subsidiaries for the financial year 2016-17, conforming to the applicable Accounting Standards, are attached to this Report along with the Auditorsâ Report on the same.

The Directors have consented not to attach copy of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Auditors of the five (5) Subsidiary Companies viz., HMT Machine Tools Limited; HMT Watches Limited; HMT Chinar Watches Limited; HMT Bearings Limited and HMT (International) Limited and one (1) Joint Venture Company i.e. SUDMO- HMT Process Engineers (India) Limited to the Balance Sheet of the Company (Holding Company). However, these documents will be made available upon request by any member of the Company interested in obtaining the same. The financial information of each of these subsidiary Companies have been furnished as part of the Consolidated Balance Sheet of the Company. The annual accounts and other detailed information of each of the Subsidiary companies will be available for inspection by any member at the Registered Office of the Company.

HUMAN CAPITAL

Information in accordance with the Companies Act, 2013 read with the Companies (Particulars of Employees), Rules, 1975, as amended, is NIL for the year 2016-17.

The employee strength of the Company as on March 31, 2017, stood at 269 Nos comprising of various categories of employees in manufacturing plants and other offices in technical and other professional areas.

The number of employees on the rolls of the Company as on March 31, 2017 in SC/ST, Ex-servicemen, Physically Handicapped and Women Employee Categories etc. is detailed below:

Scheduled Castes 46

Scheduled Tribes 02

Other Backward Classes 36

Ex-Servicemen 02

Persons with Disabilities 06

Women employees 17

Minorities 22

INDUSTRIAL RELATIONS

The overall Industrial Relations situation in the Company during the year remained cordial.

IMPLEMENTATION OF OFFICIAL LANGUAGE

Continuous efforts are being made towards implementation of Official Language Act, Rules & Policy as per the directives of the Government in the Company to enhance the levels of usage. The Official Language Implementation Committee have been constituted in all the Units of the Company and the Subsidiaries, including the Corporate Office at Bangalore to monitor implementation of Official Language Act, Rules, Policy, etc. which meets at regular intervals in every quarter.

In order to propagate the usage of Hindi as Official Language, âHINDI DIWAS/HINDI FORTNIGHTâ was observed during the month of September, 2016. Various competitions in Hindi such as Hindi Story Writing, Hindi News Paper Reading, Hindi Quiz Writing, Hindi Conversation, Hindi Antyakshari, etc., were organized and participants were awarded prizes. A workshop was organised during the above period. The Hindi Magazines/Newspapers are being procured to propagate the usage of Hindi among employees. The concerned Officials of the Company regularly take part in the meetings of the Town Official Language Implementation Committee.

Reporting on progress of Hindi proliferation in the Company is being reported periodically on Rajabhasha Vibhag portal.

VIGILANCE ACTIVITIES

Chief Vigilance Officer (CVO) appointed by the Government of India heads the Corporate Vigilance Department of the Company. Presently, CVO, Scooter India Limited has been assigned with the additional charge of CVO HMT Limited.

All the Unit Vigilance Officers send their monthly Vigilance / Inspection Reports and Surprise Inspection reports to CVO. Reports so received are scrutinized at CVO Office for further action. Unit Vigilance Officers also verify Annual Property Returns submitted by the employees of the Unit.

Apart from regular inspections by Unit Vigilance Officers, CVO conducts CTE (Chief Technical Examiner at CVC) type surprise and regular inspections of high value purchase/ contracts and systems by visiting various Subsidiaries and Units.

1. Uploading of all open tenders and high value Limited Tenders on www.tenders.gov.in (Website of GOI).

4. Management is being persuaded to adopt E procurement process.

5. Management is being persuaded to adopt Integrity Pact.

6. In many of the units / Subsidiary, E-payment mode to suppliers is adopted and compliance level is 30 to 80%.

7. Quarterly vigilance workshops were organized at all manufacturing units to enhance the level of vigilance awareness among the employees.

8. Vigilance Awareness Week 2016 with the theme âPublic participation in promoting integrity and eradicating corruptionâ was observed in all Units and Offices of HMT Limited and Subsidiary Companies as per the guidelines of CVC.

9. Number of inspections including surprise inspections carried out by Unit Vigilance Officers and number of Annual Property Returns scrutinized between April 2016 to March 2017 is tabulated below:-

Inspection	Total carried out between April 2016-March 2017 (by Unit Vigilance Officers)
Periodic Inspection of purchase files	1001
Surprise Inspection	176
Scrutiny of Annual Property Returns	800

CORPORATE GOVERNANCE

Pursuant to Regulation 34 of the SEBI (LODR) Regulation, 2015, a Report on the Corporate Governance is annexed as part of this Report along with the Compliance Certificate from the Auditors. A Report on Management Discussion and Analysis is also appended to this Report separately. Further, a declaration by the Chairman & Managing Director for having obtained affirmation of compliance of the Code of Conduct by the Board Member (s) and Senior Management for the year ended March 31, 2017, is also appended.

The Audit Committee has been constituted with the existing one Independent Director to comply the provisions of the Companies Act, 2013 and the SEBI (LODR) Regulation, 2015

INFORMATION REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

DIRECTORS RESPONSIBILITY STATEMENT

- that in the preparation of the annual financial statements for the year ended 31.03.2017, the applicable accounting standards has been followed along with proper explanation relating to material departures;

- that the annual financial statements have been prepared on a going concern basis;

- that proper internal financial controls were in place and are adequate and were operating effectively;

- that proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively;

- Since the overall performance of the Company is evaluated against the annual MoU targets set by the Department of Public Enterprises (DPE), no specific criteria is laid down for the evaluation of Board and of its Committees and the individual Directors. Since your Company being a Central Public Sector Enterprise (CPSE), the personnel policies and guidelines issued by DPE are being adopted in line with other CPSEs Accordingly, your Company has not formulated any separate policy in respect of appointment or evaluation of senior management and key managerial personnel.

EXTRACT OF ANNUAL RETURN

AUDITORS

M/s. B. K. Ramadhyani & Co., LLP were appointed as Statutory Auditors of the Company for the year 2016-17 by the Comptroller & Auditor General of India. Three firms of Chartered Accountants were also appointed as Branch Auditors for the other Units/Divisions of the Company.

Replies to the observations by the Statutory Auditors in their Report are given by way of an addendum to this Report.

SECRETARIAL AUDIT REPORT

In terms of Section 204 of the Companies Act 2013 and Rules made thereunder Mr. Venkateswaralu, Practicing Company Secretary have been appointed as Secretarial Auditor of the Company. The report of the Secretarial Auditors is enclosed as Annexure to this report along with replies. The report is self-explanatory and do not call for any further comments.

BOARD MEETINGS AND CHANGE IN DIRECTORS/KEY MANAGERIAL PERSONNEL

During the financial year 5 (Five) Board meetings were held and the details are given in Corporate Governance Report.

During the year, Dr. Subhash Chandra Pandey, ASFA has been appointed as the Director on 13.04.2016, Smt. Shashi B. Srivastava, has been appointed as Director Finance on 01.07.2016, Shri Ravindra Singh has been appointed as Independent Director on 02.02.2017 and Shri. Sivarami Reddy, Director (Operations) superannuated from the services of the Company on 30.06.2016.

Vide Presidential Order No.5 (42)/2007-P.E.X dated 2nd February, 2017 and in terms of Article 77(1) of the Articles of Association of the Company, Shri Ravindra Singh (DIN No. 00475462) has been appointed as Non-Official Independent Director on the Board of HMT Limited for a period of three years, from the date of notification of his appointment or until further orders, whichever is earlier.

Shri Ravindra Singh is proposed for appointment as Independent Director in terms of Article 67(4) of the Article of Association of the Company read with Section 160 of the Companies Act, 2013 in the ensuing Annual General Meeting for which a notice has been received from the Member.

Dr. Subhash Chandra Pandey, Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment

Shri. Subhash B.K resigned from the post of Company Secretary with effect from 04^th August, 2016.

Shri. S. Girish Kumar, Managing Director of HMT (International) Limited was assigned the additional charge of the post of Chairman and Managing Director of HMT Limited with effect from 1^st December, 2013. Further, vide Administrative Ministryâs Order No. I-05/18/2015-PE.X dated 3^rd April, 2017, Shri. S. Girish Kumar has been appointed as Chairman & Managing Director of the Company for a period of five years, who has assumed charge of the post on 21^st April, 2017.

Further, the Company has appointed Mr. Kishor Kumar S as Company Secretary of the Company with effect from 8^th June, 2017 and designated as Compliance Officer. Further Shri. Bhaskara Gowdar, Assistant General Manager -Corporate Finance of the Company as the Chief Financial Officer (CFO) with effect from 29^th August, 2017.

DECLARATION FROM INDEPENDENT DIRECTOR

As per section 149(7) of the Companies Act, 2013, the Company has received declaration from Shri. Ravindra Singh, Independent Director of the Company.

INTERNAL FINANCIAL CONTROLS

EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:

There are no Material changes and commitments affecting the financial position of the company which have occurred between 31 March 2017 and date of signing of this Report.

RELATED PARTY TRANSACTIONS

The details of related party transactions are given in the notes to the Financial Statements

PARTICULARS OF LOANS, GUARANTEES & INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements

ACKNOWLEDGEMENTS

For and on behalf of the Board of Directors

(S.Girish Kumar)

Chairman & Managing Director

Place: New Delhi

Date: 29-08-2017

Mar 31, 2016

The Members,

HMT Limited Bangalore

Dear Members,

The Board of Directors has pleasure in presenting the 63rd Annual Report on the Business & Operations of your Company and Annual Accounts of the Company for the year 2015-16 along with the Auditorsâ Report. The Comments of the Comptroller & Auditor General of India are attached to this Report.

Financial summary / Performance of the Company (Standalone)

(Rs. in Crore)

Particulars	2015-16	2014-15
Gross Revenue from Operations	46.43	61.47
Profit Before Depreciation and Finance Costs	3.15	(75.48)
Depreciation	2.57	2.71
Gross Profit/(Loss)	0.58	(78.19)
Finance Cost	25.33	18.36
Net profit before exceptional Items and PPA	(24.75)	(96.55)
Add : Exceptional Items	-	-
Less : Prior Period Adjustments	(0.01)	0.02
Net Profit before Tax	(24.74)	(96.57)
Provision for Tax	-	-
Net Profit After Tax	(24.74)	(96.57)
Profit/Loss carried forward to Balance Sheet	(24.74)	(96.57)

BUSINESS SCENARIO

As per the provisional estimates of national income released by Central Statistics Office on 31st May 2016, the growth rate of Gross Domestic Product (GDP) at constant (2011-12) prices for the year 2015-16 is estimated at 7.6 per cent, as compared to the growth of 7.2 per cent in 2014- 15.

The growth in Gross Value Added (GVA) at constant (2011-12) basic prices for the year 2015-16 is estimated at 7.2 per cent as compared to the growth of 7.1 per cent in 2014-15.

At the sectoral level, the growth rate of GVA at constant (2011-12) basic prices for agriculture & allied sectors, industry and services sectors for the year 2015-16 are estimated at 1.2 per cent, 7.4 per cent, and 8.9 per cent respectively.

Overall growth in the Index of Industrial Production (IIP) was 2.1 per cent in June 2016 as compared to 4.2 per cent in June 2015. The IIP growth during the first quarter (April-June) of 2016-17 was 0.6 per cent as compared to 3.3 per cent during the corresponding period of previous year. The low growth in IIP is mainly due to contraction in capital goods and consumer non-durable goods sectors.

Eight core infrastructure industries grew by 5.2 per cent in June 2016 as compared to growth of 3.1 per cent in June 2015. The growth of core industries during the first quarter (April-June) of 2016-17 was 5.4 per cent as compared to 2.5 per cent during the corresponding period of previous year.

The production of manufacturing sector grew by 0.9 per cent in June 2016 as compared to 5.2 per cent in the corresponding month of previous year. In terms of use based classification, sectors like basic goods, intermediate goods, consumer goods registered positive growth, while capital goods registered negative growth in June 2016.

Merchandise exports and imports declined by 6.8 per cent and 19.0 per cent (in US dollar terms) respectively in July 2016 over July 2015. During July 2016, oil imports and nonoil imports declined by 28.1 per cent and 15.8 per cent respectively over July 2015. During April-July 2016, merchandise exports declined by 3.6 per cent while merchandise imports declined by 16.3 per cent.

The growth in GDP in Q4 (January-March) of 2015-16 is estimated at 7.9 per cent as compared to the growth of 6.7 per cent in the corresponding quarter of 2014-15. GDP growth during the first three quarters of 2015-16 was 7.5 per cent, 7.6 per cent and 7.2 per cent respectively.

Operating Results

In the Companyâs main business portfolio of Tractors, the market indicators reveal that the industry recorded degrowth of 10% in terms of quantity. Your Company had to face severe pressure on performance during the year due to lack of working capital.

Your Company recorded a Production of '' 37.18 Crore (633 Nos. of Tractors) as against '' 53.66 Crore (1078 Nos. of Tractors), in the previous year, and Sales of '' 45.43 Crore (733 Nos. of Tractors) compared to '' 60.28 Crore (1127 Nos. of Tractors) in the previous year.

HMT Group along with its Subsidiaries achieved an aggregate Production of '' 249.69 Crore and Sales of '' 284.62 Crore for the year 2015-16.

During January 2016, CCEA has approved closure of the subsidiaries, HMT Watches, HMT Chinar Watches and HMT Bearings and the Administrative Ministry has directed the Company to take requisite action for the process of closure.

The Government of India vide letter no. 1-0501/8/2015-PE.X dated 4th November 2016 communicated CCEA approval for Budgetary support to HMT Ltd for payment of outstanding salary/wages and has also approved for Closure of operations at HMT Tractor Division with offer of attractive and improved VRS/VSS package to allow ex-gratia and terminal benefits based on 2007 notional pay scales, in relaxation of DPE guidelines disallowing pay revision in sick/ loss-making CPSEs, as against the current pay scales of 1997, to all the employees of Tractor Division. Employees not opting for VRS would be retrenched under the Industrial Disputes Act, 1947 as the Tractor Division is proposed to be closed down.

The Government of India has also approved for Infusion of funds of '' 718.72 Cr as interest free loan for the said VRS/ VSS with ex-gratia and terminal benefits based on 2007 notional pay scales for all employees of the Tractor Division ('' 335.00 Cr), clearing of employee related liabilities of HMTL ('' 271.05 Cr) and settlement of other liabilities in respect of HMT Tractor Division ('' 112.67 Cr).

The Government of India has also approved for Restructuring of Balance Sheet of HMTL by reduction of paid-up capital to the extent of accumulated losses of Tractor Division amounting Rs. 848.49 Crore against Govt. of India paid up equity shareholding in the Company of Rs. 1204.09 Crore and write-off of Govt. loans provided to HMT Ltd. (Rs. 72.02 Cr) along with accrued interest (Rs. 18.56 Cr) to be frozen as on 31.03.2016, with no further liability of interest.

Further, the process of transferring of land to Govt. of Haryana (GoH) on mutually agreed terms and negotiation of suitable compensation will be undertaken in a time bound manner after the due approval. In addition, sale of other assets, which will become surplus after closure of the Tractor Division. The Company would explore the possibilities of using the productive resources, for example, factory premises of HMT Tractor Division with clearly demarcated land and buildings, plants and machineries, for leasing out on âAs is Where is'' basis to interested private parties engaged preferably in Capital Goods or Auto sector, on medium or long term basis after duly safeguarding the GoI interest. Failing this, an alternative option for strategic sale of the HMT Tractor Factory, Pinjore to national or International parties may be explored in consultation with DIPAM.

FUTURE OUTLOOK

The Machine Tools Industry demand projections are based on CAGR of around 15% although the industry expectations of growth are much higher.

The National Manufacturing Policy in Make in India program envisages manufacturing growth of 12 to 14 % per annum. The Policy is aimed at increasing the share of manufacturing in the country''s Gross Domestic Product (GDP) from 16 % to 25 % by the year 2022. The policy also envisages creating of National Investment & Manufacturing zones which will help in creating demand for machine tools.

Increased allocation in Defense Sector, India has the potential to emerge as a global platform for Defense research, manufacturing, supply chain sourcing, software development, and offsets, which will strengthen our defense capabilities and spur industrial development as well as exports in this sector.

The Company proposes to further its initiatives in âSkill Indiaâ projects of the Government to train youth to become employable and contribute to the âMake in Indiaâ initiatives of the Government. Skill Development Centres are being planned at six locations across India.

To make the Company viable and vibrant, a Restructuring Plan is now being formulated by the Company with focus on achieving technology leadership capabilities in the core business of Machine Tools, in view of the enormous potential of the sector.

DIVIDEND & PROVISIONS

Owing to the losses incurred during the year, the Directors are unable to recommend any dividend on the paid up equity share capital of the Company.

Share Capital

The Authorized Share Capital of the Company is Rs. 2100 Crore and Paid up Share Capital is Rs. 1240.95 Crore

Fixed Deposits:

The Company has not accepted any deposits from the public and hence there is no violation of Chapter V of Companies Act 2013, and the corresponding rules made there under. Receipt of any commission by MD / WTD from the Company

Disclosure pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended:

Please refer Annexure to Directors Report

Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

During the Financial year 2015-16, the Company has not received any complaints of Sexual Harassment.

Fraud Reporting

There was no incident of fraud reported during the year under review.

Corporate Social Responsibility (CSR) Policy

[Pursuant to sub-section (3) (o) of Section 134 of the Companies Act, 2013] consequent upon appointment of Independent director on the Board of the Company, the CSR Committee will be constituted.

Enterprise Risk Management:

Establishment of Risk Management System in terms of Clause 49(VI) of the Listing Agreement and the provisions of the Companies Act, 2013 is under process.

Particulars of Employees:

No employees of the Company received remuneration in excess of the limits prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

SUBSIDIARY COMPANIES

HMT Machine Tools Limited

This company executed orders for several critical Machines and procured prestigious orders from strategic sectors & auto sectors during the year. The Company also initiated various product developments, Technology development & Technology Tie-ups making it an eventful year. During the year the inflow of orders from Railways & Defence sector has also gone up by 168% and 30% respectively. The Subsidiary achieved Sales of Rs.197.62 Crore against Rs. 172.15 Crore and Production is Rs. 201.44 Crore as against Rs. 181.50 Crore, in the previous year. Net loss reported is Rs. 121.64 Crore during the year 2015-16 against reported loss of Rs. 134.94 in previous year.

HMT (International) Limited

The Subsidiary achieved a turnover of Rs. 33.91 Crore during the year 2015-16 as against Rs. 33.40 Crore recorded in the previous year 2014-15. The Order procurement during the year is Rs. 9.43 Crore as against Rs. 82.08 Crore achieved in the previous year. Continuing the trend of achieving profits, Subsidiary could achieve Profit Before Tax (PBT) of Rs. 0.87 Crore against Rs. 1.66 Crore reported in previous year. The Subsidiary has maintained its consistent dividend payment record and has recommended a dividend of 20% for the year 2015-16 on its Paid-up equity share capital

HMT Watches Limited

This Subsidiary achieved Sales of Rs. 4.32 Crore and Production of Rs. 0.94 Crore during the year under review. The Net Loss for the year stood at Rs. 159.71 Crore. Consequent to Govt. decision for closure 794 employees were releieved on VRS.

HMT Chinar Watches Limited

The Subsidiary achived Sales to Rs. 0.11 Crore during the year with NIL Production for the year. The Subsidiary incurred a Net loss of Rs. 9.51 Cr. Consequent to Govt. decision for closure of the company all the employees were relieved on VRS.

HMT Bearings Limited

During the year under review, the Subsidiary achieved Sales of Rs.10.34 Crore, against the Previous Year''s Sales of Rs. 14.75 Crore. In terms of Production the Company achieved Rs. 10.13 Crore compared to the Previous Year''s Production of Rs. 14.20 Crore. Profit Before Tax registered at Rs. (-) 8.09 Cr during 2015-16 as against Rs. (-) 17.78 Cr. reported during previous year. Consequent to Govt. decision for closure of the company all the employees were releieved on VRS.

ASSOCIATE /JOINT VENTURE COMPANY SUDMO-HMT Process Engineers (India) Limited

This Joint Venture Company could not transact any business during the year under review. For the financial year 2015-16, this Company showed a Profit after tax of Rs. 0.67 Lakhs only on account of the interest income of Rs. 3.55 Lakhs, on the fixed deposits kept with the Banks.

Gujarat State Machine Tools Corporation Ltd

This Joint Venture Company between HMT and GIIC Ltd has discontinued its operations since long. It is therefore proposed to divest from this Associate Company jointly with the JV Partner. The process of disinvestment from this Company, is under consideration by the Company in consultation with the JV Partner.

CONSOLIDATED FINANCIAL STATEMENTS

As required under the Listing Agreement, Consolidated Financial Statements of the Company along with that of the Subsidiaries for the financial year 2015-16, conforming to the applicable Accounting Standards, are attached to this Report along with the Auditors'' Report on the same.

In terms of the General Circular No. 2/2011 dated 8th February, 2011, issued by the Central Government in terms of Section 212(8) of the Companies Act, 1956, the Directors have consented not to attach copy of the Balance Sheet,

Profit and Loss Account, Report of the Board of Directors and Auditors of the five (5) Subsidiary Companies viz., HMT Machine Tools Limited; HMT Watches Limited; HMT Chinar Watches Limited; HMT Bearings Limited and HMT (International) Limited and one (1) Joint Venture Company i.e. SUDMO- HMT Process Engineers (India) Limited to the Balance Sheet of the Company (Holding Company). However, these documents will be made available upon request by any member of the Company interested in obtaining the same. Further, in compliance with the conditions of the above referred Government circular, the financial information of each of these subsidiary Companies have been furnished as part of the Consolidated Balance Sheet of the Company. The annual accounts and other detailed information of each of the Subsidiary companies will be available for inspection by any member at the Registered Office of the Company.

HUMAN CAPITAL

Information in accordance with the Companies Act, 2013 read with the Companies (Particulars of Employees), Rules, 1975, as amended, is NIL for the year 2015-16.

The employee strength of the Company as on March 31, 2016, stood at 3795 Nos comprising of various categories of employees in manufacturing plants and other offices in technical and other professional areas.

The number of employees on the rolls of the Company as on March 31, 2016 in SC/ST, Ex-servicemen, Physically Handicapped and Women Employee Categories etc. is detailed below:

Scheduled Castes 252

Scheduled Tribes 31

Other Backward Classes 89

Ex-Servicemen 5

Persons with Disabilities 14

Women employees 37

Minorities 181

INDUSTRIAL RELATIONS

The overall Industrial Relations situation in the Company during the year remained cordial.

IMPLEMENTATION OF OFFICIAL LANGUAGE

The efforts towards implementation of Official Language Act, Rules & Policy as per the directives of the Government in the Company is continuous. The Official Language Implementation Committee have been constituted in all the Units of the Company and the Subsidiaries, including the Corporate Office at Bangalore to monitor implementation of Official Language Act, Rules, Policy, etc. which meets at regular intervals in every quarter.

In order to propagate the usage of Hindi as Official Language, âHINDI DIWAS/HINDI FORTNIGHTâ was observed during the month of September, 2015. Various competitions in Hindi such as Hindi Story Writing, Hindi News Paper Reading, Hindi Quiz Writing, Hindi Conversation, Hindi Antyakshari, etc., were organized and participants were awarded prizes. A workshop was organized during the above period. The Hindi Magazines/Newspapers are being procured to propagate the usage of Hindi among employees. The concerned Officials of the Company regularly take part in the meetings of the Town Official Language Implementation Committee.

Reporting on progress of Hindi proliferation is being reported periodically on Rajabhasha Vibhag portal.

VIGILANCE ACTIVITIES

The Chief Vigilance Officer appointed by the Government of India heads the Corporate Vigilance Department of the Company. Presently the post of Chief Vigilance Officer is vacant and General Manager (HR) of HMT MTL is holding the additional charge of CVO as per the directive of Ministry of Heavy Industry. Chief Vigilance Officer is assisted at Unit level by exclusively appointed Vigilance Officers.

The Corporate Vigilance Department carries out vigilance functions in the Holding Company as well as its Subsidiary Companies. The vigilance functions in the manufacturing Units and Marketing Offices are looked after by Vigilance Officers, under the guidance of Chief Vigilance Officer.

All the Unit Vigilance Officers send their monthly Vigilance / Inspection Reports and Surprise Inspection reports to CVO. The reports so received are scrutinized at CVO Office for further action. Unit Vigilance Officers also verify Annual Property Returns submitted by the employees of the Unit.

Apart from regular inspections by Unit Vigilance Officers, CVO conducts CTE type surprise and regular inspections of high value purchase/contracts and systems by visiting various Subsidiaries and Units.

Violations of rules and procedures observed during the inspection of files by CVO/ Dy. CVO/ Unit VOs were recorded and depending upon the seriousness of the deviations, further actions are taken. Unit Vigilance Officers are advised to discuss deviations noticed by them during their inspection, in the quarterly Vigilance Workshop and advice the concerned officers that the violations of rules and procedures pointed out by the Vigilance Department should not be repeated and should conform to CVC and Company Purchase Manual guidelines.

Emphasis was laid on preventive vigilance by striving towards strict adherence to all rules and procedures and all norms of transparency in tendering process. Based on CVC''s guidelines for âImproving vigilance administration by leveraging technology and increasing transparency through effective use of website'' necessary directions were given by CVO for implementation of the same. Some of the systems put in place by the Company are:

1. Hosting of all open tenders and high value Limited Tenders on www.tenders.gov.in (Website of GOI).

2. Publishing details regarding all purchase orders / contracts concluded during the month of and above the threshold value (presently Rs.5.00 lakhs). This is generally followed by all manufacturing Units.

4. Efforts are being put to persuade the Managing Directors for switching over to E- Procurement process for all purchases of value Rs. 2 lakhs and above and adopt E-payment mode for making all payments including supplier payment. In many of the Units E payment mode to suppliers is adopted and compliance level is 10 to 20%.

5. Quarterly vigilance workshops were organized at all manufacturing units to enhance the level of vigilance awareness among the employees and other stakeholders. Vigilance Awareness Week 2015 was observed in all Units and Offices of HMT Limited and Subsidiary Companies as per the guidelines of CVC.

6. A list of DOs and DONTs, based on CVC Guidelines & Company Purchase Manual, was prepared and released for the guidance of personnel working in Purchase & Contract department and Vigilance Officers

The number of inspections including surprise inspections carried out by CVO and Unit Vigilance Officers along with the number of property returns scrutinized between April 2015 to March 2016 is tabulated below :-

Inspection	Total carried out between April 2015 - March 2016 (by Unit Vigilance Officers)
Periodic Inspection of Purchase Files	1074
Surprise Inspection	228
Scrutiny of Annual Property Returns	60

Inspections done by CVO at Units (April 2015 to March 2016)

(I) HMT MTL Marketing Office Provident Fund, Bangalore (ii) HMT MTL Hyderabad (PTH & MTH) (iii) HMT MTL Pinjore

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on the Corporate Governance is annexed as part of this Report along with the Compliance Certificate from the Auditors. A Report on Management Discussion and Analysis is also appended to this Report separately. Further, a declaration by the Chairman & Managing Director for having obtained affirmation of compliance of the Code of Conduct by the Board Member (s) and Senior Management for the year ended March 31, 2016, is also appended.

The Audit Committee could not be reconstituted as per Cl. 49 of the Listing Agreement in the absence of Independent Directors on the Board to be appointed by the Government on the Board.

INFORMATION REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

DIRECTORS RESPONSIBILITY STATEMENT

- that in the preparation of the annual financial statements for the year ended 31.03.2016, the applicable accounting standards has been followed along with proper explanation relating to material departures;

- that the annual financial statements have been prepared on a going concern basis;

- that proper internal financial controls were in place and are adequate and were operating effectively;

- that proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively;

- Since the overall performance of the Company is evaluated against the annual MoU targets set by the Department of Public Enterprises (DPE), no specific criteria is laid down for the evaluation of Board and of its Committees and the individual Directors. Since your Company being a Central Public Sector Enterprise (CPSE), the personnel policies and guidelines issued by DPE are being adopted in line with other CPSEs. Accordingly, your Company has not formulated any separate policy in respect of appointment or evaluation of senior management and key managerial personnel.

Extract of Annual Return

In terms of Section 92(3) of the Companies Act, 2013 read with Rule 1 2 of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in the prescribed form is placed as Annexure - MGT9.

AUDITORS

M/s Dokania S.Kumar & Co., Howrah , were appointed as Statutory Auditors of the Company for the year 2015-16 by the Comptroller & Auditor General of India. Three firms of Chartered Accountants were also appointed as Branch Auditors for the other Units/Divisions of the Company.

Replies to the observations by the Statutory Auditors in their Report are given by way of an addendum to this Report.

Secretarial Audit Report

In terms of Section 204 of the Companies Act 2013 and Rules made thereunder Mr. Venkateswaralu, Practicing Company Secretary have been appointed as Secretarial Auditor of the Company. The report of the Secretarial Auditors is enclosed as Annexure VII to this report. The report is self-explanatory and do not call for any further comments.

DIRECTORS

Vide Presidential Order No.5(8)/2010-P.E.X dated April 13, 2016 and in terms of Article 67(4) of the Articles of Association of the Company, Shri Subhash Chandra Pandey, AS&FA, Department of Industrial Policy and Promotion holding additional charge of DHI has been appointed as Part-time Official Director on the Board of the Company with immediate effect, until further orders vice Shri S.K.Bahri the then AS & FA.

Shri Subhash Chandra Pandey is proposed for appointment as Director in terms of Article 67(4) of the Article of Association of the Company read with Section 160 of the Companies Act, 2013 in the ensuing Annual General Meeting for which a notice has been received from the Member.

The Board placed on record its appreciation for the valuable services rendered by Shri S.K.Bahri whose term of Office ended during the year.

Smt. Shashi B. Srivastava (DIN. 07582574),IDAS, was appointed as Director (Finance) on deputation of the Company by the Ministry of Heavy Industries & Public Enterprises vide letter I-.05/14/2014-PE-X dated April 29, 2016 and accordingly was appointed as an wholetime Director of the Company pursuant to Article 67 of the Articles of Association of the Company read with Section 161 (1) of the Companies Act, 2013 w.e.f. 01.07.2016 and who holds Office upto the date of this Annual General Meeting.â

Smt. Shashi B. Srivastava shall not be liable to retire by rotation.

ACKNOWLEDGEMENTS

Your Directors would also like to take this opportunity to express their appreciation for the contributions made by the Company''s employees and look forward to their continued services in pursuit of building a world class Indian Company.

For and on behalf of the Board of Directors

( S. Girish Kumar)

Chairman & Managing Director

Place: Bangalore

Date: 6 Sept. 2016

Mar 31, 2014

Dear Members,

The Board of Directors have pleasure in presenting the 61st Annual Report on the Business & Operations of your Company and the Annual Accounts for the year 2013-14 together with the Auditors'' Report thereon and the Comments of the Comptroller & Auditor General (CAG) of India.

BUSINESS SCENARIO

India''s economic growth rate in the current fiscal was 4.7 percent as against 4.5 percent recorded in the previous year, mainly on account of improved performance in the agriculture and allied sectors. The sub 5 percent growth of economy was primarily a result of the slowdown in industry for second year in succession that registered a growth rate 0.4 percent. Manufacturing sector witnessed contraction of 0.8 percent in 2013-14 as compared to a growth of 1.3% in the previous year. The high inflation and interest rates did not boost the consumer sentiment in the market and thus did not lead to favorable business environment during 2013-14. The domestic market suffered from weak consumer off take and poor industrial production growth.

During Fiscal 2013-14, IIP growth was (0.1) percent as compared to 1.1 percent in April- March 2012-13. Overall growth in the Index of Industrial Production (IIP) was 3.4 per cent during April 2014 as compared to 1.5 per cent in April 2013.

As per the Advance Estimates the growth in Gross Domestic Product (GDP) at factor cost is estimated at 4.9 per cent in 2013-14 with agriculture, industry and services registering growth rates of 4.6 per cent, 0.7 per cent and 6.9 per cent respectively. The GDP growth rate is placed at 4.4 per cent, 4.8 per cent and 4.7 per cent respectively for the first, second and third quarters of 2013-14.

Growth in real fixed capital formation (fixed investment) is estimated at (-) 1.2 per cent in Q1 of 2013-14 as against (-) 2.2 per cent in Q1 of 2012-13. As a ratio of GDP at current market prices, gross fixed capital formation was

28.6 per cent in Q1 of 2013-14 as against 29.9 per cent in Q1 of 2012-13.The rate of growth of private final consumption expenditure was 1.6 per cent. The growth of exports was negative.

Agriculture plays the significant role in the all-round socio economic development of the country; however, its share in GDP has been declining over the years which is

13.7 percent currently. The average annual growth rate of 3.3 percent during the 11th Five Year Plan has fallen short of the 4 percent growth target, but has been much faster than the 9th and 10th Five Year Plan annual average growth rate of 2.5 and 2.4 percent respectively. The growth target set for agriculture for the 12th Five Year Plan is 4 percent. The good monsoons in 2013 14 bode well for strong agricultural output.

The contribution of the capital goods sector for the growth of IIP has been negative during last two years. Declining trends in investment, fall in the growth of credit off take and low level of investment in R&D have contributed reduction in the growth rate of capital goods sector from the high of 48.5 per cent in 2007-08 to contraction of 4.0 per cent and 6.3 per cent in 2011-12 and 2012-13 respectively. During April-June 2013 capital goods production declined by 3.3 per cent. The only capital goods segment that has shown recovery in domestic production is the electrical machinery and apparatus segment showing robust growth of 11.9 per cent during April-June 2013.

On the Company''s main business portfolio of Tractors, the market indicators reveal that the industry recorded growth of 21% in terms of quantity. After seeing volumes in both domestic and export markets shrink by as much as 3 percent in fiscal 2013-14 the domestic tractor industry witnessed strong 18 per cent growth in the last fiscal. Your Company had to face severe pressure on performance during the year due to lack of working capital. Your Company recorded a Production of Rs. 74.11 Crore (1546 Nos. of Tractors) as against Rs. 63.05 Crore (1309 Nos. of

Tractors), in the previous year, and Sales of Rs. 78.45 Crore (1488 Nos. of Tractors) compared to Rs. 99.42 Crore (2005 Nos. of Tractors) in the previous year. HMT Group along with its Subsidiaries achieved an aggregate Production of Rs. 249.41 Crore and Sales of Rs. 270.79 Crore for the year 2013-14.

Riding high on the expectations from the new Government at centre, GDP is expected to grow during 2014-15. As per farm experts Tractor Industry is also expected to witness a growth of 8-10% during 2014-15 on back of sustained agriculture demand. Tractors in higher HP segment will record good growth due to Infrastructure projects.

OPERATING RESULTS

During the year under review, the operations of your Company resulted in a negative Gross Margin of Rs. 150.36 Crore (which includes Rs. 82.75 Crore provision for Holding Company loan and investment in HMT Chinar Watches Ltd) as compared to the negative Gross Margin of Rs. 21.24 Crore in the previous year. The Operations of your Company resulted in a Profit of Rs. 105.82 Crore during the year 2013-14, as compared Loss of Rs. 145.38 Crore recorded in the previous year, which was mainly due to waiver of Interest & Guarantee Fee of Rs. 291.18 Crore as per the Revival Plan approved by GOI. The financial highlights for the year 2013-14, are as under:

FINANCIAL HIGHLIGHTS (Rs. in Crore)

Particulars 2013-14 2012-13

Gross Margin (PBIDT) (150.36) (21.24)

Depreciation & Amortization 3.40 3.55

Finance Cost 14.34 104.03

Profit/(Loss) before PPA (168.10) (128.82)

Add: Exceptional Items 275.00 -

Less: Prior Period Adjustments (PPA) 1.08 16.56

Net Profit/(Loss) before tax 105.82 (145.38)

Tax Provision (Net) 18.61 -

Net Profit/(Loss) after tax 87.21 (145.38)

Net Profit/(Loss) carried to 87.21 (145.38) Balance Sheet

DIVIDEND

As the Company is facing severe financial constraints, the Directors are unable to recommend any dividend on the paid up equity share capital of the Company.

FINANCIAL POSITION

The Company reported positive profit after Tax of Rs. 87.21 Crore due to exceptional items like Interest waiver & Guarantee fee waiver sanctioned as part of the Revival Plans of the Company. During the year 2013-14 the Company has reported Production of 1546 Tractors and Sales of 1488 Tractors.

FUTURE OUTLOOK

Tractor industry is expected to grow by 4-6 percent this fiscal owing to near normal monsoon and improvement in rural economy. The Auto Policy of the Government also encourages this sector favourably.

Although low HP tractors have only a negligible presence even now, the segment has more than doubled its market share in the past three years. There is an inherent expansion in tractor demand in this segment because of shortage of farm labour/increase in wage rates due to alternative employment opportunities available to workers under National Rural Employment Guarantee Act leading to increased tractor viability even for small/medium size land owners.

The other trend that is evident is increased use of tractors in infrastructure and construction sectors which has led to a huge growth in purchase of higher HP tractors. High growth in this segment is expected to continue because of replacement demand turning towards higher HP tractors and increased usage of tractors for non-agricultural applications across India

The Tractor Industry will continue to grow in the year 2014- 15 due to thrust of the Govt. on Agriculture and infrastructure drivers remaining favourable. The growth drivers of Tractor Industry such as boost in rural economy, increased focus on agriculture and rural development, credit availability, shorter replacement cycle, several policy initiatives by the Government, etc., are aiding the growth trends.

The Tractor Business Group of your Company has already initiated a host of measures to improve performance and fuel efficiency. Appointment of new Distributors and Dealers in potential areas/territories, up-gradation of the tractor engines to contemporary requirements, entering into MoU''s with Banks/Financing Agencies for priority loan sanctions for the purchase of HMT Tractors, dynamic business strategies, etc., which are expected to yield results in the current financial year.

The future plans of your Company envisages Plant Modernization and Technology Up-gradation which will contribute to better productivity and give a thrust to the growth trends in the coming years. The Government has approved the Revival and Financial Restructuring Plan for the Company (HMT Ltd) during April, 2013 as recommended by the BRPSE, which envisages financial support, waivers etc., from Government of India. Formal sanctions for Non- cash Assistance i.e., conversion of Government Loans into Equity and waiver of accumulated interest thereon received during the year.

SUBSIDIARY COMPANIES

HMT Machine Tools Limited

The Subsidiary achieved Sales of Rs. 159.02 Crore against Rs. 213.01 Crore in the previous year. Net loss reported is Rs. 52.66 Crore during the year 2013-14 against reported loss of Rs. 43.65 Cr in previous year. Capacity utilization for the year 2013-14 is 53%.

The Subsidiary has implemented the revival plan proposals and plant up-gradation. The Subsidiary is also pursuing with various agencies for extending the reliefs and concessions sanctioned by the BIFR under the Rehabilitation Scheme. Some of these Parties including the Consortium of Banks have preferred appeals against the reliefs and concessions sanctioned by the BIFR, which is being contested by the Subsidiary.

BRPSE reviewed the progress of Revival Plan Implementation and recognised the need for interim measures to propel the growth of HMT Machine Tools Limited. Accordingly, the proposal forwarded to DHI was approved by CCEA during February 2014 and formal sanctions received during 2014-15. Accordingly, the implementation process has been initiated.

HMT Watches Limited

The performance of the Subsidiary showed a decline during the year under review. Major factors affecting the performance of this Subsidiary were paucity of working capital, erosion of trade channel and high cost of borrowings. The Subsidiary could achieve a Sales level of Rs. 7.48 Crore and Production of Rs. 4.70 Crore during the year under review. The Net Loss for the year stood at Rs. 233.08 Crore as compared to Rs. 242.47 Crore incurred during the previous year.

The Revival Plan in respect of this Subsidiary has been submitted to the Government based on the business plans prepared by a reputed Consultancy Firm and is under examination of the Government.

HMT Chinar Watches Limited

The performance of this Subsidiary could not be sustained due to the disturbed situation prevailing in the J&K Valley apart from working capital constraints for production. Majority of the employees have been separated on VRS leaving about 34 employees at Srinagar and Jammu Units of the Subsidiary. The Subsidiary''s Sales was Rs. 0.39 Crore during the year compared to Rs. 0.32 Crore in the previous year, with NIL Production for the year. The Subsidiary incurred a Net loss of Rs. 50.56 Cr against Rs. 51.16 Crore in previous year.

HMT (International) Limited

The Subsidiary which is the export arm of the Company, achieved a turnover of Rs. 25.08 Crore as against Rs. 34.09 Crore recorded in the previous year, i.e. 2012-13 due to demand depletion. The Order procurement during the year was Rs. 22.23 Crore as against Rs. 24.10 Crore achieved in the previous year. The Subsidiary reported a Profit Before Tax (PBT) of Rs. 0.50 Crore as against Rs. 6.85 Crore reported in previous year. The Subsidiary has maintained its consistent dividend payment record and has recommended a dividend of 10% for the year 2013-14 on its Paid-up equity share capital

HMT Bearings Limited

During the year under review, the Subsidiary significantly improved its performance and was able to achieve a Sales of Rs. 14.36Crore, against the Previous Year''s Sales of Rs. 10.89 Crore. In terms of Production, the Company achieved Rs. 15.04 Crore compared to the Previous Year''s Production level of Rs. 11.73 Crore. The Company has incurred a net loss of Rs. 15.98 Crore as against Rs. 2.07 Crore reported during 2012-13.

The Revival Plans of this Subsidiary submitted to DHI/ BRPSE was recommended by the BRPSE during its meeting held in May 2013 and is under the consideration of the Government.

ASSOCIATE /JOINT VENTURE COMPANY

SUDMO-HMT Process Engineers (India) Limited

This Joint Venture Company could not transact any business during the year under review. For the financial year 2013-14, this Company showed a Profit after tax of Rs. 0.93 Lakhs on account of the interest income of Rs. 3.68 Lakhs, on the fixed deposits kept with the Banks.

Gujarat State Machine Tools Corporation Ltd

This Company a Joint Venture between HMT and GIIC Ltd has discontinued its operations since long. It is therefore proposed to divest from this Associate Company jointly with the JV Partner. The process of disinvestment from this Company is under consideration by the Company in consultation with the JV Partner.

CONSOLIDATED FINANCIAL STATEMENTS

As required under the Listing Agreement, Consolidated Financial Statements of the Company along with that of the Subsidiaries for the financial year 2013-14, conforming to the applicable Accounting Standards, are attached to this Report along with the Auditors'' Report on the same.

In terms of the General Circular No. 2/2011 dated 8th February, 2011, issued by the Central Government in terms of Section 212(8) of the Companies Act, 1956, the Directors have consented not to attach copy of the Balance Sheet, Statement of Profit and Loss, Report of the Board of Directors and Auditors of the five (5) Subsidiary Companies viz., HMT Machine Tools Limited; HMT Watches Limited; HMT Chinar Watches Limited; HMT Bearings Limited and HMT (International) Limited to the Balance Sheet of the Company (Holding Company). However, these documents will be made available upon request of any member of the Company. Further, in compliance with the conditions of the above referred Government circular, the financial information of each of these subsidiary Companies have been furnished as part of the Consolidated Balance Sheet of the Company. The annual accounts and other detailed information of each of the Subsidiary companies will be available for inspection by any member at the Registered Office of the Company. A statement pursuant to Section 212(1) of the Companies Act, 1956, in respect of each of the Subsidiary Companies is attached to this report.

HUMAN RESOURCE

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rules, 1975, as amended, is NIL for the year 2013-14.

The employee strength of the Company as on March 31, 2014, stood at 1434 Nos. as compared to 1442 at the end of the previous year. There are 291 employees in the Officer Cadre and 1143 Non-Executive in Workmen cadre. The breakup of the number of employees on the rolls of the Company in categories like SC/ST, Ex-servicemen, Physically Handicapped and Women Employee etc. as on March 31, 2014 is detailed below:

Scheduled Castes 320

Scheduled Tribes 47

Other Backward Classes 105

Ex-Servicemen 4

Persons with Disabilities 15

Women employees 44

Minorities 217

INDUSTRIAL RELEATIONS

The overall Industrial Relations situation in the Company during the year remained cordial.

IMPLEMENTATION OF OFFICIAL LANGUAGE

The efforts towards implementation of Official Language Act, Rules & Policy as per the directives of the Government in the Company is continuous. The Official Language

Implementation Committee is constituted in all the Units of the Company and the Subsidiaries, including the Corporate Office at Bangalore to monitor implementation of Official Language Act, Rules, Policy, etc. meets at regular intervals in every quarter.

In order to propagate the usage of Hindi as Official Language, "HINDI DIWAS/HINDI FORTNIGHT" was observed during the month of September, 2013. Various competitions in Hindi such as Hindi Story Writing, Hindi News Paper Reading, Hindi Quiz Writing, Hindi Conversation, Hindi Antyakshari, etc., were organized and participants were awarded prizes. A workshop was organised during the above period. The Hindi Magazines/Newspapers are being procured to propagate the usage of Hindi among employees. The concerned Officials of the Company regularly take part in the meetings of the Town Official Language Implementation Committee.

VIGILANCE ACTIVITIES

The Chief Vigilance Officer appointed by the Government of India heads the Corporate Vigilance Department of the Company. Chief Vigilance Officer is assisted at Unit level by exclusively appointed Vigilance Officers.

The Corporate Vigilance Department carries out vigilance functions in the Holding Company as well as its Subsidiary Companies. The vigilance functions in the manufacturing Units and Marketing Offices are looked after by Vigilance Officers, under the guidance of Chief Vigilance Officer.

All the Unit Vigilance Officers send their monthly Vigilance / Inspection Reports and Surprise Inspection reports to CVO. The reports so received are scrutinized at CVO Office for further action. Unit Vigilance Officers also verify Annual Property Returns submitted by the Unit level Officers.

Apart from regular inspections by Unit Vigilance Officers, CVO conducts CTE type surprise and regular inspections of high value purchase/contracts and systems by visiting various Subsidiaries and Units.

Violations of rules and procedures observed during the inspection of files by CVO/Unit VOs were pointed out and comments of the concerned officers on the same were obtained. Wherever required, appropriate action against the concerned officers were recommended, instructions were issued to the effect that the violations of rules and procedures pointed out by the Vigilance Department should not be repeated.

Emphasis was laid on preventive vigilance by striving towards strict adherence to all rules and procedures and all norms of transparency in tendering process. Based on CVC''s guidelines for ÂImproving vigilance administration by leveraging technology and increasing transparency through effective use of websites, necessary directions were given by CVO for implementation of the same. Some of the systems put in place by the Company are:

1. Hosting of all open tenders and high value Limited Tenders on www.tenders.gov.in (Website of GOI). All Manufacturing Units and Offices generally observed compliance.

2. Publishing details regarding all purchase orders / contracts concluded during the month and above the threshold value (presently Rs. 5.00 lakhs). Implemented by all Units except Food Processing Machinery Unit, Aurangabad, CSD Division, Bangalore and Corporate Office, Bangalore under HMT Limited.

3. Application form for vendor registration along with list of items required by different Units of HMT Limited and Subsidiaries are made available on Company Website so as to enable the interested vendors to download the application form and submit the same to the Unit of their choice. Efforts are being made for periodical uploading of status of every vendor application on website. Presently 5 Units have uploaded the status.

4. Efforts are being made to persuade all Unit Managements to adopt e-payment mode for remittance of all payments including supplier payments. At present the HMT MTL Kalamassery Unit has adopted e-payment mode for making all payments. In many of the Units partial payments are being done by e payment mode.

Quarterly vigilance workshops were organized at all manufacturing units to enhance the level of vigilance awareness among the employees and other stakeholders. Vigilance Awareness Week 2013 was observed in all Units and Offices of HMT Limited and Subsidiary Companies as per the guidelines of CVC.

The number of inspections including surprise inspections carried out by CVO and Unit Vigilance Officers along with the number of property returns scrutinized between April 2013 to March 2014 is tabulated below :-

Inspection

Total carried out between April 2013 Â March 2014 (by Unit Vigilance Officers)

Periodic Inspection of Purchase Files 1464

Surprise Inspection 306

Scrutiny of Annual Property Returns 1120

Inspections done by CVO (April 2013 to March 2014)

(i) Watch Show Room in Bangalore (HMT Bhavan) (ii) HMT Machine Tools Hydrabad Unit, Praga Tools, Hyderabad and HMT Bearings Limited, Hyderabad. (iii) HMT MTL Bangalore Complex (MBX) (iv) HMT International Limited, Bangalore. (v) All HMT Units having the facility of dedicated Residential Colony for employees are directed to verify for cases of sub-letting on the basis of inspection at Bangalore. (vi) Surprise inspection at HMT WL Watch Factory, Bangalore.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on the Corporate Governance is annexed as part of this Report along with the Compliance Certificate from the Auditors. A Report on Management Discussion and Analysis is also appended to this Report separately. Further, a declaration by the Chairman & Managing Director for having obtained affirmation of compliance of the Code of Conduct by the Board Member (s) and Senior Management for the year ended March 31, 2014, is also appended.

The Audit Committee could not be reconstituted as per Cl. 49 of the Listing Agreement in the absence of Independent Directors to be appointed by the Government on the Board.

The Register of Members and Share Transfer Records both in respect of the shares held in physical and depository form are maintained by Karvy Computershare Private Limited, the Registrars & Share Transfer Agents of the Company.

INFORMATION REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under the Companies (Disclosures of Particulars) Rules, 1988, are annexed to this Report.

DIRECTORS RESPONSIBILITY STATEMENT

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

- In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

- accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit/loss 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;

- The annual accounts have been prepared on a going concern basis.

AUDITORS

M/s S.R.R.K.Sharma, Bangalore, were appointed as Statutory Auditors of the Company for the year 2013-14 by the Comptroller & Auditor General of India. Three firms of Chartered Accountants were also appointed as Branch Auditors for the other Units/Divisions of the Company.

DIRECTORS

Vide Presidential Order No.5(8)/2010-P.E.X dated 17th December 2013 issued by the Department of Heavy Industry, Ministry of Heavy Industries and Public Enterprises, Shri Rajesh Kumar Singh, has been appointed as the Part time Official Director of the Company with immediate effect, until further orders vice Shri Harbhajan Singh.

And Vide Presidential Order No.5(8)/2010-P.E.X dated 20th May 2014 issued by the Department of Heavy Industry, Ministry of Heavy Industries and Public Enterprises Shri S.K Bahri, has been appointed as the Part time Official Director of the Company with immediate effect, until further orders vice Ms. Kusumjit Sidhu.

The Board of Directors had approved their appointment as Directors with effect from 17th December 2013 and 20th May 2014 in terms of Article 67(4) of the Articles of Association read with Section 262 of the Companies Act, 1956 and 161 of the Companies Act, 2013. Shri Rajesh Kumar Singh & Shri S.K Bahri, are proposed for appointment as Directors in terms of Article 67(4) of the Article of Association of the Company read with Sections 160 of the Companies Act, 2013, for which a notice has been received from a Member.

Shri Antony Chacko who was appointed as Director of the Company resigned from the Company and he has been relived from services with effect from 20.05.2014.

The Government has given additional charge of the Post of Chairman & Managing Director of the Company to Shri S.Girish Kumar, Managing Director, HMT (International) Ltd. with effect from 1.12.2013 vice the then Chairman & Managing Director Shri Harbhajan Singh.

The Board of Directors had approved the appointment of Shri S.Girish Kumar as Director with effect from 1st

December, 2013 in terms of Article 67(4) of the Articles of Association read with Section 262 of the Companies Act, 1956. Shri S.Girish Kumar, is proposed for appointment as a Director in terms of Article 67(4) of the Article of Association of the Company read with Sections 160 of the Companies Act, 2013, for which a notice has been received from a Member.

ACKNOWLEDGEMENTS

Your Directors are thankful to the various Departments and Ministries in the Government of India, particularly the Department of Heavy Industry, Ministry of Corporate Affairs, Comptroller and Auditor General of India, Principal Director- Commercial Audit, Statutory and Branch Auditors, various State Governments, Foreign Collaborators, the Subsidiary Companies, Suppliers, Reserve Bank of India, the Consortium of Banks lead by UCO Bank and the valued Customers of the Company both in India and abroad for their continued co-operation and patronage.

Your Directors would also like to take this opportunity to express their appreciation for the contributions made by the Company''s employees and look forward to their continued services in pursuit of building a world class Indian Company.

For and on behalf of the Board of Directors

( S. Girish Kumar)

Chairman & Managing Director

Place: Bangalore Date: 11-08-2014

Mar 31, 2013

To The Members of HMT Limited

Bangalore

Dear Members,

The Annual Accounts of the Company for the year 2012-13 along with the Auditors'' Report and the Comments of the Comptroller & Auditor General of India are attached to this Report.

CORPORATE PERFORMANCE

The growth of the Indian economy, as per the Provisional Estimates, in terms of Gross Domestic Product (GDP) is estimated at 5.0 per cent in 2012-13 with agriculture, industry and services registering growth rates of 1.9 per cent, 2.1 per cent and7.1 per cent respectively. The growth in GDP is placed at 4.8 per cent in the fourth quarter of 2012-13.

The Exports decreased by 1.1 per cent and imports increased by 7.0 per cent, in US dollar terms during May 2013 over May 2012. According to the World Bank''s latest India Development Update, a bi-annual report on the Indian economy, India is expected to record 6.1 per cent gross domestic product (GDP) growth in the current fiscal. The growth is expected to increase further to 6.7 per cent in 2014-15. Prospects for agriculture are encouraging since monsoon for the year 2013-14 is near normal and is expected to spur agricultural growth resulting in demand for Company''s Products. The macroeconomic and industrial scenario in the Country during the year under review was extremely demanding and continues to be same during the current year so far.

In the Company''s main business portfolio of Tractors, the market indicators reveal that the industry recorded growth of 4% in terms of quantity, but there was a negative growth in value terms to 10% during the year under review. Your Company had to face severe pressure in its performance parameters during the year due to lack of working capital during peak season which effected the production activities during such crucial periods. Your Company could record a

Production of only Rs. 63.05 Crore (1309 Nos. of Tractors) during the year as against Rs. 182.98 Crore (4453 Nos. of Tractors), in the previous year, and Sales of Rs. 100.95 Crore (2005 Nos. of Tractors) compared to Rs. 161.12 Crore (3639 Nos. of Tractors) in the previous years, which was the lowest achieved in recent times. During the year under review, the Company had to reconcile the sales registered in the previous year 2011-12 and give effect to the same in the accounts, due to certain practices followed by the Tractor Unit which were not in accordance with the established Accounting Standards/practices. Necessary corrective measures have been taken in this regard to establish proper accounting norms as per the Accounting Policies and Accounting Standards in vogue.

The HMT Group Companies including the Subsidiaries achieved an aggregate Production of Rs. 306.86 Crore and Sales of Rs. 383.70 Crore during the year 2012-13.

OPERATING RESULTS

During the year under review, the operations of your Company resulted in a negative Gross Margin of Rs.21.24 Crore as compared to the Gross Margin of Rs.11.77 Crore in the previous year. The Operations of your Company resulted in a Net Loss of Rs. 145.38 Crore during the year 2012-13, when compared with Rs. 82.20 Crore recorded in the previous year, which was mainly due to lower capacity utilization in the Tractor business and the higher interest burdens on account of Loans availed from the Govt of India under various heads. The financial highlights for the year 2012-13, are as under:

FINANCIAL HIGHLIGHTS

(Rs.in Crore)

Particulars 2012-13 2011-12 Gross Profit/(Loss) (PBIDT) (21.24) 11.77

Depreciation & Amortization 3.55 4.40

Finance Cost 104.03 89.55

Profit/(Loss) before PPA (128.82) (82.187)

Less: Prior Period Adjustments 16.56 0.02 (PPA)

Net Profit/(Loss) before tax (145.38) (82.20)

Tax Provision (Net)

Net Profit/(Loss) after tax (145.38) (82.20)

Net Profit/(Loss) carried to (145.38) (82.20)

Balance Sheet

DIVIDEND & PROVISIONS

Owing to the losses incurred during the year, the Directors are unable to recommend any dividend on the paid up equity share capital of the Company. In view of the losses incurred during the year, no reserve has been created for Bonds redemption as required.

FINANCIAL POSITION

Due to the sub-optimal performance during the year under review, the Net Loss for the year to increased to Rs. 145.38 Crore, adversely affecting the Net Worth position of the Company. Further, on account of the loans of India during the year, the interest liability also shot up, adversely affecting the bottom line.

During the year 2012-13 the Tractor Division reported Production of 2523 Tractors and Sales 3333 Tractors in order to report increased performance and after the comprehensive audit taken up by the Company through a special team of Auditors, Production 1214 Nos of Tractors and Sales of 1328 Nos of Tractors had to be reversed. As a result of such inflated reporting of performance by the Unit, the Company''s overall performance was severely affected and created an aberration and disciplinary action was initiated against senior executives of the Tractor Division as well as against the Chief executive of the Company. All necessary steps have since been taken during last few months to set right the systems and procedures in the Unit in accordance with guidelines of the Company and prevailing accounting norms. Both administrative and organizational changes have been effected at various levels in the Unit to strictly ensure that instances of incorrect reporting of Production and Sales are not repeated in future.

FUTURE OUTLOOK

The Tractor industry is expected to grow by 6-8 percent this fiscal owing to near normal monsoon and improvement in rural economy. The Auto Policy of the Government also encourages this sector favorably. Although low HP tractors have only a negligible presence even now, the segment has more than doubled its market share in the past three years. There is an inherent expansion in tractor demand in this segment because of shortage of farm labour/increase in wage rates due to alternative employment opportunities available to workers under National Rural Employment Guarantee Act leading to increased tractor viability even for small/medium size land owners. Low HP tractors are also affordable for farmers with small land holdings that make them a viable option.

Growth in the segment is expected to remain buoyant because of increased application of lower HP tractors for smaller grounds, narrow spaces, orchards and cropping, etc. The other trend that is evident is increased use of tractors in infrastructure and construction sectors which has led to a huge growth in purchase of higher HP tractors. High growth in this segment is expected to continue because of the following:

- Replacement demand turning towards higher HP tractors.

- Increased usage of tractors for non-agricultural applications across India

The Tractor Industry will continue to grow in the year 2013--14 due to thrust of Govt, on Agriculture and infrastructure. The growth drivers of Tractor Industry such as boost in rural economy, increased focus on agriculture and rural development, credit availability, shorter replacement cycle, several policy initiatives by the Government, etc., are aiding the growth trends.

The Tractor Group of your Company has already initiated a host of measures towards performance corrections, improvements. Appointment of new Distributors and Dealers in potential areas/territories, upgradation of the tractor engines for compliance to new emission norms for all models of tractors, entering into MoUswith Banks/Financing Agencies for priority loan sanction for the purchase of HMT Tractors, dynamic business strategies, etc., which are expected to yield results in the current financial year.

The future plans of your Company envisages plant modernization and technology upgradation which will contribute to better productivity and give a thrust to the growth trends in the coming years. The Government has approved Revival and Financial Restructuring Plan for the Company (HMT Ltd) as recommended by the BRPSE during April 2013, which envisages financial support, waivers etc from Government of India. The salient features of the approved Revival Plans amounting toRs. 1083.48 Cr., to be implemented in a phased manner are as follows:

- Cash infusion of Rs. 447.92 Cr. in the form of issue of 8% redeemable Preference Share Capital of the face value of Rs. 425 Cr. for Plant modernization & capacity augmentation, technology upgradation, working capital, repayment of certain identified liabilities etc. and a Bridge Loan from Government of India at Rs. 22.92 Cr. at 7% interest p.a., over a period of 2 years;

- Non cash assistance in the form of conversion of Government of India Loans into Equity to the extent of Rs. 429.92 Cr. and waiver of accumulated interest of Rs. 205.64 Cr. on Government of India Loans;

- The Government has also approved for implementation of revised Pay Scales/Wages 1997 and revision in the retirement age of employees of the compnay (HMT Ltd.,) from 58 years to 60 years from the date of approval of the Revival Plan by Government i.e. 18.4.2013;

- Government has given permission to sell identified surplus land for redemption of the Preference Share Capital and repayment of bridge loan to Government.

The Shareholders of the Company at its Extra Ordinary General Meeting held on June 21,2013, have considered and approved the increase in Authorised Share Capital of the Company from Rs. 1450 Crore to Rs. 2100 Crore. The Board also approved, inter-alia, the issue and allotment of fully paid redeemable cumulative 3.5% Preference Share Capital of the face value of Rs. 443 Cr. in favour of President of India as per the terms of sanction of the investment by Government.

In compliance with the requirement of minimum public shareholding (MPS) of 10% as per Securities Contract (Regulations) (Amendment) Rules, 2010 and SEBI guidelines on MPS, the competent authority has approved the transfer of 67538614 Government shares in the Company held by the President of India of the face value of Rs. 10/- each to the Special National Investment Fund (NIF) for the purpose of making the Company compliant with the MPS norms of 10% which was effected on 7.8.2013.

The Government of India has issued sanction vide F.No. 5(4)/2011-PE.X (Vol.lll) Pt. V dated September 17, 2013 releasing an amount of Rs. 217,00,00,000/- towards subscription to the privately placed issue of preferential shares of the Company for meeting the expenditure on technology upgradation (Rs. 30 Crore), working capital (Rs.45 Crore) and discharge of overdue liabilities (Rs. 142 Crore) for which the Company has to issue 2 year 8% preferential share Capital comprising of 2,17,00,000 shares of the face value of Rs. 100/- each at par in the name of President of India. The shares will be allotted to the Government with the approval of the Board of Directors of the Company. The Govt of India has also sanctioned release of a GOI Bridge Loan of Rs. 11.46 for meeting the expenditure towards additional impact on account of pay revision as per requirement of the revival plan approved by CCEA. Formal Sanction for Non-Cash assistance i.e. conversion of Government loans in to equity & waiver of accumulated interest thereon is still awaited from Government.

SUBSIDIARY COMPANIES

- HMT Machine Tools Limited

The Subsidiary achieved Sales ofRs. 236.23 Crore against Rs. 240.46 Crore achieved in previous year. Net loss reported is Rs. 43.65 Crore during the year 2012-13 against reported loss of Rs. 46.14 Cr in previous year. Capacity utilisation for theyear2012-13is54%.

The Subsidiary has implemented the revival plan proposals and plant up-gradation. The Subsidiary is also pursuing with various agencies for extending the reliefs and concessions sanctioned by the BIFR under the Rehabilitation Scheme. Some of these Parties including the Consortium of Banks have preferred appeals against the reliefs and concessions sanctioned by the BIFR, which is being contested by the Subsidiary.

During recent Meeting, BRPSE reviewed the progress of Revival Plan Implementation and recognized the need for interim measures to propel the growth of HMT Machine Tools Limited which will augur the momentum. Accordingly proposal from HMT Machine Tools Limited has been forwarded to the Ministry for consideration.

- H MT Watches Li m ited

This Subsidiary could not show significant improvement in performance during the year under review. Major factors affecting the performance of this Subsidiary were paucity of working capital, erosion of trade channel and high cost of borrowings. Despite these constraints, this Subsidiary could achieve a Sales level of Rs.11.06 Crore and Production of Rs. 14.03 Crore during the year under review. The Net Loss for the year stood at Rs. 242.47 Crore as compared to Rs. 224.04 Crore incurred during the previous year.

The Subsidiary was able to reduce its manpower by introduction of VRS, funded by Government of India (Gol) Loans. A total of 59 employees have been retired by the Subsidiary under VRS during the year 2012-13 thereby reducing its manpower strength to 1105 as on 31.3.2013.

The Revival Plan in respect of this Subsidiary has been submitted to the Government based on the business plans prepared by a reputed Consultancy Firm and is under consideration of the Government.

- HMT Chinar Watches Limited

The performance of this Subsidiary could not be sustained at optimum levels due to the disturbed situation prevailing in the J&K Valley apart from working capital constraints for production. Majority of the employees have been separated on VRS leaving about 54 employees at Srinagar and Jammu Units of the Subsidiary. Under these circumstances, the Subsidiary''s Sales was limited to Rs. 0.36 Crore during the year compared to Rs. 0.08 Crore in the previous year, with NIL Production for the year. In view of the virtual non operating levels, the Subsidiary incurred a Net loss of Rs. 51.16 Cr against Rs. 44.04 Crore compared to previous year.

- HMT (International) Limited This Mini Ratna Subsidiary achieved a turnover ofRs. 34.09 Crore as against Rs. 32.40 Crore recorded in the previous year, i.e. 2011-12, registering a growth of 5%. The Order procurement during the year is Rs. 24.10 Crore as against Rs. 37.98 Crore achieved in the previous year. Continuing the trend of achieving profits, Subsidiary could report Profit before Tax (PBT) of Rs. 6.85 Crore achieved against Rs. 1.74 Crore reported in previous year. PBT includes earlier bad debts written off realised now amounting to Rs. 4.13 Cr. The Subsidiary has maintained its consistent dividend payment record and has recommended a dividend of 20% for the year 2012-13 on its Paid-up equity share capital.

- HMT Bearings Limited During the year under review, the Subsidiary was able to achieve a Sales of Rs. 12.54 Crore, against the Previous Year''s Sales of Rs. 16.12 Crore. In terms of Production the Company was able to achieve Rs. 11.73 Crore compared to the Previous Year''s Production level of Rs. 14.64 Crore. Profit before Tax is Rs. (-)2.07 Cr. with exceptional Item of interest waiver of Rs.6.38 Cr. against Rs. (-)10.12 Cr. reported during 2011-12.

The Revival Plans of this Subsidiary submitted to DHI/ BRPSE has been approved by BRPSE during its meeting held in May 2013 and forwarded its recommendations to Government

ASSOCIATE /JOINT VENTURE COMPANY

SUDMO-HMT Process Engineers (India) Limited

This Joint Venture Company could not transact any business during the year under review. For the financial year 2012-13, this Company showed a Profit after tax of

Rs. 1.06 Lakhs on account of the interest income of Rs. 3.71 Lakhs, on the fixed deposits kept with the Banks. The Company is in the process of re-starting the operations of this Company.

Gujarat State Machine Tools Corporation Ltd

This Joint Venture Company between HMT and GIIC Ltd has discontinued its operations since long. It is therefore proposed to divest from this Associate Company in favour of the JV Partner. The process of disinvestment from this Company, is under consideration by the Company in consultation with the JV Partner.

CONSOLIDATED FINANCIAL STATEMENTS

As required under the Listing Agreement, Consolidated Financial Statements of the Company along with that of the Subsidiaries for the financial year 2012-13, conforming to the applicable Accounting Standards, are attached to this Report along with the Auditors'' Report on the same.

In terms of the General Circular No. 2/2011 dated 8th February, 2011, issued by the Central Government in terms of Section 212(8) of the Companies Act, 1956, the Directors have consented not to attach copy of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Auditors of the five (5) Subsidiary Companies viz., HMT Machine Tools Limited; HMT Watches Limited; HMTChinar Watches Limited; HMT Bearings Limited and HMT (International) Limited to the Balance Sheet of the Company (Holding Company). However, these documents will be made available upon request by any member of the Company and Subsidiary Companies interested in obtaining the same. Further, in compliance with the conditions of the above referred Government circular, the financial information of each of these subsidiary Companies have been furnished as part of the Consolidated Balance Sheet of the Company. The annual accounts and other detailed information of each of the Subsidiary companies will be available for inspection by any member at the Registered Office of the Company. A statement pursuant to Section 212(1) of the Companies Act, 1956, in respect of each of the Subsidiary Companies is attached to this report.

HUMAN CAPITAL

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rules, 1975, as amended, is NIL for the year 2012-13.

The employee strength of the Company as on March 31, 2013, stood at 1442 Nos. as compared to 1699 at the end of the previous year. There are 295 employees in the Officer Cadre and 1147 Non-Executive in Workmen cadre. The number of employees on the rolls of the Company as on March 31, 2013 in SC/ST, Ex-servicemen, Physically Handicapped and Women Employee Categories etc. is detailed below:

Scheduled Castes 320

Scheduled Tribes 47

Other Backward Classes 105

Ex-Servicemen 4

Persons with Disabilities 15

Women employees 44

Minorities

217 INDUSTRIAL RELEATIONS

The overall Industrial Relations situation in the Company during the year remained cordial.

IMPLEMENTATION OF OFFICIAL LANGUAGE

The efforts towards implementation of Official Language Act, Rules & Policy as per the directives of the Government in the Company is continuous. The Official Language Implementation Committee have been constituted in all the Units of the Company and the Subsidiaries, including the Corporate Office at Bangalore to monitor implementation of Official Language Act, Rules, Policy, etc. which meets at regular intervals in every quarter.

In order to propagate the usage of Hindi as Official Language, "HINDI DIWAS/HINDI FORTNIGHT''was observed during the month of September, 2012. Various Hindi competitions such as Hindi Story writing, Hindi News Paper Reading, Hindi Quiz Writing, Hindi Conversation, Hindi Antyakshari, etc., were organized and participants were awarded prizes. A workshop was organised during the above period. The Hindi Magazines/Newspapers are being procured to propagate the usage of Hindi among employees. The concerned Officials of the Company regularly take part in the meetings of the Town Official Languages Implementation Committee. The Company also sponsors some of the Hindi competitions under Bangalore Town Official Language Implementation Committee

VIGILANCE ACTIVITIES

The Chief Vigilance Officer appointed by the Government of India heads the Corporate Vigilance Department of the Company. The Chief Vigilance Officer is assisted at Unit level by exclusively appointed Vigilance Officers. The

Corporate Vigilance Department carries out vigilance functions in the Company as well as in the Subsidiaries. The vigilance functions in the manufacturing Units and Marketing Offices are looked after by Vigilance Officers, under the guidance of Chief Vigilance Officer.

The Vigilance Department carried out regular and surprise inspections of a large number of high value contracts / purchases, services contracts etc and verified Annual Property returns submitted by the officers of the Company. Violations of rules and procedures were pointed out and comments of the concerned officers on the same were obtained. Wherever required, appropriate action against the concerned officers was recommended. The Vigilance Officers were given special task such as verification of man power contracts. This was done across all Units of the Company & Subsidiary Companies.

In line with CVC''s direction, emphasis was laid on preventative vigilance by striving towards strict adherence to all rules and procedures and all norms of transparency in tendering process. Based on CVC''s guidelines for ''Improving vigilance administration by leveraging technology and increasing transparency through effective use of website'' necessary directions were given by CVO for implementation of the same .some of the systems put in place by the Company are:

1. Hosting of all open tenders and high value Limited Tenders on www.tenders.gov.in (website of Gol).

2. Publishing details regarding all purchase orders / contracts concluded during the month, above the threshold value (presentlyRs.5.00 lakhs).

3. Application form for vendor registration along with list of items required by different Units of the Company and Subsidiaries are made available on Company website so as to enable the interested vendors to download the application form and submit the same to the Unit of their choice. Efforts are being made for periodical uploading of status of every vendor application on website.

4. Units are directed to upload status of vendor applications on the website and update the same once in quarter. Presently 3 Units have implemented this.

5. Payments by electronic mode to suppliers are being done completely by one Manufacturing Unit and partially by all Units. Efforts are being put for complete compliance by all Units

Quarterly vigilance workshops were organized at all manufacturing Units to enhance the level of vigilance awareness among the employees and other stakeholders. Vigilance Awareness Week 2012 was observed in all Units and Offices of the Company and Subsidiaries as per the guidelines of CVO

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on the Corporate Governance is annexed as part of this Report along with the Compliance Certificate from the Auditors. A Report on Management Discussion and Analysis is also appended to this Report separately. Further, a declaration by the Chairman & Managing Director for having obtained affirmation of compliance of the Code of Conduct by the Board Member (s) and Senior Management for the year ended March 31, 2013, is also appended.

The Audit Committee could not be reconstituted as per CI. 49 of the Listing Agreement in the absence of Independent Directors to be appointed by the Government on the Board.

The Register of Members and Share Transfer Records both in respect of the shares held in physical and depository form are maintained by Karvy Computershare Private Limited, the Registrars & Share Transfer Agents of the Company.

INFORMATION REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under the Companies (Disclosures of Particulars) Rules, 1988, are annexed to this Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Sub-Section (2AA) of Section 217 of the Companies Act, 1956, the Board of Directors hereby state and confirm that:

- In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

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

- The Directors have taken proper and sufficient care 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;

- The Directors have prepared the annual accounts on a going concern basis. AUDITORS

M/s S.R.R.K.Sharma , Bangalore, were appointed as Statutory Auditors of the Company for the year 2012-13 by the Comptroller & Auditor General of India. Three firms of Chartered Accountants were also appointed as Branch Auditors for the other Units/Divisions of the Company. M/s.Khurana & Co Cost Accountants were re-appointed as Cost Auditors for the year 2012-13 in respect of "Tractors" and S.B.Khadke & Co., Cost Accountants were re-appointed as Cost Auditors for "Food processing Unit", Aurangabad for the year 2012-13. Replies to the observations by the Statutory Auditors in their Report are given by way of an addendum to this Report.

DIRECTORS

Vide Presidential Order No.5(8)/2010-P.E.X dated 2nd May 2013 issued by the Department of Heavy Industry, Ministry of Heavy Industries and Public Enterprises, Ms. Kusumjit Sidhu, has been appointed as the Part time Official Director of the Company with immediate effect, until further orders vice Shri Vijay Shankar Madan. The Board of Directors has approved her appointment as Director with effect from 2nd May 2013 in terms of Article 67(4) of the Articles of

Association read with Section 262 of the Companies Act, 1956. Ms.Kusumjit Sidhu, is proposed for appointment as a Director in terms of Article 67(4) of the Article of Association of the Company read with Sections 255,257 and 262 of the Companies Act, 1956,for which a notice has been received from a Member.

Shri Antony Chacko who was appointed as Director of the Company, retires by rotation at ensuing Annual General Meeting and is eligible for re-appointment. The Govt has given additional charge of the Post of Chairman & Managing Director of the Company to Shri Harbhajan Singh, Director and Joint Secretary with effect from 15.06.2013.

ACKNOWLEDGEMENTS

Your Directors are thankful to the various Departments and Ministries in the Government of India, particularly the Department of Heavy Industry, Ministry of Corporate Affairs, Comptroller and Auditor General of India, Principal Director-Commercial Audit, Statutory and Branch Auditors, various State Governments, Foreign Collaborators, the Subsidiary Companies, Suppliers, Reserve Bank of India, the Consortium of Banks lead by UCO Bank and the valued Customers of the Company both in India and abroad for their continued co-operation and patronage.

Your Directors would also like to take this opportunity to express their appreciation for the contributions made by the Company''s employees and look forward to their continued services in pursuit of building a world class Indian Company.

For and on behalf of the Board of Directors

Harbhajan Singh

Chairman & Managing Director

Place: Bangalore

Date: 23-10-2013

Mar 31, 2012

To The Members of HMT Limited

The Annual Accounts of the Company for the year 2011 - 12 along with the Auditors' Report and the Comments of the Comptroller & Auditor General of India are attached to this Report.

CORPORATE PERFORMANCE

The Indian macroeconomic overview reported that the economic growth in the Country decelerated during the year 2011-12 showing a drop from 7.7 percent in the first quarter to 6.9 per cent in the second quarter and further down to 6.1 per cent in the third quarter & lastly to 6.9 per cent in the fourth quarter. Overall Growth decelerated significantly to 6.1 per cent in the third quarter of last year, although it is expected to have recovered moderately in the fourth quarter. Based on current assessment, the economy is clearly operating below its post-crisis trend. India's GDP growth rate slowed to 6.9 per cent in 2011- 12 against 8.4 per cent in the previous two financial years.

On the demand side, gross fixed capital formation contracted both in the second and third quarters of the year 2011 -12, and on the other hand, the share of gross Fixed Capital Formation (GFCF) in GDP was down by almost 1 percentage point (from 30.4 per cent to 29.5 per cent). The more recent data on industrial production suggest that activity may have expanded at a slower pace than last year.

Looking ahead, the overall growth outlook for the current year appears to be marginally better than it was last year.

Accordingly, a projection of GDP growth for the current year is 7.3 per cent. Prospects for agriculture are encouraging. The assessment of leading indicators suggests that the overall situation of monsoon for the year 2012 may be near normal. Growth may have bottomed out in the 3Ã Quarter of 2011 -12, but recovery ahead is likely to be slow. Revival in the industrial sector hinges on the impetus to ease supply-side constraints, especially in the energy and mineral deficits. Government initiatives to revive the power sector would lead to reviving the growth momentum.

On the Company's main business portfolio of Tractors, the market indicators reveal that the industry recorded growth of 4% in terms of quantity, but there was a negative growth in value terms to 10% during the year under review. As a result, your Company also had to face severe pressure on performance during the year. Your Company recorded a Production ofRs. 182.98 Crore (4453 Nos. of Tractors) as against Rs. 187.24 Crore (4812 Nos. of Tractors), in the previous year, and Sales of Rs. 161.12 Crores (3639 Nos. of Tractors) compared to Rs. 200.86 Crores (4920 Nos. of Tractors) in the previous year.

HMT Group along with its Subsidiaries achieved an aggregate Production of Rs. 428.83 Crore and Sales of Rs. 449.67 Crore for the year 2011-12. The overall performance was marginally better than that of the previous year.

OPERATING RESULTS

Your Company achieved a Gross Margin of Rs. 11.77 Crore during the Year under review as compared to the Gross Margin of Rs. 3.71 Crore in the previous year. The Operations of your Company resulted in a Net Loss of Rs. 82.20 Crore during the year 2011-12, when compared with Rs. 79.24 Crores recorded in the previous year, which was mainly due to the higher interest burdens on account of Loans availed from the Govt of India under various heads. The financial highlights for the year 2011 -12, are as under:

FINANCIAL HIGHLIGHTS (Rs. in crore)

Particulars 2011-12 2010-11

Gross Profit/(Loss)(PBIDT) 11.77 3.71

Depreciation & Amortization 4.40 3.87

Finance Cost 89.55 79.08

Profit/(Loss) before PPA (82.18) (79.24)

Less: Prior Period Adjustments (PPA) 0.02 -

Net Profit/(Loss) before tax (82.20) (79.24)

Tax Provision (Net)

Net Profit/(Loss) after tax (82.20) (79.24)

Net Profit/(Loss) carried to

Balance Sheet (82.20) (79.24)

DIVIDEND & PROVISIONS

Owing to the losses incurred during the year, the Directors are unable to recommend any dividend on the paid up equity share capital. Hence, no reserve has been created for Bonds redemption as required.

FINANCIAL POSITION

Due to liquidity constraints, the production value of Tractors remained at Rs. 182.98 Crore during the year under review. Further, the high interest on account of loans availed from Government of India to discharge liabilities, affected the bottom line to a large extent.

During January 2012, your Company received financial assistance in the form of Non Plan Loan of Rs. 38 Crore from the Government of India, for meeting the urgent working capital needs of the Tractor Division, which helped improve the Production in the last Quarter of the year under review.

FUTURE OUTLOOK

Two distinct trends are emerging in the Indian tractor market, first being the increase in market share of low HP tractors. Although low HP tractors have only a negligible

presence even now, the segment has more than doubled its market share in the past three years. There is an inherent expansion in tractor demand in this segment because of shortage of farm labour/increase in wage rates due to alternative employment opportunities available to workers under National Rural Employment Guarantee Act leading to increased tractor viability even for small/medium size land owners. Low HP tractors are also affordable for farmers with small land holdings that make them a viable option.

Growth in the segment is expected to remain buoyant because of increased application of lower HP tractors for smaller grounds, narrow spaces, orchards and cropping, etc.

The other trend that is evident is increased use of tractors in infrastructure and construction sectors which has led to a huge growth in purchase of higher HP tractors. High growth in this segment is expected to continue because of the following:

- Replacement demand turning towards higher HP tractors.

- Increased usage of tractors for non-agricultural applications across India

The Industry growth is projected at 8-12 per cent for current financial year 2012-13, with the monsoon being normal.

The Tractor Industry will continue to grow in the year 2012-13 due to thrust of Govt, on Agriculture and infrastructure. The growth drivers of Tractor Industry such as boost in rural economy, increased focus on agriculture and rural development, credit availability, shorter replacement cycle, several policy initiatives by the Government, etc., are aiding the growth trends. Tractor sales are expected to witness growth of 8 -10% during the year 2012-13. The demand for I.P.Engnes is also expected to grow substantially due to shortage of power across the Country and installation of cellular towers by the Mobile telephone operators.

The Tractor Business Group of your Company has already initiated a host of measures towards performance improvement in right earnest, by appointment of new Distributors and Dealers in potential areas/territories, up gradation of the tractor engines for compliance to new emission norms for all models of tractors, entering into Molls with Banks/Financing Agencies for priority loan sanction for the purchase of HMT Tractors, dynamic business strategies, etc., which are expected to yield results in the current financial year.

The future plans of your Company envisages plant modernization and technology upgradation which will contribute to better productivity and give a thrust to the growth trends in the coming years. A Business Plan has been prepared in association with a reputed Consultancy Firm, which comprises of various strategic initiatives to sustain the operations and achieve growth and has been recommended by the Board for Reconstruction of Public Sector Enterprises (BRPSE) in the form of a Revival Plan and is being processed for approval by the Government of India.

SUBSIDIARY COMPANIES

- HMT Machine Tools Limited

The Subsidiary achieved Sales of Rs. 240.46 Crore and Production of Rs. 218.17 Crore with a Net loss of Rs. 46.14 Crore during the year 2011-12. The Subsidiary has implemented the revival plan proposals and plant up- gradation. The Subsidiary is also pursuing with various agencies for extending the reliefs and concessions sanctioned by the BIFR under the Rehabilitation Scheme. Some of these Parties including the Consortium of Banks have preferred appeals against the reliefs and concessions sanctioned by the BIFR, which is being contested by the Subsidiary. The Merger of Praga Tools Ltd, Hyderabad, with the Subsidiary, which was part of the sanctioned Scheme of BIFR has since been completed.

- HMT Watches Limited

This Subsidiary could not show significant improvement in performance during the year under review. Major factors affecting the performance of this Subsidiary were paucity of working capital, erosion of trade channel and high cost of borrowings. Despite these constraints, this Subsidiary could achieve a Sales level of Rs. 10.24 Crore and Production of Rs. 13.04 Crore during the year under review. The Net Loss for the year stood at Rs. 224.04 Crore as compared to Rs. 253.74 Crore incurred during the previous year. The Revival Plan in respect of this Subsidiary has been submitted to the Government based on the business plans prepared by a reputed Consultancy Firm. The Subsidiary was able to reduce its manpower by introduction of VRS, funded by Government of India (Gol) Loans. Atotal of 124 employees have been retired by the Subsidiary under VRS during the year 2011-12 involving an outgo of Rs. 26.29 Crore, thereby reducing its manpower strength to 1219 as on 31.3.2012.

- HMT Chinar Watches Limited

The performance of this Subsidiary could not be sustained at optimum levels due to the disturbed situation prevailing in the J&K Valley apart from working capital constraints for production. Majority of the employees have been separated on VRS leaving about 111 employees at Srinagar and Jammu Units of the Subsidiary. Under these circumstances, the Subsidiary's Sales was limited to Rs. 0.08 Crore during the year compared to Rs. 0.10 Crore in the previous year, with NIL Production for the year. In view of the virtual non operating levels, the Subsidiary incurred a Net loss of Rs. 44.04 Crore during the year.

- HMT (International) Limited

The export Subsidiary achieved a turnover of Rs. 32.40 Crore as against Rs. 27.89 Crore recorded in the previous year, i.e. 2010-11, registering a growth of 16%. The Order procurement during the year also showed a satisfactory increase atRs. 37.98 Crore as against Rs.27.45 Crore achieved in the previous year, registering a growth of 38%. With the increased Turnover levels, the Subsidiary was able to achive the Profit Before Tax (PBT) of Rs. 1.74 Crore as against Rs. 0.31 Crore achieved in the previous year, thereby continuing the trend of achieving profits. The Subsidiary has maintained its consistent dividend payment record and has recommended a dividend of 20% for the year 2011 -12 on its Paid-up equity share capital.

- HMT Bearings Limited

During the year under review, your Company was able to achieve a Sales of Rs. 16.12 Crore, registering growth of 40% as against the Previous Year's Sales of Rs. 11.48 Crore. In terms of Production also, the Company was able to achieve Rs. 14.64 Crore registering a growth of 30% as compared to the Previous Year's Production level of Rs. 11.24 Crore.

The Revival Plans of this Subsidiary has been prepared and submitted for consideration by the Government through the BRPSE. Meanwhile, the bankers to the Company holding security in the form of immovable properties have initiated action against the mortgaged property under the SARFAESI Act and the matter is now pending before DRT, Hyderabad, in appeal.

ASSOCIATE /JOINT VENTURE COMPANY

SUDMO-HMT Process Engineers (India) Limited

Business was not transacted by this Joint Venture Company during the year under review. For the financial year 2011-12, this Company showed a Profit after tax of Rs. 0.91 Lakhs on account of the interest income ofRs. 3.36 lakhs, out of the Fixed Deposits kept with the Banks. The Company is in the process of re-starting the operations of this Company.

Gujarat State Machine Tools Corporation Ltd

This Joint Venture Company between HMT and GIIC Ltd has discontinued its operations since long. It is therefore proposed to divest from this Associate Company jointly with the JV Partner. The process of disinvestment is under consideration by the Company in consultation with the JV Partner.

CONSOLIDATED FINANCIAL STATEMENTS

As required under the Listing Agreement, Consolidated Financial Statements of the Company along with that of the Subsidiaries for the financial year 2011 -12, conforming to the applicable Accounting Standards, are attached to this Report along with the Auditors' Report on the same.

In terms of the General Circular No. 2/2011 dated 8th February, 2011, issued by the Central Government in terms of Section 212(8)of the Companies Act, 1956, the Directors have consented not to attach copy of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Auditors of the five (5) Subsidiary Companies viz., HMT Machine Tools Limited; HMT Watches Limited; HMTChinar Watches Limited; HMT Bearings Limited and HMT (International) Limited to the Balance Sheet of the Company (Holding Company). However, these documents will be made available upon request by any member of the Company and Subsidiary Companies interested in obtaining the same. Further, in compliance with the conditions of the above referred Government circular, the financial information of each of these subsidiary Companies have been furnished as part of the Consolidated Balance Sheet of the Company. The annual accounts and other detailed information of each of the Subsidiary Companies will be available for inspection by any member at the Registered Office of the Company. A statement pursuant to Section 212(1) of the Companies Act, 1956, in respect of each of the Subsidiary Companies is attached to this report.

HUMAN CAPITAL

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rules, 1975, as amended, is NIL for the year 2011-12.

The employee strength of the Company as on March 31, 2012, stood at 1699 Nos. as compared to 2088 Nos. at the end of the previous year. There are 340 employees in the Officer Cadre and 1359 Non-Executive in Workmen cadre. The number of employees on the rolls of the Company as on March 31, 2012 in SC/ST, Ex-servicemen, Physically Handicapped and Women Employee Categories etc. is detailed below:

Scheduled Castes 397

Scheduled Tribes 57

Other Backward Classes 117

Ex-Servicemen 4

Persons with Disabilities 16

Women employees 48

Minorities 258

INDUSTRIAL RELEATIONS

The overall Industrial Relations situation in the Company during the year remained cordial.

IMPLEMENTATION OF OFFICIAL LANGUAGE

The efforts towards implementation of Official Language Act, Rules & Policy as per the directives of the Government in the Company is continuous. The Official Language Implementation Committee have been constituted in all the Units of the Company and the Subsidiaries, including the Corporate Office at Bangalore to monitor implementation of Official Language Act, Rules, Policy, etc. which meets at regular intervals in every quarter.

In order to propagate the usage of Hindi as Official Language, "HINDI DIWAS/HINDI FORTNIGHT" was observed during the month of September, 2011. Various competitions in Hindi such as Hindi Story Writing, Hindi News Paper Reading, Hindi Quiz Writing, Hindi Conversation, Hindi Antyakshari, etc., were organized and participants were awarded prizes. A workshop was organised during the above period. The Hindi Magazines/Newspapers are being procured to propagate the usage of Hindi among employees. The concerned Officials of the Company regularly take part in the meetings of the Town Official Language Implementation Committee. The Company also sponsors some of the Hindi competitions under Bangalore Town Official Language Implementation Committee.

VIGILANCE ACTIVITIES

The Chief Vigilance Officer appointed by the Government of India heads the Corporate Vigilance Department of the Company. The Chief Vigilance Officer is assisted at Unit level by Assistant Vigilance Officers appointed specifically for this purpose.The Corporate Vigilance Department carries out vigilance functions in the Company as well as in the Subsidiaries. The vigilance functions in the manufacturing Units and Marketing Offices are looked after by Vigilance Officers, under the guidance of Chief Vigilance Officer.

The Unit Vigilance Officers submit monthly vigilance and inspection reports to CVO. The reports so received are scrutinized at CVO Office for further action. Unit Vigilance Officers also verify Annual Property Returns submitted by the Unit level Officers. Apart from regular inspections by Unit Vigilance Officers, CVO conducts CTE type surprise and regular inspections of high value purchase /contracts and systems. Violations of rules and procedures, if any, observed during the inspection of files by CVO/Unit VOs are pointed out and comments of the concerned officers obtained. Wherever required, appropriate action against the concerned officers are recommended, instructions issued to the effect that the violations of rules and procedures pointed out by the Vigilance Department do not recur.

In line with CVC's direction, emphasis was laid on preventive vigilance by striving towards strict adherence to all procedures and norms of transparency in tendering process. CVC's guidelines for 'Improving vigilance administration by leveraging technology and increasing transparency through effective use of website' are considered. Some of the systems put in place by the Company are:

1. Hosting of all open tenders and high value Limited Tenders on www.tenders.gov.in (website of Gol).

2. Publishing details regarding all purchase orders / contracts concluded during the month, above the threshold value (presentlyRs. 5.00 lakhs).

3. Application form for vendor registration along with list of items required by different Units of the Company and Subsidiaries are made available on Company website so as to enable the interested vendors to download the application form and submit the same to the Unit of their choice. Efforts are being made for periodical uploading of status of every vendor application on website.

4. Wherever possible Company has adopted e-payment mode for remittance.

Quarterly vigilance workshops were organized at all manufacturing Units to enhance the level of vigilance awareness among the employees and other stakeholders. Vigilance Awareness Week 2011 was observed in all Units and Offices of the Company and Subsidiaries as per the guidelines of CVC.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on the Corporate Governance is annexed as part of this Report along with the Compliance Certificate from the Auditors. A Report on Management Discussion and Analysis is also appended to this Report separately. Further, a declaration by the Chairman & Managing Director for having obtained affirmation of compliance of the Code of Conduct by the Board Member (s)and Senior Management for the year ended March 31, 2012, is also appended.

The Audit Committee could not be reconstituted as per CI. 49 of the Listing Agreement in the absence of Independent Directors to be appointed by the Government on the Board.

The Register of Members and Share Transfer Records both in respect of the shares held in physical and depository form are maintained by Karvy Computershare Private Limited, the Registrars & Share Transfer Agents of the Company.

INFORMATION REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under the Companies (Disclosures of Particulars) Rules, 1988, are annexed to this Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Sub-Section (2AA) of Section 217 of the Companies Act, 1956, the Board of Directors hereby state and confirm that:

- In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

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

- The Directors have taken proper and sufficient care 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;

- The Directors have prepared the annual accounts on a going concern basis.

AUDITORS

M/s S.R.R.K.Sharma , Bangalore, were appointed as Statutory Auditors of the Company for the year 2011 -12 by the Comptroller & Auditor General of India. Three firms of Chartered Accountants were also appointed as Branch Auditors for the other Units/Divisions of the Company. M/s Khurana & Co., Cost Accountants were appointed as Cost Auditors for the year 2011 -12 in respect of "Tractors".

Replies to the observations by the Statutory Auditors in their Report are given by way of an addendum to this Report.

DIRECTORS

Vide Presidential Order No. 5(32)/2009-P.E.X dated 19th September 2011 issued by the Department of Heavy Industry, Shri S.G. Sridhar, Director (Operations) has been appointed as the Chairman & Managing Director of the Company for a period of five years from the date he assumes the charge of the post or till the date of his superannuation or until further orders, whichever is earliest. Shri Sridhar took charge of the Post on September 19, 2011.

Shri Harbhajan Singh, Director, retires by rotation at the ensuing Annual General Meeting and is eligible for re- appointment.

The Ministry of Heavy Industries and Public Enterprises, Department of Heavy Industry, New Delhi has appointed Dr. Vijay Shankar Madan, Additional Secretary and Financial Advisor as a Director on the Board of the Company with effect from 18.07.2012 Vice Shri Saurabh Chandra, Director.

Shri Antony Chacko was appointed as Director (Operations) in the vacancy caused by the elevation of Shri S.G. Sridhar as Chairman & Managing Director vide presidential order F.No. 5 (33)/2011PE.X. dated 16.07.2012. He assumed charge of post on 23-08-2012.

Pursuant to Article 67(4) of the Article of Association of the Company and Section 255 read with Sections 257 and 262 of the Companies Act, 1956, as amended, Dr. Vijay Shankar Madan who was appointed as Directors of the Company, who retires by rotation at ensuing Anual General Meeting and is eligible for re-appointment.

The Directors wish to place on record the services rendered by Shri Saurabh Chandra, Director.

ACKNOWLEDGEMENTS

Your Directors are thankful to the various Departments and Ministries in the Government of India, particularly the Department of Heavy Industry, Ministry of Corporate Affairs, Comptroller and Auditor General of India, Principal Director- Commercial Audit, Statutory and Branch Auditors, various State Governments, Foreign Collaborators, the Subsidiary Companies, Suppliers, Reserve Bank of India, the Consortium of Banks lead by UCO Bank and the valued Customers of the Company both in India and abroad for their continued co-operation and patronage.

Your Directors would also like to take this opportunity to express their appreciation for the contributions made by the Company's employees and look forward to their continued services in pursuit of building a world class Indian Company.

For and on behalf of the Board of Directors (S. G. Sridhar)

Chairman & Managing Director

Mar 31, 2011

Dear Members

The Annual Accounts of the Company for the year 2010-11 along with the Auditors' Report and the Comments of the Comptroller & Auditor General of India are attached to this Report.

CORPORATE PERFORMANCE

The Indian Economy recorded robust growth and steady fiscal consolidation in the year 2010-11. The growth rate of the Economy has been 8.6% in the financial year 2010-11 and is expected to be around 9% in the next fiscal i.e the current year. The growth in the agriculture sector is expected to be around 5.4% while growth in the manufacturing and services sectors has registered impressive gains of 7% and 9.5% respectively.

Taking cue from the strong growth indicators, the tractor industry also recorded an impressive growth of 24% during the year under review. As a result, your Company also showed a marginally better performance during the year, recording growth in terms of both Production and Sales, over that of the previous year. During the year, your Company achieved a Production level of Rs.187.24 Crore (4812 Nos. of Tractors) as against Rs.169.65 Crore (4652 Nos. of Tractors), recorded in the previous year, with a growth of 10%. In terms of Sales also the Company registered a growth of 4% at Rs.200.86 Crore (4920 Nos. of Tractors) compared to Rs.191.64 Crore (4901 Nos. of Tractors) achieved in the previous year.

At the consolidated level, your Company along with its Subsidiaries achieved an aggregate Production of Rs.386.59 Crore and Sales of Rs.449.03 Crore for the year 2010-11. On a comparative basis, the performance was marginally better than that of the previous year.

OPERATING RESULTS

Despite the marginal growth in Sales registered during the year, the Operations of your Company resulted in a Net Loss of Rs.79.24 Crore during 2010-11, when compared with Rs.52.91 Crore recorded in the previous Year, which was mainly due to the additional provisions required to be made owing to the recent enhancement in the ceiling amount of gratuity payable to retiring employees from Rs.3.50 lakhs to Rs.10 lakhs and the higher interest burdens on account of Loans availed from the Govt of India under various heads. The financial highlights for the year 2010-11, are as under:

FINANCIAL HIGHLIGHTS

(Rs. in crore)

Particulars 2010-11 2009-10

Gross Profit/(Loss) (PBIDT) (36.66) (29.26)

Depreciation 3.87 3.92

Interest 38.71 23.57

Profit/(Loss) before PPA (79.24) (52.86)

Less: Prior Period Adjustments

(PPA) - 0.05

Net Profit/(Loss) before tax (79.24) (52.91)

Tax Provision (Net) - -

Net Profit/(Loss) after tax (79.24) (52.91)

Net Profit/(Loss) carried to

Balance Sheet (79.24) (52.91)

DIVIDEND

Owing to the losses incurred during the year, the Directors are unable to recommend any dividend on the paid up equity share capital. Hence, no reserve has been created for Bonds redemption as required.

FINANCIAL POSITION

Due to liquidity constraints, the production volume of Tractors has reduced resulting in a turnover of Rs.200.06 crore during the year under review. Further, the high interest on account of loan availed from Government of India to discharge liabilities, affected the bottom line to a large extent.

FUTURE OUTLOOK

Indian Tractor Industry's Annual growth rate is expected to be around 8-10%; marginally higher than that of the historical average of 6-8%. The growth drivers of Tractor

Industry such as boost in rural economy, increased focus on agriculture and rural development, credit availability, shorter replacement cycle, several policy initiatives by the Government, etc., are aiding the growth trends. Further, due to better irrigation facilities, farmers are resorting to multiple cropping through farm mechanisation for achieving higher productivity and output. All these factors are likely to contribute to a positive growth in its performance in the current Financial Year 2011-12.

In fact, the performance of your Company for the first quarter of the year under review has seen a positive upturn with a 10% growth in production compared to the achievement of the corresponding period of the previous year, with a similar growth of 2% in Sales for the Quarter compared to the same period of the previous year. The Tractor Business Group has already initiated a host of measures towards performance improvement in right earnest, by appointment of new Distributors and Dealers in potential areas/territories, upgradation of the tractors engines for compliance to new emission norms for all models of tractors, setting up of a new paint plant, entering into MoUs with Banks/Financing Agencies for priority loan sanction for the purchase of HMT Tractors, dynamic business strategies, etc., which are expected to yield results in the current financial year.

The future plans of the Company envisages investment in plant modernization and technology upgradation which will contribute to better productivity and give a thrust to the growth trends in the coming years. The Company has engaged the services of a leading consultancy firm to prepare a Business Plans comprising various strategic initiatives to sustain the operations and achieve growth.

SUBSIDIARY COMPANIES

- HMT Machine Tools Limited

This Subsidiary achieved Sales of Rs.209.02 Crore and Production of Rs.177.43 Crore with a Net loss of Rs.93.06 Crore during the year 2010-11. The performance of this Subsidiary was affected mainly due to working capital constraints. The Subsidiary has set a Sales target of Rs.372.96 Cr. for the current financial year 2011 - 12. The Subsidiary has implemented the revival plan proposals and plant upgradation with substantial part of the investments as Capital Expenditure. The Subsidiary is also pursuing with various agencies for extending the reliefs and concessions sanctioned by the BIFR under the Rehabilitation Scheme. Some of these Parties including the Consortium of Banks have preferred appeals against the reliefs and concessions sanctioned by the BIFR, which is being contested by the Subsidiary. The Merger of Praga Tools Ltd, Hyderabad, with the Subsidiary, which was part of the sanctioned Scheme of BIFR has since been completed.

- HMT Watches Limited

This Subsidiary could not show significant improvement in performance. Major factor affecting the performance of this Subsidiary was lack of working capital, absence of a robust trade channel and higher interest burden, with depletion in skilled manpower. Despite these constraints, this Subsidiary could achieve a Sales Rs.8.82 Crore and Production of Rs.10.62 Crore during the year under review. The Net Loss for the year stood at Rs.253.74 Crore as compared to Rs.168.35 Crore incurred during the previous year. The Revival plans in respect of this Subsidiary is under submission to the Government based on the business plans being prepared by the Consultants appointed by the Company. The Subsidiary was able to reduce its manpower by introduction of VRS, funded by Government of India Loan. A total of 462 employees have been retired by the Subsidiary during the year 2010-11 involving an outgo of ^63.98 Crore, reducing its manpower strength to 1417 as on 31.3.2011.

- HMT Chinar Watches Limited

The performance of this Subsidiary could not be sustained at optimum levels due to the ongoing troubled situation in the J&K Valley apart from shortage of working capital to enhance production levels. Majority of the employees have been separated on VRS leaving about 114 employees at Srinagar and Jammu Units of the Subsidiary. Under these circumstances, the Subsidiary could achieve only a meagre Sales of Rs.0.10 Crore during the year compared to Rs.0.73 Crore achieved during the previous year, while in terms of Production, it was at the level of only Rs.0.12 Crore for the year. As a result of the lower levels of operations, the Subsidiary incurred a Net loss of Rs.45.40 Crore during the year. The Subsidiary was able to reduce its manpower by introduction of VRS, funded by Government of India.

- HMT (International) Limited

This Subsidiary exported goods and technical services valued at Rs.27.89 Crore during the year under review as compared to Rs.30.80 Crore achieved in the previous year, and pre-tax Profit of Rs.0.31 Crore for the year. The performance of this Subsidiary in terms of orders, sales and profits during the year under review was marginally less amidst global financial crisis affecting delay/shelving of procurement plans by major customers. The Subsidiary has maintained its consistent dividend payment record and has declared a dividend of 20% on the Paid up equity Share Capital, for the year 2010-11. During the year, this Subsidiary was able to successfully obtain the re-certification of ISO9001-2008 from the certifying agencies.

- HMT Bearings Limited

This Subsidiary achieved a higher Sales turnover of Rs.11.44 Crore during the year under review as compared to Rs.6.84 Crore achieved during the previous year. The achievement in terms of Production during the year was also higher at Rs.11.18 Crore as compared to Rs.5.62 Crore recorded in the previous year. The Subsidiary incurred a Net Loss of Rs.21.32 Crore during the year compared to Rs.15.31 Crore recorded in the previous year, which was mainly due to higher incidence of VRS ex gratia. The Subsidiary was able to reduce its manpower by introduction of VRS, funded by Government of India Loan. A total of 103 employees have been retired by the Subsidiary during the year 2010-11 involving an outgo of Rs.10.67 Crore, reducing its manpower strength to 89 as on 31.3.2011.

The Subsidiary has been referred to the BIFR under the Sick Industrial Companies (Special Provisions ) Act, 1985 as amended and a Rehabilitation Scheme prepared by the Operating Agency viz., Canara Bank is under consideration of the BIFR including the proposal for inducting a strategic partner by divesting the equity.

JOINT VENTURE COMPANY

- SUDMO-HMT Process Engineers (India) Limited

There were no business operations by this Joint Venture Company during the year under review. For the financial year 2010-11, this Company showed a Net Profit after tax of Rs.0.68 Lakhs on account of the interest income of Rs.2.83 lakhs, out of the fixed deposits kept with the Banks.

- Gujarat State Machine Tools Corporation Ltd

This Company which was ordered to be wound up by BIFR, had discontinued its operations since long and is now a defunct Company. It is therefore considered prudent to divest from this JV Company jointly with the JV Partner.

CONSOLIDATED FINANCIAL STATEMENTS

As required under the Listing Agreement, Consolidated Financial Statements of the Company along with that of the Subsidiaries for the financial year 2010-11, conforming to the applicable Accounting Standards, are attached to this Report along with the Auditors' Report on the same.

In terms of the General Circular No. 2/2011 dated 8th February, 2011, issued by the Central Government in terms of Section 212(8) of the Companies Act, 1956, the Directors have consented to not to attach copy of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Auditors of the five (5) Subsidiary Companies viz., HMT Machine Tools Limited; HMT Watches Limited; HMT Chinar Watches Limited; HMT Bearings Limited and HMT (International) Limited to the Balance Sheet of the Company (Holding Company). However, these documents will be made available upon request by any member of the Company and Subsidiary Companies interested in obtaining the same. Further, in compliance with the conditions of the above referred Government circular, the financial information of each of these subsidiary Companies have been furnished as part of the Consolidated Balance Sheet of the Company. The annual accounts and other detailed information of each of the Subsidiary companies will be available for inspection by any member at the Registered Office of the Company. A statement pursuant to Section 212(1) of the Companies Act, 1956, in respect of each-of the Subsidiary Companies is attached to this report.

HUMAN RESOURCES

Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is NIL for the year 2010-11.

The employee strength of the Company as on March 31, 2011, stood at 1904 Nos as compared to 2088 at the end of the previous year. There are 381 employees in the Officer Cadre and 1523 Non-Executives in Workmen cadre. The number of employees on the rolls of the Company as on March 31, 2011 in SC/ST, Ex- Servicemen, Physically Handicapped and Women Employee Categories etc is as follows:

Scheduled Castes 450

Scheduled Tribes 71

Other Backward Classes 129

Ex-Servicemen 7

Persons with Disabilities 16

Women Employees 56

Minorities 288

INDUSTRIAL RELATIONS

The overall Industrial Relations situation in the Company during the year remained peaceful. The Company continues to put in sincere efforts to improve and upgrade the skill sets of the employees at different levels and also to recruit manpower in key areas to achieve better and improved productivity in various fields of activities.

IMPLEMENTATION OF OFFICIAL LANGUAGE

The efforts towards implementation of Official Language Act, Rules & Policy as per the directives of the Government in the Company is continuous. The Official Language Implementation Committee have been constituted in all the Units of the Company and the Subsidiaries, including the Corporate Office, Bangalore to monitor implementation of Official Language Act, Rules, Policy, etc. which meets at regular intervals in every quarter.

In order to propagate the usage of Hindi as Official Language, "HINDI DIWAS/HINDI FORTNIGHT" was observed during the month of September, 2010. Various Hindi competitions such as Hindi Story writing, Hindi News Paper Reading, Hindi Quiz Writing, Hindi Conversation, Hindi Antyakshari, etc., were organized and participants were awarded prizes. A workshop was organised during the above period. The Hindi Magazines/Newspapers are being procured to propagate the usage of Hindi among employees. The concerned Officials of the Company regularly takes part in the meetings of the Town Official Languages Implementation Committee. The Company also sponsors some of the Hindi competitions under Bangalore Town Official Language Implementation Committee.

VIGILANCE ACTIVITIES

The Chief Vigilance Officer appointed by the Government of India heads the Corporate Vigilance Cell of the Company and is assisted at the Unit level by the Vigilance Officers.

The Corporate Vigilance Cell carries out vigilance functions in the Holding Company as well as in its Subsidiaries. The vigilance functions in the manufacturing Units and Marketing Officers are looked after by Vigilance Officers, under the guidance of Chief Vigilance Officer.

The Vigilance department carried out regular and surprise inspections of a large number of high value contracts/purchases, property returns, service contracts, etc. In case of violations of rules and procedures, serious irregularities, the matter was investigated and investigation reports prepared for further action. Wherever required, appropriate action against the concerned officers were recommended, instructions were issued to the effect that the violations of rules and procedures pointed out by the Vigilance Department should not be repeated. A lot of emphasis was laid on preventive vigilance by striving towards strict adherence to all rules and procedures and to all norms of transparency in tendering process. Several suggestions were made for systems improvement in various fields. As provided for in the relevant CVC guidelines, requisite emphasis was put on improving vigilance administration by leveraging technology.

Quarterly vigilance awareness workshops and Vigilance awareness week were organized to enhance the level of vigilance awareness among the employees and other stakeholders. A compilation of important CVO's Circulars were prepared and circulated to all Managing Directors, Unit Chiefs and concerned officers for quick reference.

COPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on the Corporate Governance is annexed as part of this Report along with the Compliance Certificate from the Auditors. A Report on Management Discussion and Analysis is also appended to this Report separately. Further, a declaration by the Chairman & Managing Director for having obtained affirmation of compliance of the Code of Conduct by the Board Member (s) and Senior Management for the year ended March 31, 2011, is also appended.

The Audit Committee could not be reconstituted as per requirements of the Listing Agreement in the absence of Independent Directors to. be appointed toy the Government.

The Register of Members and Share Transfer Records both in respect of the shares held in physical and depository form are maintained by Karvy Computershare Private Limited, Hyderabad, and the Registrars & Share Transfer Agents of the Company.

INFORMATION REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under the Companies (Disclosures of Particulars) Rules, 1988, are annexed to this Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Sub-Section (2AA) of Section 217 of the Companies Act, 1956, the Board of Directors hereby state and confirm that:

- In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

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

- The Directors have taken proper and sufficient care 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;

- The Directors have prepared the annual accounts on a going concern basis.

AUDITORS

M/s. Dagliya & Co. Chartered Accountants, Bangalore, were appointed as Statutory Auditors of the Company for the year 2010-11 by the Comptroller & Auditor General of India. Three firms of Chartered Accountants were also appointed as Branch Auditors for the other Units/Divisions of the Company. M/s Khurana & Co., Cost Accountants were appointed as Cost Auditors for the year 2010-11 in respect of 'Tractors'.

Replies to the observations by the Statutory Auditors in their Report are given by way of an addendum to this Report.

DIRECTORS

Shri A.V. Kamat, Chairman & Managing Director, vacated the position on 31.3.2011 consequent upon his superannuation from the services of the Company on that date. The Directors wish to place on record the services rendered and contributions made by Shri A.V.Kamat, during his tenure as Chairman and Managing Director of the Company.

Vide Presidential Order No. 5(32)/2009-PE.X(Pt) dated May 13, 2011 issued by the Department of Heavy Industry, Shri S.G.Sridhar, Director (Operations) had been assigned additional charge of the post of Chairman & Managing Director of the Company for a period of three months w.e.f. 01.04.2011.

Shri Saurabh Chandra, Director, retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.

ACKNOWLEDGEMENTS

The Directors are thankful to the various Departments and Ministries in the Government of India, particularly the Department of Heavy Industry, Ministry of Corporate Affairs, Comptroller and Auditor General of India, Principal Director-Commercial Audit, Statutory and Branch Auditors, various State Governments, Foreign Collaborators, the Subsidiary Companies, Suppliers, Reserve Bank of India, the Consortium of Banks lead by UCO Bank and the valued Customers of the Company both in India and abroad for their continued co-operation and patronage.

The Directors also sincerely appreciate the contributions made by the employees at all levels in the operations of the Company during the year.

For and on behalf of the Board of Directors

(S. G. Sridhar)

Chairman

Place: Bangalore

Date : 5-9-2011

Mar 31, 2010

The Annual Accounts of the Company for the year 2009-10 along with the Auditors Report and the Comments of the Comptroller & Auditor General of India are attached to this Report.

CORPORATE PERFORMANCE

The year 2009-10 saw a significant resurgence of the Indian economy, in spite of the global meltdown witnessed all round except in respect of the BRIC countries. The growth of 7.9% achieved during the second quarter of 2009-10 was indeed quite encouraging. The subsequent data releases on Industrial production, infrastructure or exports, confirmed the assessment that the economy has been steadily gaining momentum on a strong economic turnaround. Taking cue from the strong growth indicators, the tractor industry also recorded a growth of 26.21% during the year under review.

Your Company also showed a marginally better performance during the year under review, with growth in terms of both Production and Sales, over the previous year. During the year, your Company achieved a Production level of Rs. 169.65 Cr (4652 Nos. of Tractors) as against the Production level of Rs. 134.34 Cr. (3651 Nos Tractors), recorded in the previous year, with a growth of 26%. In terms of Sales also the Company registered a growth of 19% at Rs, 191.64 Cr (4901 Nos. of Tractors) compared to the Sales of Rs. 160.98 Cr. (4109 Nos. of Tractors) achieved in the previous year.

At the consolidated level, your Company along with its Subsidiaries achieved the Production of Rs.381.18 Cr. and Sales of Rs.436.48 Cr. for the year 2009-10, recording a Net Loss of Rs.329.65 Cr. On a comparative basis, the performance was marginally better than that of the previous year despite the lower levels of performance achieved by some of the Subsidiaries viz., HMT Watches Limited and HMT Chinar Watches Limited.

OPERATING RESULTS

As a result of the improved performance achieved during the year 2009-10, the bottom line improved with the Net Loss coming down from the level of Rs.68.98 Cr. recorded in the previous Financial Year 2008-09 to a Net Loss of Rs.52.91 Cr. during the Year 2009-10. The financial highlights for the year 2009-10, are as under:

FINANCIAL HIGHLIGHTS

(Rs. In crore)

Particulars 2009-10 2008-09

Gross Profit/(Loss) (PBIDT) (29.26) (53.24)

Depreciation 3.92 3.40

Interest 1,9.68 12.34

Profit/(Loss) before PPA (52.86) (68.98)

Less: Prior Period Adjustments

(PPA) O05 -

Net Profit/(Loss) before tax (52.91) (68.98)

Tax Provision (Net) - 1.81

Net Profit/(Loss) after tax (52.91) (70.79)

Net Profit/(Loss) carried to

Balance Sheet (52.91) (70.79)

DIVIDEND

In view of the accumulated losses, your Directors are not in a position to recommend any Dividend on the Paid-up Equity Share Capital for the year 2009r10. No appropriation towards Bonds Redemption Reserve has been made as required under the Bonds Issue Guidelines.

The Issued, Subscribed and Paid-up Equity Share Capital of the Company stood at Rs.760,35,01,400/- as on March 31, 2010. An amount of Rs. 443 Cr. is continued to be shown as Application Money pending allotment of the Preference Shares in the name of the President of India.

FINANCIAL POSITION

The financial position of the Company continued to remain precarious during the year under review, mainly due to the losses incurred by the Company and the difficulty in arranging the required resources from the

Banking sector as well as through disposal of surplus assets, as planned. Your Company is evaluating a strategy9 for joint development of identified surplus assets of the Company with help of a reputed professional agency, The thrust will be to raise the required resources from leveraging these surplus assets in order to meet the commitments towards retirement of the outstanding overdue liabilities as well as those falling due for repayment/redemption during the current year.

FUTURE OUTLOOK

With the increased focus on agriculture and rural development, easing of credit availability, etc., in view of certain policy initiatives by the Government, the performance of your Company is likely to show positive growth in the current financial year. Further, due to better irrigation facilities, more and more farmers are resorting to multiple cropping through farm mechanisation for achieving higher productivity and output. In fact, the performance of your Company for the first quarter of the year under review has been up by 24% in production compared to previous corresponding period of previous year. The Sales also increased by 4% when compared to first quarter of the previous year. The Tractor Group of your Company has already initiated a host of measures towards performance improvement in right earnest, by appointment of new Distributors and Dealers in select potential areas/territories, engine upgradation for compliance of new emission norms for all models of tractors, setting up of a new paint plant, entering into MOUs with Banks/Financing Agencies for priority loan sanction for the purchase of HMT Tractors, dynamic business strategies, etc., which are expected to yield positive results during the current financial year.

SUBSIDIARY COMPANIES

- HMT Machine Tools

During the year under review, this Subsidiary achieved a Sales of Rs. 198.45 Cr. (including excise duty) and Production of Rs.194.19 Cr. with a Net loss of Rs.45.80 Cr. The performance of this Subsidiary was affected mainly due to working capital constraints and lower order bookings due to the recessionary trends faced by the Capital Goods segment of the Country for the substantial part of the Year under review. The higher input costs of items like steel also contributed to decline in the performance of this Subsidiary. The Subsidiary has set a Sales target of Rs.403 Cr. for the current financial year 2010-11. This Subsidiary is currently implementing the Rehabilitation Scheme sanctioned by the BIFR during the year 2008 based on the revival plans approved by the Government of India during March 2007. The Subsidiary has implemented the revival plan proposals substantially including substantial portion of the sanctioned investments in Capital Expenditure, which are expected to bear fruit in the ensuing years.

HMT Watches Limited

This Subsidiary could not show any improvement in its performance, during the year under review despite salary support being received from the Government. The Revival Plans prepared by the Company and submitted to the Government is under its active consideration and review by the Ministry. The Major factor affecting the performance of this Subsidiary was lack of working capital, absence of a robust trade channel and higher interest burden, with depletion in skilled manpower. Despite these constraints, this Subsidiarycould achieve a Sales Turnover of Rs.10.54 Cr. and Production of Rs.11.42 Cr. during the year under review. The Net Loss for the year stood at Rs.168.35 Cr. as compared to Rs. 164.05 Cr. incurred during the previous year.

- HMT Chinar Watches Limited

The performance of this Subsidiary could not be sustained at optimum levels due to the ongoing troubled situation in the J&K Valley apart from shortage of working capital to enhance production levels for the market required models of watches. Majority of the employees have been separated on VRS leaving about 145 employees at Srinagar and Jammu Units of the Subsidiary. Under these circumstances, the Subsidiary could achieve only a meagre Sales Turnover of Rs. 0.73 Cr. during the year compared to Rs.0.70 Cr. achieved during the previous year, while in terms of Production, the Subsidiary could achieve the level of only Rs.0.30 Cr. for the year. As a result of the lower levels of operations, the Subsidiary incurred a Net loss of Rs.49.94 Cr. during the year.

- HMT (International) Limited

This Subsidiary exported goods and technical services valued at Rs.30.80 Cr. during the year under review as compared to Rs.16.36 Cr. achieved in the previous year, registering a growth of 88% and resulting in pre-tax Profit of Rs.3.96 Cr. for the year. The performance of this Subsidiary in terms of orders, sales and profits during the year under review was significantly higher amidst global financial crisis affecting delay/shelving of procurement plans by major customers. The Subsidiary has also successfully obtained the re-certification of ISO 9001-2000. The Subsidiary has also maintained its consistent dividend payment record and h ; declared a dividend of 20% on the Paid up Equity Share Capital, for the year 2009-10

- HMT Bearings Limited

This Subsidiary achieved a lower Sales turnover of Rs. 6.84 Cr. (excluding excise duty) during the year under review as compared to Rs.8.71 Crore during the previous year. The achievement in terms of Production during the year was lower at Rs.5.62 Cr. as compared to Rs.7.17 Cr. recorded in the previous year. This Subsidiary incurred a Net Loss of Rs.15.31 Cr. during the year compared to the Net Loss of Rs.10.68 Cr. during the previous year. As a result of the increase in the Losses incurred during the year, the Accumulated Losses of the Company stood at Rs.81.13 Cr. as a result of which the Net Worth of the Company as at March 31, 2010 showed a negative position at Rs. 43.42 Cr. The Company has been declared as a Sick Industrial Company in terms of Section 3(1) (O) of the Sick Industrial Companies (Special Provisions) Act, 1985, by the BIFR and appointed Canara Bank as the Operating Agency (OA) u/s 17(3) of the Act. The DRS has been submitted by the Subsidiary for the consideration of the BIFR and actions are being initiated in terms of the directions of BIFR for the rehabilitation of the Subsidiary.

CONSOLIDATED FINANCIAL STATEMENTS

As required under the Listing Agreement, Consolidated Financial. Statements of the Company along with that of the Subsidiaries for the financial year 2009-10, conforming to the applicable Accounting Standards, are attached to this Report along with the Auditors Report on the same.

In terms of the approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, a copy of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Auditors of the five (5) Subsidiary Companies viz., HMT Machine Tools Limited; HMT Watches Limited; HMT Chinar Watches Limited; HMT Bearings Limited and HMT (International) Limited have not been attached with the Balance Sheet of the Company (Holding Company). However, these documents will be made available upon request by any member of the Company and Subsidiary

Companies interested in obtaining the same. As directed by the Central Government, the financial information of each of these Subsidiary Companies has been furnished as part of the Consolidated Balance Sheet. The annual accounts and other detailed information of each of the Subsidiary Companies will be available for inspection by any member at the Registered Office of the Company and that of the Subsidiary Companies concerned. A statement pursuant to Section 212(1) of the Companies Act, 1956, in respect of each of the Subsidiary Companies Is attached to this report.

ASSOCIATE COMPANY

- SUDMO-HMT Process Engineers (India) Limited

There were no significant operations bythis Associate Company during the year under review. For the financial year 2009-10, this Company made a Net Profit after tax of Rs. 0.59 Lakhs from the interest income of Rs. 3.01 Lakhs out of the fixed deppsits with the Banks. It is expected that the business operations of this Company would be resumed upon implementation of the Government sanctioned Revival Plans, for HMT Ltd.

VIGILANCE ACTIVITIES

The Chief Vigilance Officer appointed by the Government of India heads the Corporate Vigilance Cell of the Company and is assisted at the Unit level by the Vigilance Officers.

The Corporate Vigilance Cell carries out vigilance functions in the Holding Company as well as in its Subsidiaries. The vigilance functions in the manufacturing Units and Marketing Offices are looked after by Vigilance Officers, under the guidance of Chief Vigilance Officer.

The Vigilance department carried out regular and surprise inspections of a large number of high value contracts/purchases, property returns, service contracts, etc. Violations of rules and procedures were pointed out and in cases of serious irregularities, the matter was investigated and investigation reports were prepared for further action. Wherever required, appropriate action against the concerned officers were recommended, instructions were issued to the effect that the violations of rules and procedures pointed out by the Vigilance Department should not be repeated. A lot of emphasis was laid on preventive vigilance by striving towards strict adherence to all rules and procedures and to all norms of transparency in tendering process. Several suggestions were made for systems improvement in various fields. As provided for in the relevant CVC guidelines, requisite emphasis was put on improving vigilance" administration by leveraging technology. Quarterly vigilance awareness workshops and vigilance awareness week were organized to enhance the level of vigilance awareness among the employees and other stakeholders. A compilation of important CVOs Circulars were prepared and circulated to all Managing Directors, Unit Chiefs and concerned officers for quick reference.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is NIL for the year 2009-10.

INFORMATION REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under the Companies (Disclosures of Particulars) Rules, 1988, are annexed to this Report.

EMPLOYEES

The employee strength of the Company as on March 31, 2010, stood at 2088 Nos. as compared to 2205 at the end of the previous year. There were 421 employees in the Officer Cadre and 1667 Non- Executives in Workmen cadre. The number of employees on the rolls of the Company as on March 31, 2010 in SC/ST, Ex-Servicemen, Physically Handicapped, Women Employee and Minority Categories is as follows:

Scheduled Castes 484

Scheduled Tribes 92

Other Backward Classes 26

Ex-Servicemen 12

Persons with Disabilities 17

Women Employees 61

Minorities 325

EMPLOYEE RELATIONS

The overall Industrial Relations situation in the Company during the year remained peaceful. The Company continues to put in sincere efforts to improve and upgrade the skill sets of the employees at different levels and also to recruit manpower in key areas in order to achieve better and improved productivity in various fields of activities. Certain performance incentive schemes linked to achieving set targeted performance levels are being formulated to improve the motivation of the employees.

IMPLEMENTATION OF OFFICIAL LANGUAGE

The Company is making all out efforts for. implementing Official Language Act, Rules & Policy as per the directives of the Government. The Official Language Implementation Committee have been constituted in all the Subsidiaries, Units of the Company including Corporate Office, Bangalore to monitor implementation of Official Language Act, Rules, Policy, etc. which meets at regular intervals in every quarter.

In order to propagate the usage of Hindi as Official Language, "HINDI DIWAS/HINDI FORTNIGHT" was observed during the month of October 2009. Various Hindi competitions such as Hindi Story writing, Hindi News Paper Reading, Hindi Quiz Writing, Hindi Conversation, Hindi Antyakshari, etc., were organized and participants were awarded prizes. A three day workshop was organised during the above period. The concerned Officials of the Company in charge of implementation of the Official Languages Act, regularly take part in the meetings of the Town Official Languages Implementation Committee. The Company also sponsors some of the Hindi competitions under Bangalore Town Official Language Implementation Committee.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on the Corporate Governance is annexed as part of this Report along with the Compliance Certificate from the Auditors. A Report on Management Discussion and Analysis is also appended to this Report separately. Further, a declaration by the Chairman & Managing Director for having obtained affirmation of compliance of the Code of Conduct by the Board Member (s) and Senior Management for the year ended March 31, 2010, is also appended.

The Register of Members and Share Transfer Records both in respect of the shares held in physical and depository form are maintained by Karvy Computershare Private Limited, Hyderabad, and the Registrars & Share Transfer Agents of the Company.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Sub-Section (2AA) of Section 217 of the Companies Act, 1956, the Board of Directors hereby state and confirm that:

- In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

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

- The Directors have taken proper and sufficient care 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;

- The Directors have prepared the annual accounts on a going concern basis.

AUDITORS

M/s. Dagliya & Co. Chartered Accountants, Bangalore, were appointed as Statutory Auditors of the Company for the year 2009-10 by the Comptroller & Auditor General of India. Three firms of Chartered Accountants were also appointed as Branch Auditors for the other Units/Divisions of the Company. M/s. V. Kumar & Associates, Cost Accountants, were appointed as Cost Auditors for the year 2009-10 in respect of Tractors.

Replies to the observations by the Statutory Auditors in their Report are given by way of an addendum to this Report.

DIRECTORS

Pursuant to Article 67 (4) of the Articles of Association of the Company, Shri Harbhajan Singh, Joint Secretary, Department of Heavy Industry, Ministry of Heavy

Industries & Public Enterprises, has been appointed as Part-time Official Director on the Board of the Company, with effect from January 11, 2010, vice Shri Rajiv Bansal, vide Presidential Order No.5(16)/2009-P.E-X dated January 11, 2010. Shri Harbhajan Singh retires at the ensuing Annual General Meeting and being eligible offers himself for appointment as Director in terms of Section 255 read with 257 and 262 of the Companies Act, 1956, for which notice has been received from a member.

Consequent upon the completion of their term, Dr. N.B. Ballal, Shri S.K. Tuteja, and K. Kipgen, Part- time Non-Official (Independent) Directors ceased to. be Directors with effect from 31.01.2010, 11.02.2010, and 25.06.2010 respectively.

Shri S. K. Kampasi, Director (Finance) ceased to be Directior consequent upon his superanuation from the Company on February 28, 2010.

The Directors wish to place on record the services rendered and contributions made by Shri Rajiv Bansal, Dr. N.B. Ballal, Shri S.K. Tuteja, Shri S. K. Kampasi and Shri K. Kipgen, during their tenure as Directors on the Board of the Company.

Shri S.G. Sridhar, Director (Operations) retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.

ACKNOWLEDGEMENTS

The Directors are thankful to the various Departments and Ministries in the Government of India, particularly the Department of Heavy Industry, Ministry of Corporate Affairs, Comptroller and Auditor General of India, Principal Director-Commercial Audit, Statutory and Branch Auditors, various State Governments, Foreign Collaborators, the Subsidiary Companies, Suppliers, Reserve Bank of India, the Consortium of Banks lead by UCO Bank and the valued Customers of the Company both in India and abroad for their continued co-operation and patronage.

The Directors also sincerely appreciate the contributions made by the employees at all levels in the operations of the Company during the year, in spite of the difficult situation faced by the Company.

For and on behalf of the Board of Directors

(A.V. Kamat)

Chairman & Managing Director

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