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Directors Report of Johnson Controls-Hitachi Air Conditioning India Ltd.

Mar 31, 2016

Dear Members,

The Directors have pleasure in presenting the Thirty First Annual Report and the Audited Financial Statements, for the year ended March 31, 2016.

FINANCIAL HIGHLIGHTS

The highlights of financial results of the Company for the year under review are given below:

(Rs. In Lacs)

For the year ended For the year ended March 31, 2016 March 31, 2015

Revenue from operations (gross) 1,81,720 1,70,726

Less: Excise Duty 15,767 13,442

Revenue from operations (net) 1,65,953 1,57,284

Other Income 178 712

Total Revenue 1,66,132 1,57,996

Profit before finance cost, depreciation and tax 12,451 14,520

Finance Cost 1,012 826

Depreciation and amortization expenses 4,555 3,593

Profit before Tax 6,884 10,101

Tax expense 1,886 2,325

Profit for the year 4,998 7,776

DIVIDEND

Your Directors recommend a dividend of Rs.1.50 per Equity Share for the year ended 31st March, 2016. This is subject to the approval of the Members at the ensuing Annual General Meeting.

About Hitachi Home & Life Solutions (India) Limited, a Johnson Controls - Hitachi Air Conditioning Company

On 1st October, 2015, Johnson Controls, Hitachi Ltd. and Hitachi Appliances Inc. have completed Global Joint Venture agreement (JV) and commenced operations of Johnson Controls - Hitachi Air Conditioning Company (JCH) to provide global customers with full range of Air conditioning products. Through this agreement Johnson Controls has acquired a 60 percent ownership stake of JV and Hitachi Appliances Inc. retained ownership of remaining 40 percent stake of the JV.

Through this joint venture, we have combined the rich heritage and innovative technology of Hitachi with the Industry-leading expertise and global network of Johnson Controls. Our partnership aims to address the cooling needs in a faster, smarter, safe and efficient manner than ever before. Our customers stand to benefit from our world-class R&D centers, where our researchers work tirelessly to provide innovative solutions and quality products that are designed to meet every need. "Hitachi Home & Life Solutions (India) Limited" (HHLI), is the Indian arm of Johnson Controls- Hitachi Air Conditioning Company.

Hitachi Home & Life Solutions (India) Limited is one of the earliest companies to set up Air conditioning Manufacturing in India, HHLI has a legacy that is over 30 years in the making. Today, the Company manufactures a wide range of products, from room Air conditioners (Split & Window ACs) to commercial Air conditioners including Chiller, Ductable Air conditioners, Telecom Air conditioners & VRF system. HHLI is also involved in trading of Refrigerators & Air Purifiers and has strong presence in undertaking turnkey projects in HVAC.

The HHLI headquarters is situated at Kadi, Gujarat with its manufacturing plant also located there. The Company has a total installed capacity of 6,00,000 Room Air conditioners per annum (in a single shift). In addition to that the Company also has the capacity to manufacture 120000 Tons of Ductable units, 9000 VRFs ODU and 300 Chillers per annum. HHLI is amongst the top Air conditioning companies in India. It has a strong nationwide distribution consisting of 5 regional offices, 20 branch offices, 203 exclusive sales and service dealers and over 4000 sales points. Currently, the Company has 33 Exclusive showrooms in India. The organization expects these numbers to rise up to 150 in the very near future. To provide this wide distribution network, Company has 40 Company owned service centers (HCS) and 600 other service points including Multi brand S&S dealers and franchisees.

At Hitachi Home & Life Solutions (India) Ltd., we believe in "i Care" philosophy which is our guiding force. i Care is everything we stand for, believe in, and work towards for our internal and external customers. We believe in simplifying life. This is why, we constantly innovate, bring in world-class technology and newer concepts in our products to make life comfortable for our customers.

MACRO ECONOMIC ENVIRONMENT

The Indian economy has gone through various challenges in recent times. But it has recovered and is showing strong growth in the face of adverse global economic scenario. In the recent past, the economy faced difficult times with several issues like lower growth, widening current account deficit and high levels of inflation; worsened by two consecutive years of drought. Yet the Indian Economy has shown remarkable growth by 7.5% this year and expected 7.7% in 2016. The downturn in global commodity prices has also helped significantly to improve the prospects of Indian economy. This, in turn, has had a positive impact on the Air conditioning industry which has a high number of commodities that contribute towards its input costs.

OVERVIEW

1. The year gone by has not been very good for the Indian Air conditioning Industry. The residential business was affected by unpredictable weather, un-seasonal rainfall during peak summer while the commercial segment suffered the lagging effects of slowdown from 2012-14.

The residential Air conditioner market for the year was almost flat. HHLI''s residential business also performed in line with the industry growth. The residential business showed negligible volume growth but managed to grow marginally in value terms due to shift towards high-star rated ACs and Inverter ACs.

2. Though the overall commercial market remained weak, the Company scored significant success in the Ductable segment. The Company maintained and bettered its position in the segment with a business growth of around 15% and improved its market share. The Company continues to retain its strong position in this segment.

The other bright spot in the commercial segment was the growth in the VRF Segment led by increased demand towards energy- efficient solutions and use of innovative technology. The Company saw its Set Free- VRF segment picked up speed in terms of order bookings and projects executed across various customer segments like Banking, Education, Hospitality, etc. The Company has invested in manpower and infrastructure in this new fast growing segment and would continue to invest in this segment to drive future growth.

3. The Chiller business has been subdued due to the difficult economic environment of the preceding year. It is also bogged down by delays and postponement of various commercial real estate projects. Therefore Company could not perform well in this segment which is heavily dependent upon the economic conditions.

4. The Company had entered into the project business to fulfill a gap of providing end-to-end solutions to its customers. The Company has invested in the required manpower and other requisite support tools for this business in last few years. This has been the reason why 2015-16 has been a break out year for this business. The Projects business delivered a big growth over last year and this year has got significant number of projects in the pipeline.

5. The Telecom and Special Products segment is a niche segment where Hitachi commands 65-70% market share but the growth over last year has not been encouraging. Being a niche segment, the growth of this product category depends on growth of the telecom industry. Judging by the competition and shrinking margins of telecom operators the segment growth may face challenges in the coming years.

6. The Company forayed into exports last year on a trial basis and a small batch was exported during the year. The initial response has been very encouraging. Today, we are exporting to Sri Lanka, Indonesia and Bangladesh. In coming years, we plan to expand into other parts of the world.

7. The home appliances business for the Company has also grown over the last year. The differentiated product range coupled with advance features has enabled the Company to carve out a niche which has made Company''s brand name popular in the 300 Litres segment. The Company has focused in the distribution channels and has opened new channels for sale of this product. The introduction of new product category "Air Purifier" has shown positive response and looks very promising for future business growth.

8. Customer Service has always been a top priority for the Company. The Company has started many initiatives to improve the customer satisfaction index, which has shown a healthy growth year-on-year. With 40 Company-owned HCS centers, i Care Service App, Online Product Demo Videos and online complaint registration initiatives, the Company will continue to focus on customer service which will become a key differentiator for our business in the future.

ROOM AIR CONDITIONERS

Room Air conditioners segment contribution is very high for the Company in its total business and it is one of our major focus areas. The Company has a wide range of Split ACs to meet the requirement of the Indian consumers. The current range of split ACs consists of around 80 models which include 2, 3, 4, 5 star rated ACs and tropical inverter technology products. The launch of the ''Kashikoi'' range in 2015 added a technical edge in the range of Split ACs. Its i-See, i-Sense, i-Clean technologies were designed to meet Indian consumer''s needs. This year, the Company has focused on promoting its unique "i Clean Plus" technology in Split AC Range. i Clean Plus technology was offered in 3-star, 4-star, 5-star and Inverter technology products. The Company has also developed ''Smart i-Connect range'', of Split Air conditioner with Wi-Fi connectivity which can be operated from any Android or iOS Smart Phone.

The Company also launched its ''Toushi'' range of products which primarily caters to replacement markets targeting people seeking to buy into Hitachi Brand at a value price. The Window range continues to dominate with 11 models in 2, 3 and 5 star rating. The Company also has Hot and Cold range of Products in both Splits and Windows.

In order to widen its reach to Tier II & Tier III towns, the Company has expanded its distribution network through direct dealers and distributors. Today it caters to more than 4,000 outlets and exclusive showrooms.

India has a large market for institutional buyers in this segment. With its ''Logicool'' range, the Company has significantly increased the number of key accounts year-on-year. With growth in demand of institutional sales, this product business is expected to grow strongly.

COMMERCIAL AIR CONDITIONERS

The Commercial range of Air conditioners includes Cassette ACs, Ductable ACs, Set Free (Variable Refrigerant Flow - VRF) and Chillers. The Company has presence in all these segments and is strengthening its position in all these segments every year.

The ductables used to cater to cooling requirements of small corporate offices, banquet halls, small hospitals etc. This segment, is projected to have low CAGR and is facing lot of challenge, from other cooling solutions like VRF. The Company has a good market share in this segment. This is one segment where very few brands are operating. This has helped the HHLI in increasing its market share. The introduction of R410A (Green Gas) range has helped the brand consolidate its position. The Company has registered a growth of around 15% in this product category and with an innovative product range, the Company is confident that it shall grow further in the coming years.

The VRF segment has been the star segment for the industry and has continued to show robust growth during the calendar year. The Company has a very strong product range of 8 HP - 54 HP and is growing exponentially in this business. The Company could succeed to win many large projects in Hospitality, Entertainment, Banking, Education, Residential, industrial, Hospitals etc. which resulted in exponential growth of the VRF sales.

The Chiller market has grown marginally over the last year due to slow growth in commercial real estate. In view of this the Company faced difficulty and performed in line with the industry trend. However, the chiller market in India is expected to grow at CAGR of around 7% which is a good sign. Judging by the growth trend, the Company is manufacturing Water-cooled Screw Chillers up to 180 HP in its factory in India and is looking to increase the localization content to be more competitive to chart its growth in this business. Currently, Chillers above 190 HP are being imported by the Company.

The Project Business is another category which is closely allied with the Chiller business. This business is also growing and has a good potential to grow in coming years. In order to increase its share of the Project and Chiller business, the Company has invested in setting up the infrastructure in terms of manpower as well as upgrading their skills to take up this business in the past few years. With such investments, the Company feels confident about establishing growth in Project Business.

APPLICATION-BASED AIR CONDITIONERS

The Application-based Air conditioners is a category which has grown rapidly in last few years. The growth was driven by the growth in the parent industries of telecom and banking. Today, due to increasing debt, Telecom industry is aggressively switching to IME Model to reduce operating costs, which has resulted in low growth of Telecom Air conditioning business. The Company, however has a near monopoly in this segment and will continue to serve its existing base. The Company is continuously looking to develop new products and technology that meet the emerging requirements of the industry. These Innovative solutions will also help Company to remain ahead of competition in India.

HOME APPLIANCES

The Home Appliances segment of the Company has continuously grown over the last few years. Last year, the Home Appliances business contributed 9% share in total business of the Company. The Company has created a niche in Home Appliances category which has helped the brand substantially. The Company is operating in over 253 Ltrs Frost-Free Refrigerators market. The Company also launched its new range of Air Purifiers which caters to increasing demand of Air purifiers in Delhi and other Metro cities. Currently, the base of Air purifiers is very small. However, the Company is expecting good growth in this product segment too. This segment is also strategically important for the Company as it allows continuous engagement with channel partners during the lean season.

MANUFACTURING

A good quality product is the backbone of any organization. To achieve manufacturing excellence, the Company is focusing on continuous improvement using Lean principles. The Company''s manufacturing department has always focused on product quality, safe working environment and productivity improvement at various levels. This year, the Company has started a continuous improvement Dept. within manufacturing. The main objective of this Dept. is to focus on waste elimination and improvement of the manufacturing facilities. This year Company has implemented continuous improvement activity to heat exchanger manufacturing, injection moulding facilities etc. This will enhance the product quality and help to reduce the lead time and cost.

Alongside its focus on lean manufacturing, safe working environment is also an important priority for the Company. The Company is taking various steps in educational activities within the plant so that safety is ensured. The Company has started a special program like KYT ( Kiken Yochi Training ) where operators are taught how to identify hazards early and work to eliminate hazards.

This year, the Company has invested into conservation of energy. Three sets of new machinery has been installed in the injection moulding shop. This has led to a reduction in outsourcing of moulded parts which has resulted in cost reduction including transportation cost. Moreover installation on new fin press with servo motor mechanism has also resulted into more savings of Power cost.

RESEARCH AND DEVELOPMENT

To combat competition and excel in the segment of Split ACs, the Company''s Research and Development department has worked tirelessly to develop new and innovative products which can meet demand of Indian consumers.

With the changing weather conditions, the Indian consumer habits are also changing. The demand for the Heat Pump AC is also growing. Hence, Company has developed a Heat Pump Inverter Air conditioner, which can operate from -10 to 52°C.

The Company has also developed smart i-connect range of Split Air conditioners with Wi-Fi connectivity, which can be operated from any Android or Apple (iOS) Smart Phone.

Apart from innovation in Split ACs, the Company''s R&D facility has also started a local production of 4 - way cassette indoor units and started development of the DX kit to operate Air Handling Units (AHUs) with Set Free Outdoor units.

Company has completed the implementation of processes and procedures for successful completion of NABL (National Accreditation Board for Testing and Calibration Laboratories), Accreditation of RAC APF Lab and VRF APF Lab. This formal recognition of competence of a laboratory by an Accreditation body in accordance with international criteria confirms reliability testing of Company''s product before they are put into the market.

OPPORTUNITIES AND OUTLOOK

1. The Indian market for white goods and Air conditioners is poised for steady growth. The growth in demand of Air conditioners and other home appliances is a result of rising income, urbanization, falling AC prices and a hot climate. Hence, The AC ownership in India is going to increase exponentially.

2. Product innovations, improved technology and availability of new variants of products has led to increase in the demand of Air conditioners.

3. With lucrative and easy finance options and rise in the share of organized retail, the Air conditioner industry gets an opportunity to grow further.

4. The changing consumer behaviour as a result of the e-commerce boom is an opportunity for higher sales.

5. Product Segments like VRF, chillers and projects are a big opportunity for the Company. The growth trend of VRF is very impressive. Chillers and Projects are also growing steadily. Now, given the joint venture, the Company has a better scope to grow in this segment.

RISKS, CONCERNS AND CHALLENGES

1. Air conditioners, as a product category, still depends heavily on weather conditions. The sales depends on the severity of the summer season and the relative demand of the product.

2. Electricity demand for Room ACs is growing rapidly in emerging economies (such as India). This may impact the sales of ACs if the products are not energy efficient. Hence, the Company needs to constantly upgrade the energy efficiency standards.

3. With energy standards set to change in the beginning of 2016, the resultant cost and price increase may dampen the volume growth expected by the industry.

4. The ductable segment in which Company has a good market share is de-growing and is under tremendous pressure to win projects.

5. The hiked excise duty, effective January 2015 (excise duty on consumer durables was rolled back to 12% from 10%).

6. The under-developed local supplier base.

7. The higher cost of capital and other manufacturing costs due to frequently revised energy efficiency requirements.

CAUTION:

Management Discussion and Analysis on the Company''s Objectives, Estimates, Projections and Expectations may be forward-looking within the tenets of the applicable laws. The actual result may differ from the views expressed or implied. Factors that can affect the Company''s performance and outlook are price conditions in the market, global commodity cycle changes, exchange rate, government regulations, weather conditions and other incidental factors.

HUMAN RESOURCES

The Company operates in a highly competitive environment vis-a-vis attracting the best talent for its operations and therefore the human resources management function has assumed vital importance in the Company. The Company focuses on attracting, motivating and retaining the best talent. Its people systems like recruiting, training, performance management and talent development are robust and competitive. As we have been growing we are putting in place new HR programs to ensure that the organization is geared up to deliver for the future.

People - Our Brand:

The total Strength of employees (Staff and Operators) of the Company was 1426 as on March 31, 2016. HHLI believes that it is the quality and dynamism of its human resources that enables it to make a significant contribution to enhancing stakeholder value. Company works relentlessly towards being customer-focused, competitively-superior, performance-driven and future-ready. HHLI has been able to galvanize its human resource to become more agile, leverage change, stay ahead of competition and win in the market.

High Performance Culture:

Company strives to foster a culture of high performance. Ongoing learning, aligning HR systems in line with current market benchmarks, aligning rewards and recognitions with performance has enabled HHLI to sustain its reputation of being a meritocratic organisation. We expect a lot from our team members, differentiate on the basis of performance and potential through career opportunities and rewards, and lay particular emphasis on developing, mentoring and training.

Training & Development:

During the year 2015-16, the Company has invested in training in various categories of employees and indirect team members. Competency development continues to be a key area of strategic focus for us. We have been driving various Technical & Behavioural Training Programs at both the Factory & Head Office and Field. Our focus has been to launch training initiatives as an on-going process, covering different levels across the organisation. We launched the process of "Talent Assessment & Development" Centre for the Senior Management Team. At the Middle Level "Managerial Effectiveness Skills" was rolled out to build & enhance the managerial capabilities.

Workforce Employment:

As a continuous process of skill building and creating employment opportunities, this year we again did a Certificate program - IKVK in collaboration with Commissionerate of Employment and Training Gandhinagar to provide a single point contact for industries to provide efficient platform for the career growth of Skilled Candidates in Gujarat. Objective of the Program, is to test & certify the Existing skills of the experienced but unqualified workers and to award skill certificates after upgrading and updating the skills. The course is designed specific to the requirement and to provide simple understanding of Air conditioning and Refrigeration fundamentals.

Safety & Health:

A safe work place environment has been at its core at HHLI. We launched Hitachi Safety League (HSL) as step to create awareness & commitment towards zero injury or accident culture. Continuous safety drives are being carried out for all employees thereby reiterating the emphasis of safety in personal life.

Internal Control and Systems

The Company has adequate system of internal control to ensure that all the assets pertaining to Company are safeguarded and protected. Internal Audit has also been done through external Auditors at plant as well as at all the branches of the Company as per the detailed scope defined and approved by the Audit Committee. The Internal Audit is planned to substantiate and review the adequacy of controls and laid down procedures & systems.

Observations of Internal Auditors and the detailed plan of action is reviewed and discussed at the meetings of the Audit Committee. Auditors

Audit Committee and Board of Directors have recommended appointment of M/s. Price Waterhouse & Co. Chartered Accountants LLP (Firm Registration No. 304026E/E300009) as an Auditor of the Company. Accordingly, requisite resolution forms part of the notice convening the AGM.

Directors'' Responsibility Statement

Your Directors confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

(b) Such accounting policies selected 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 of the Company for that period;

(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities

(d) Annual accounts have been prepared on a going concern basis;

(e) Internal financial controls which are to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and

(f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Performance evaluation

Board has carried out an annual evaluation of performance of Board, Audit Committee, Stakeholder Relationship Committee, Nomination and Remuneration Committee, Executive Committee, Vigil Mechanism Committee and CSR Committee.

Board has also carried out annual evaluation of the performance of individual Directors, who were evaluated considering level of their engagement and contribution, safeguarding the interests of the Company and its minority shareholders, etc. The performance evaluation of the Chairman and the Non Independent Directors were carried out by the Independent Directors at their separate meeting.

Details of establishment of Vigil Mechanism

Company has established a Vigil Mechanism process as an extension of the Company''s Code of Conduct whereby an employee, director, customer, vendor or associate of the Company can disclose his genuine doubt in good faith to any member of Vigil Mechanism Committee about unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct or ethics policy, so that appropriate action can be taken to safeguard the interest of the Company. In exceptional cases, a complaint can be reported by a complainant to a Chairperson of Audit Committee. This mechanism is overseen by the Audit Committee.

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

Name of Director Designation % increase in Ratio of the remuneration of Director and KMP remuneration of to the median remuneration of the Director and KMP employees of the Company for the financial year

Mr. Shinichi Iizuka Chairman Nil NA

Mr. Shoji Tsubokuta Managing Director Note 1 Note 1

Mr. Atsushi Ohtsuka Managing Director Note 2 Note 2

Mr. Anil Shah CFO & Executive Director 24% 16:1

Mr. Vinay Chauhan Executive Director 21% 16:1

Mr. Gurmeet Singh Executive Director Note 3 13:1

Mr. Varghese Joseph Executive Director Note 4 Note 4

Mr. Amit Doshi Executive Director Note 5 Note 5

Mr. Ashok Balwani Independent Director Note 6 0.37:1

Dr. Devender Nath Independent Director Note 6 0.56:1

Ms. Indira Parikh Independent Director Note 6 0.19:1

Mr. Mukesh Patel Independent Director Note 6 0.72:1

Mr. R S Mani Independent Director Note 6 0.19:1

Mr. Ravindra Jain Independent Director Note 6 0.56:1

Mr. Vinesh Sadekar Independent Director Note 6 0.25:1

Mr. Parag Dave Company Secretary 17% 0.19:1

Note 1: Mr. Shoji Tsubokuta ceased to be a Managing Director on 31st August, 2015

Note 2: Mr. Atsushi Ohtsuka appointed as a Managing Director on 1st September, 2015

Note 3: Mr. Gurmeet Singh appointed as an Executive Director on 21st July, 2014

Note 4: Mr. Varghese Joseph appointed as an Executive Director on 1st August, 2015

Note 5: Mr. Amit Doshi Ceased to be an Executive Director on 1st June, 2015

Note 6: Sitting fees payable to Independent Directors for attending various meeting remained same.

Comparison of remuneration against Company''s performance

- Increase in remuneration of each KMP As mentioned in above table

- Increase in total remuneration of all Key Managerial Personnel Total remuneration of KMP increased by 22%

- Average increase in remuneration of all employees other than KMP Average increase in remuneration of all employees other than

KMP: 14%

Performance of the Company for the financial year 2015-16 Financial year 2015-16 Income from operations was Rs.181720.18 Lacs and profit before tax was Rs.6883.97 Lacs.

Percentage increase in the median remuneration of employees in the financial year 5%

No. of permanent employees on the roll of the Company 1426

- Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year

2014-15 2015-16

- Market Cap (Rs. In Lacs) 393724 330097

- Price earning ratio 50.63 66.05

- Percentage increase / decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer

IPO in 1991 @ Rs.10

Market Price as on 31st March, 2016 is Rs.1214 Compounding annual growth rate per year: 20%

Average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentage increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration

- Average % increase in the salaries of employees other than the managerial personnel 14%

- Average % increase in the managerial remuneration 22%.

Key parameters for any variable component of remuneration availed by the directors

As per the Remuneration Policy of the Company, Variable component of remuneration is decided on basis of Company''s performance and individual performance of the Executive Directors.

Ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year

Mr. Ichio Iwai: Ratio 1 : 1.22

Mr. Tomonaga Watabane: Ratio 1 : 1.25

We hereby affirm that the remuneration given to all the employees, Directors and KMP is as per the Remuneration policy of the Company. Risk Management System Company has implemented Enterprise Risk Management (ERM) system to identify, assess, monitor and mitigate the various risks associated with the Company.

Risks are identified and then classified into different categories such as Strategic, Operational, Business risk and Risk related to act of god. Then score based on level and significance of risk is given and subsequently risk mitigation steps are taken.

Every quarter a statement identifying new risks and updation on pre-identified risks along with their mitigation process or counter measures taken are reported before the Audit Committee.

Details of directors or Key managerial personnel who were appointed or have resigned during the year under review:

- Mr. Shoji Tsubokuta has ceased to be a Managing Director of the Company with effect from 31st August, 2015.

- Mr. Atsushi Ohtsuka has been appointed as a Managing Director of the Company with effect from 1st September, 2015.

- Mr. Amit Doshi has ceased to be an Executive Director of the Company with effect from 1st June, 2015.

- Mr. Varghese Joseph has been appointed as an Executive Director of the Company with effect from 1st August, 2015.

- No Independent director has been re-appointed by passing a special resolution during the year under review.

Internal Financial Control:

Internal Financial Control plan adopted by the Company is adequate with reference to the Financial Statement.

1. Conduct of its business by adherence to Company''s policies.

2. Safeguarding of assets.

3. The accuracy and completeness of the accounting records, Prevention and detection of frauds and errors and timely preparation of reliable financial information.

Other disclosures:

1. Number of meetings of the Board: Four meetings of the Board of Directors of the Company were held during the year under review on 29th May, 2015, 24th July, 2015, 26th October, 2015, 8th February, 2016.

2. Members of the Audit Committee are as under:

- Mr. Mukesh Patel - Chairman

- Dr. Devender Nath - Member

- Mr. Ravindra Jain - Member

3. The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013.

4. Details about the Policy on Corporate Social Responsibility (CSR) and projects implemented by the Company during the year under review, as required under Section 134(3)(o), 135(2) read with Companies (Corporate Social Responsibility Policy) Rules, 2014 have been provided as Annexure A.

5. Formal Appointment and Evaluation Policy of the Board of Directors and Senior Management of the Company which has been formulated and recommended by Nomination and Remuneration Committee and adopted by Board of Directors covering appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Section 178(3) is attached as Annexure B.

6. No commission paid to any Director of the Company, so no disclosure is required to be made under Section 197(14).

7. The details forming part of the extract of the Annual Return in form MGT 9 as provided under sub-Section (3) of section 92 is annexed as Annexure C.

8. No loan was granted by the Company to any person to purchase or subscribe to fully paid-up shares of the Company.

9. There is no fraud reported by Auditors under Section 143(12) of the Companies Act, 2013 during the year under review.

10. The details of familiarisation programme have been disclosed on the Company''s website and a weblink is as under: http://www.hitachi-hli.com/images/investor_relation_reports/ aggr_0.39343200%201421661808.pdf

11. Particulars of loans, investments or guarantees under section 186: Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered under Section 186. Company has not made any investment in securities of other Body Corporate. Company has given guarantee of Rs.1500 lacs against the credit facilities availed by dealers.

12. There is no subsidiary, associate and joint venture Company, so no disclosure is required on the performance and financial position of each of the subsidiaries, associates and joint venture companies in Form AOC 1.

13. There is no Company which has become or ceased to be its subsidiary, joint venture or associate Company during the year.

14. On 1st October, 2015, Johnson Controls, Hitachi Ltd. and Hitachi Appliances Inc. have completed Global Joint Venture agreement (JV) and commenced operations of Johnson Controls - Hitachi Air Conditioning (JCH) to provide global customers with a full range of Air conditioning products. Through this agreement Johnson Controls has acquired a 60 per cent ownership stake of the JV and Hitachi Appliances Inc. retained ownership of remaining 40 percent stake of the JV.

15. During the year, Company has not accepted deposits covered under Chapter V.

16. Auditor''s Report: There is no qualification, reservation or adverse remark or disclaimer made by the Auditors in their report.

17. Secretarial Audit Report: Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Report of the Secretarial Auditors is annexed as Annexure D.

The Secretarial Auditors have made observation relating to non-fling of Form MGT-10 for reporting changes in shareholding of Top 10 Shareholders of the Company. The Company understands that reporting of change in the shareholding is required if such change is of 2% or more of Company''s capital and not of the individual shareholding.

18. There is no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

19. Details of complaints relating to sexual harassment during the year under review: Received during the year: Nil; Pending as on 31st March, 2016: Nil.

20. Information pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, relating to Conservation of energy, technology absorption and foreign exchange earnings and outgo is given as Annexure E to this report.

21. Statement showing particulars of employees under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached with this Annual Report.

22. Contract or arrangement under Section 188(1): There were no contracts or arrangements entered by the party falling under Section 188(1). Particulars of contracts or arrangements with related parties are provided in Form AOC 2 as Annexure F.

23. Policy on dealing with Related Party Transactions has been disclosed on Company''s website and a weblink is as under: http://www.hitachi-hli.com/images/investor_relation_reports/aggr _0.17509900%201421661745.pdf.

24. Revision in Accounts or Board''s Report: There are no revisions made in the Accounts or Board''s Report.

25. Issue of Equity Shares with differential rights: There was no Equity Share issued with differential voting rights during the year under review.

26. Issue of Sweat Equity Shares: There was no issue of Sweat Equity Share during the year under review.

27. Employee Stock Option and Employee Stock Purchase Schemes: No Employee Stock Option and Employee Stock Purchase Schemes were launched during the year under review.

28. Disclosure under Regulation 34(3), Schedule 5 of the SEBI(Listing Obligation and Disclosure Requirement) Regualtions,2015:

- The Equity Shares of the Company are not delisted or suspended during the year under review.

- Equity Shares of the Company are listed on the BSE Limited and the National Stock Exchange of India Limited.

- Annual listing fees have been paid to both the stock exchanges mentioned above.

Acknowledgement

Your Directors thank all Customers, Suppliers, Investors, Bankers - Bank of America, N.A., State Bank of India, ICICI Bank and Standard Chartered Bank and other stakeholders of the Company for their co-operation and continued support during the year. We look forward to their continued support in the future also.

We wish to place on record our sincere appreciation for the excellent work put in by the employees of the Company at all levels.

For and on behalf of the Board of Directors

Place : Delhi Atsushi Ohtsuka Anil Shah

Date : 30th May, 2016 Managing Director CFO & Executive Director


Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting the Twenty Eighth Annual Report and the Audited Financial Statements, for the year ended March 31, 2013.

Financial Highlights

The highlights of financial results of the Company for the year under review are given below:

(Rs.in Lacs)

For the year ended For the year ended March 31, 2013 March 31, 2012

Revenue from operations (gross) 101922 86732

Less : Excise Duty 8923 6923

Revenue from operations (net) 92999 79809

Other Income 161 87

Total Revenue 93160 79896

Profit before finance cost, depreciation and tax 4805 3114

Finance Cost 721 1003

Depreciation and amortization expenses 2018 1832

Tax expense 536 (47)

Profit for the year 1530 326

Dividend

Your Directors recommend a dividend of Rs. 1.50 per Equity Share for the year ended March 31, 2013 to the Equity shareholders holding 27,190,884 Equity Shares (including shareholders holding 4,230,876 Equity Shares allotted on 8th April, 2013).

This is subject to the approval of the Members at the ensuing Annual General Meeting.

Issue of Equity Shares on Rights Basis

Company had, vide Letter of Offer dated February 27, 2013, offered fully paid-up Equity Shares at a price of Rs.130 per Equity Share (including face value of Rs.10 per Equity Share and share premium of Rs.120 per Equity Share) to the Equity Shareholders of the Company on a Rights Basis in the ratio of 1(One) equity share for every 5 (Five) Equity Shares(s) held by the equity shareholders on the record date,

i.e. March 06, 2013. The Rights Issue was opened on March 14, 2013 and closed on March 28, 2013. Company has made allotment of 4,230,876 Equity Shares on April 8, 2013 aggregating to Rs. 5500 Lacs.

Manufacturing Unit II reconstructed at Kadi (Gujarat)

Manufacturing Unit II situated at Kadi (Gujarat) was entirely gutted in a major fire incident happened on July 18, 2012 and fortunately no human casualty was there. The loss incurred by the Company is adequately covered under insurance claim. Company has received interim payment of Rs. 7,000 Lacs from the Insurance Company.

We have overcome this turbulence and within 165 days'' time, we have rebuilt it. The Unit II has been reconstructed and production has recommenced from January 13, 2013.

We have received unconditional support from all stakeholders, dealers, customers, vendors, state government and employees.

Directors'' Responsibility Statement Your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures ;

(ii) such accounting policies have been selected 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 ended March 31, 2013 and of the profit of the Company for that year ;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) annual accounts have been prepared on a going concern basis.

Report of Corporate Governance

Report on Corporate Governance under clause 49 of the Listing Agreement is attached to this Report.

Particulars as per Section 217 of the Companies Act, 1956

A statement showing particulars of employees as required under Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 is attached with this Annual Report and information pursuant to Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, relating to Conservation of energy, technology absorption and foreign exchange earning and outgo is given as Annexure-I to this report.

Particulars about Cost Audit Report

M/s. Kiran J Mehta & Co. (Membership No. 4733), Cost Accountants, Ahmedabad, has been appointed as Cost Auditors of the Company for the year 2012-13. Cost Audit Report for the year 2012-13 will be submitted on or before due date i.e. 27th September, 2013.

Acknowledgement

Your Directors thank all Customers, Suppliers, Investors, Bankers - State Bank of India, ICICI Bank and Standard Chartered Bank and other stakeholders of the Company for their co-operation and continued support during the year. We look forward to their continued support in the future also.

We wish to place on record our sincere appreciation for the excellent work put in by the employees of the Company at all levels. For and on behalf of the Board of Directors

Place : Ahmedabad, Gujarat Motoo Morimoto Anil Shah

Date : May 15, 2013 Managing Director Executive Director


Mar 31, 2012

The Directors have pleasure in presenting the Twenty Seventh Annual Report and the Audited Financial Statements, for the year ended 31st March, 2012.

Financial Highlights

The highlights of financial results of the Company for the year under review are given below:

(Rs in Lacs)

For the year ended For the year ended 31st March, 2012 31st March, 2011

Revenue from operations (gross) 86731.93 82988.99

Less : Excise Duty 6923.02 6588.24

Revenue from operations (net) 79808.91 76400.75

Other Income 87.41 467.31

Total Revenue 79896.32 76868.06

Profit before finance cost, depreciation and tax 3002.05 6336.11

Finance Cost 891.04 737.54

Depreciation and amortization expenses 1831.74 1605.20

Tax expense (46.90) 1060.80

Profit for the year 326.17 2932.57

DIVIDEND

Your Directors recommend a dividend of Rs 1.50 per Equity Share for the year ended 31st March, 2012. This is subject to the approval of the Members at the ensuing Annual General Meeting.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The home appliances industry (only Air conditioners and Refrigerators) is estimated to be around Rs 1,465,000 Lacs. Room Air conditioners contribute to around Rs 630,000 Lacs and Refrigerators contribute Rs 835,000 Lacs.

During the year under review, India's economic situation continued to decline due to depreciation in INR, high inflation rate and increased interest rates which adversely impacted Air conditioners business. In such indecisive environment, inflow and execution of orders remained slow. In addition to that industry faced the problem of margin pressure in all segments and in fact maintaining profit margin has been a tough job for all the consumer Durable players.

Air conditioning Industry

Our estimate of the industry performance during FY 2011-12 is given below:

Category Total Industry Sales

2011-12 2010-11 Growth

Room Air conditioners (in Lacs Units) 28.5 33.0 (14%)

Duct able Air conditioners (in Lacs Tr.) 3.6 3.5 3%

Room Air conditioners

The Room Air conditioner category consists of both the Window and Split Air conditioners for the use in Residential and Commercial spaces.

The Room Air conditioning industry declined by 14% in 2011-12 in comparison to about 31% growth in 2010-11.

Despite of such decline of industry, company has grown by 1% over the last year with 2.32 Lacs units against 2.30 Lacs units in last financial year in Room Air conditioner segment.

The demand of Split Air conditioners is continuously increasing and the price gap between a Window and a Split Air conditioner has shrunk in recent years. Today, the Split Air conditioners contribute to more than 74% of Room Air conditioner market.

During the year under review, the off-take during the peak summer season turned out to be lower than expectations which resulted into a situation where company was saddled with excess inventory. The Company has taken measures for liquidation of such inventory. Margin pressure continues to be a concern in Room Air conditioning segment. Several remedial steps taken by the Company including price increase, reduction in overheads and reduction in production cost by value engineering.

In the Room Air conditioner category we have about 8% market share in terms of sales volume. We are aiming to capture 10% market in terms of sales volume which will translate into 12% in value terms. We have expanded our network and are present in more than 300 towns with approx 2000 sales points. Another step is to launch exclusive Air conditioner models to each Distribution Channel i.e. Direct Dealer network, Distributor network, Modern Trade, Construction industry and Institutions.

Company has the mass-premium Air conditioner range, called 'Kaze' in the Split and the Window Air conditioners segment. The 'Kaze' range will help the Company to reach the middle level income group who want a quality product and at the same time Value for their money.

A range of Split Air conditioner models, called 'Sugoi' and 'Kampa' are launched exclusively for distribution network to widen the Air conditioner range and spread the availability across the country. The Company has also launched its popular Split Air conditioner models 'ACE Followme', 'ACE Cutout' and 'i-Tec' with refreshing looks.

Presently, Company's Split Air conditioners range comprises of 38 models, with capacities ranging from 1.0 Tr. to 3.5 Tr. The Window Air conditioners range includes 17 models within 1.0 Tr. to 2.0 Tr. capacities.

Achievement

Your company has been awarded "Certificate of Merit" at National Energy Conservation Awards Ceremony by Bureau of Energy Efficiency (BEE), Ministry of Power. Mr. Motoo Morimoto, Managing Director of the Company was awarded by Hon'ble Union Minister for Power, Mr. Sushil Kumar Shinde at the function held at Vigyan Bhavan, New Delhi on 14th December, 2011.

The Function was presided over by the Hon'ble Prime Minister of India, Dr. Manmohan Singh, Hon'ble Union Minister of State for Power, Mr. K. C. Venugopal, Secretary Min. of Power, Mr. Uma Shankar and Mr. Ajay Mathur - Director General-BEE.

The Company has won the Award based on parameters like the number of star labelled products sold, the energy savings achieved, its technology and the growth in sales of high energy efficient products over the previous financial year.

'i-Clean': The Auto Clean Air conditioner

The Company has refreshed the 'i-Clean' Range with a new color fascia. The 'i-Clean' is equipped with exclusive feature - Automatic filter clean technology, which cleans the filter automatically after every 10 hours and maintains a hygienic room environment. This model is 5 star rated (1.2 Tr. & 1.5 Tr. Class) and loaded with all other innovative features like Auto Climate Technology, Auto Humidity Control, Kaimin, On/Off timer with advanced startup etc. The 'i-Clean' is available in 1.2 Tr., 1.5 Tr. & 2.0 Tr. Class. Looking to the exclusive feature, in current year, this model has been accentuated by the Company in advertising campaign.

5 star rated Window Air conditioners range, as efficient as Split Air conditioners

For Air conditioners, the star levels are categorized over a band of EER. EER is the Energy Efficient Ratio, which indicates the amount of cooling capacity in watts the Air conditioner delivers for every watt of electrical energy consumed by it. At present, for Split Air conditioners, the EER has to be minimum 2.5 to qualify for 1-Star rating and EER of 3.3 and above for 5-Star categories. For window air conditioners, the EER has to be minimum 2.3 to qualify for 1 star rating and EER of 3.1 and above for 5 star rating. BEE has plans to move up the energy efficiency level continuously every two years.

This year Company is strengthening its 5 star rated Window Air conditioners range (1.1 Tr. & 1.5 Tr. capacities) with 'Summer TM' and 'Summer QC'. 'Summer TM' is Split in a box concept which is based on twin motor technology and Summer QC is available with 3.3 EER (W/ W)(1.5 Tr.) which is equivalent to a 5 star rated Split Air conditioner of 2012. It is creditable that Company's Window Air conditioners are as efficient as the Split Air conditioners. Both the Window Air conditioners are with innovative features, silent cooling and stylish looks in 3 capacities 1.1 Tr, 1.5 Tr. and 2.0 Tr. Class.

Commercial range of Air conditioners

During the year under review the Packaged / Duct able Air conditioning market has grown at a moderate pace on account of delayed / slow commercial construction activities by builders.

This segment of the industry has grown at about 3% however Company grew at 4.8% which is more than the market growth rate. The Company offers the 'Takumi' range of Duct able Air conditioners with unique Energy Efficient Engineering design and the wide flexibility in application provides pragmatic solutions to suit best for varied and complex cooling requirements. The range of these products is available from 3.0 Tr. to 16.5 Tr. which have been well accepted in the market.

This year, the Chiller and VRF segments have shown growth. The chiller industry grew at approximately 8.8%, whereas Company grew at 12%. We offer a wide range of chillers in the Air-cooled (40 HP to 400 HP) and Water-cooled (40 HP to 570 HP) categories and now manufactures water cooled chillers up to 120 HP capacity in India plant as well as imports it if customers so demand. The VRF category is also a promising and fast growing segment. The Company offers a range of Set Free (VRF) in Modular type from 8 HP to 54 HP and front flow type from 8 HP to 12 HP.

Telecom Air conditioners

This specialized Air conditioning system is designed for unmanned Telecom Shelters / Telecom BTS sites. 'Space maker', Company's product for the telecom sector consists of varied features viz. high cooling capacity and safety features. The 'Space maker' range is available from 0.9 Tr. to 4.0 Tr. capacities. Company has also now developed a 'Free Cooling Unit' for this Segment, which reduces the running power consumption and hence the OPEX for the Operator. It is well accepted by all the customers.

This segment has shrunk due to sharing of towers amongst the telecom operators who tried to manage with existing infrastructure. Therefore, new setups are not coming up and the growth is negative. However, Company is maintaining its leadership position with the market share of about 56% in comparison to 42% in last year.

Refrigerators

Company is increasing its focus on the Refrigerator category with the launch of 2012 range i.e. Side-by-Side refrigerator with inverter technology. This was launched to increase and strengthen the high end range. The other models i.e. Big French (4-Door), 3-Door and 2- Door refrigerators were also introduced with all new look and features. These models will be available by mid of 2012 in the market. Currently the Company offers 12 models in 3 variants i.e. Big French (4-Door), three door and two door refrigerators.

Company operates in 300 Ltr. & above frost free segment only, which is about 15% of total frost fne refrigerator industry and the size of this segment is 22.5 Lacs units. The Company operates only in premium category therefore the big sales volume is not expected. During the year under review the production of refrigerators suffered because of the floods in the Thailand Manufacturing Plant. This affected the supplies and because of that, the business of the Company affected by 4% against last year.

Customer Service

Company has expanded network of company owned and company operated service centers to 34 nos. in 26 towns with over 1500 technicians apart from 616 other service points including multi brand S&S, exclusive S&S and franchisees. With this network company is covering approx 317 towns across country.

Company has launched genuine accessories under the brand 'RYOKU'. In the initial phase 'Ryoku' Stabilizers, 'Ryoku' Copper, 'Ryoku' Stand and 'Ryoku' IDUs are available to the customers.

Apart from training of Company's own service technicians, Company has trained technicians of service franchisees in the state of art training center "Hitachi Centre for excellence". Other than Technical and behavioral training, the training to the Dealer Sales person and Hitachi Profile communicators is also imparted.

Market Drivers' Outlook, Opportunities, Threats, Risks and Concerns

Market Driver Description Outlook

AC Penetration Room Air Conditioner penetration is very low approx 3% in the country. It is expected to grow in future. I

Market Growth Middle income level population is growing; their average income levels are rising. Smaller towns are showing encouraging growth. These towns are very critical, as 1s the next round of growth will come from them.

Input Cost India's core inflation has gone up signi featly over the past year, and is unlikely to moderate significantly in the coming months. Thereby input costs of raw material especially of Aluminum, Copper and Sheet Metal has gone up and has led to an erosion of Margins. Increasing Tax, freight cost, and operational cost are some other factors which increase the cost.

Energy Efficiency From Jan 2012 onwards BEE has made the star rating system more stringent, which means the EER of all star ratings has gone up. Therefore to qualify to be a 5 star Air conditioners the minimum EER is now 3.3, which was 3.1 earlier. Company offers higher EERs in all the models therefore we could easily adopt to the new system.

Because of BEE standards of Energy efficiency the specifications of all Air conditioners have gone up which may result in the cost increase for new product development.

Market Driver Description Outlook

Growth of Modern Trade While there are established distribution networks in both rural and urban India, the presence of well-known brands and organized sector is increasing. Shopping malls are becoming increasingly common in Indian cities. This will have a positive impact 1s on the consumer durables industry, as organized retailing would not only streamline the supply chain, but also facilitate increased demand, especially for high-end and branded products.

The growth of Power Retailers and Corporate Power Retailers will hit the margins because they will increase their share and will demand more margins because of their increased muscles.

Lack of Consumer Finances Banks / NBFCs are tightening their consumer finances, the funding options have minimized. Inventory funding is also very tight, which is not a good situation for sU dealers to run their operations.

Power Quality High electricity cost and quality of power supply in the country is a cause of concern,

Long power cuts and voltage fluctuations may affect the pace of industry growth.

Seasonality Air conditioner is seasonal product therefore delayed/ short duration summer affects the overall business performance and 2011-12 was affected badly due to the same.

Is Indicates a favorable trend in the market categories in which we compete.

- Indicates a negative trend in the market categories in which we compete.

HUMAN RESOURCES

The total strength of employees (staff and operators) of the Company was 694 as on 31st March, 2012.

Operations at all the 34 service centers stabilized during the year. Manning at all the Centers was completed during the year.

To further enhance the Quality of Service to the Customers, training in the areas of both Technical & Behavioral functions was organized for the Technicians & Engineers. The technicians were also given product specific trainings to deliver service for all kinds of products.

To further develop the Central Air conditioning business specialized manpower was added in various areas of Project Design, Estimation, and Execution for handling Central Air conditioner Projects all over India.

To strengthen the Supply Chain an exclusive pool of 20 Nos. of Engineer Trainees were recruited. They were deployed in various functions of Supply Chain like Design, Quality Management, Manufacturing, and Materials at the Plant.

The Competency based Annual Appraisal Process was completed. As a token of appreciation, a Special Scheme to Reward the Long-term Association of Employees was initiated last year, which continued during the Appraisal process.

INTERNAL CONTROL AND SYSTEMS

Company has adequate system of internal control to ensure that all the assets pertaining to Company are safeguarded and protected. Internal Audit has also been done through external Auditors at plants as well as at all the branches and service centers of the Company as per the detailed scope defined and approved by the Audit Committee. The Internal Audit is planned to substantiate and review the adequacy of controls and laid down procedures & systems.

Observations of Internal Auditors and the detailed plan of action is reviewed and discussed at the meetings of the Audit Committee.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed ;

(ii) such accounting policies have been selected 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 ended 31st March, 2012 and of the profit of the Company for that year;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) annual accounts have been prepared on a going concern basis.

REPORT OF CORPORATE GOVERNANCE

Report on Corporate Governance under clause 49 of the Listing Agreement is attached to this Report.

PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956

A statement showing particulars of employees under Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 is not required to attach with this Report since no employee has drawn remuneration above the limit prescribed in Rules.

Information pursuant to Section 217(l)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, relating to Conservation of energy, technology absorption and foreign exchange earnings and outgo is given as Annexure-I to this report.

PARTICULARS ABOUT COST AUDIT REPORT

M/s. Kiran J Mehta & Co. (Membership No. 4733), Cost Accountants, Ahmadabad, has been appointed as Cost Auditors of the Company for the year 2011-12. Cost Audit Report for the year 2011-12 will be submitted on or before due date i.e. 27th September, 2012.

ACKNOWLEDGEMENT

Your Directors thank all Customers, Suppliers, Investors, Bankers - State Bank of India, ICICI Bank and Standard Chartered Bank and other stakeholders of the Company for their co-operation and continued support during the year. We look forward to their continued support in the future also.

We wish to place on record our sincere appreciation for the excellent work put in by the employees of the Company at all levels.

For and on behalf of the Board of Directors

Place : Ahmadabad, Gujarat Motoo Morimoto Anil Shah

Date : 24th May, 2012 Managing Director Executive Director


Mar 31, 2011

The Directors have pleasure in presenting the Twenty Sixth Annual Report and the Audited Financial Statements, for the year ended March 31, 2011.

FINANCIAL HIGHLIGHTS

The highlights of financial results of the Company for the year under review are given below:

(Rs. in Mn.)

For the year ended For the year ended

March 31, 2011 March 31, 2010

Income from operations 8291.28 6859.70

Less : Excise Duty 658.82 450.67

Other Income 56.40 118.31

Total Income 7688.86 6,527.34

Profit before interest, depreciation and tax 580.32 703.08

Interest 20.46 15.10

Depreciation 160.52 117.77

Tax 106.08 108.81

Profit after tax 293.26 461.40

Amount brought forward from previous year 802.24 427.14

Balance available for appropriation 1095.50 888.54

Amount transferred to General Reserve 29.33 46.14

Proposed Dividend (including Corporate Dividend Tax) 40.02 40.16

Surplus carried to Balance Sheet 1026.15 802.24

DIVIDEND

Your Directors recommend a dividend of Rs. 1.50 per Equity Share for the year ended March 31, 2011. This is subject to the approval of the Members at the ensuing Annual General Meeting.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed ;

(ii) such accounting policies have been selected 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 ended March 31, 2011 and of the profit of the Company for that year ;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) annual accounts have been prepared on a going concern basis.

REPORT OF CORPORATE GOVERNANCE

Report on Corporate Governance under clause 49 of the Listing Agreement is attached to this Report.

PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956

A statement showing particulars of employees under Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 is not required to attach with this Report since no employee has drawn remuneration above the limit prescribed in Rules.

Information pursuant to Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, relating to Conservation of energy, technology absorption and foreign exchange earning and outgo is given as Annexure-I to this report.

ACKNOWLEDGEMENT

Your Directors thank all Customers, Suppliers, Investors, Bankers - State Bank of India, ICICI Bank and Standard Chartered Bank and other stakeholders of the Company for their co-operation and continued support during the year. We look forward to their continued support in the future also.

We wish to place on record our sincere appreciation for the excellent work put in by the employees of the Company at all levels. For and on behalf of the Board of Directors

Place : Ahmedabad Motoo Morimoto Anil Shah

Date :May 23, 2011 Managing Director Executive Director



 
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