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Directors Report of Racl Geartech Ltd.

Mar 31, 2015

TO

THE MEMBERS,

The Directors take pleasure in presenting the 32nd Annual Report together with the Audited financial statements of the Company for the financial year ended March 31, 2015.

FINANCIAL RESULTS: (Rs.in Lacs)

Particular 2014-15 2013-14

Sales and Other Income 11558 11164

Operational Expenses 9958 9793

Depreciation 427 386

Financial Charges 675 645

Gross Profit/(Loss) 498 340

Provision for Taxes/ Def.Tax Liab 139 152

Net Profit 359 187

Profit b/f from last year (Reserves) 1434 1247

Profit carried to Balance Sheet 1784 1434

DIVIDEND

Considering the fund requirements for our future plans for up-gradation of plant & machinery / technology up- gradation, the Board of Directors considered it appropriate not to declare any dividend for the current year.

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed analysis of the Company's operations in terms of performance in markets, business outlook, Opportunities and Threats, Risks and Concerns forms part of the Management Discussion and Analysis, a separate section of this report.

DIRECTORS' RESPONSIBILITY STATEMENT

In compliance with section 134(5) of the Companies Act, 2013, the Directors of your Company confirm:

- that the applicable Accounting Standards have been followed in the preparation of annual accounts and that there are no material departures;

- that such 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 your Company as at March 31, 2015 and of the profit of your 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 your Company and for preventing and detecting fraud and other irregularities;

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

- that the internal financial controls to be followed by the Company have been laid down and such internal financial controls are adequate and were operating effectively; and

- that proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and operating effectively.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In terms of the provisions of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a company shall have at least one Woman Director on the Board of the company. During the year under review, The Board of Directors of your Company at their meeting held on January 31, 2015 co-opted Mrs. Narinder Paul Kaur as an Additional Director (Non-Executive Director/Woman Director) liable to retire by rotation.

In terms of section 152 of the Companies Act, 2013, Mr. Dev Raj Arya, Director of the Company retires by rotation at the ensuing Annual General Meeting. The Board recommends that Mr. Dev Raj Arya may be re-appointed at the ensuing AGM.

In terms of provisions of Section 203 of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchange, the Board of Directors of the Company has designated following Directors/ Officials of the Company as Key Managerial Personnel (KMP) of the Company at its meeting held on July 31, 2014:

1. Mr. Gursharan Singh, Chairman & Managing Director

2. Mr. Dev Raj Arya, Whole Time Director & CFO

3. Ms. Kamna Tiwari, Company Secretary

Ms. Kamna Tiwari, Company Secretary, Key Managerial Personnel (KMP) of the Company resigned on January 6, 2015 and the Board of Directors of the Company appointed and designated Mr. Hitesh Kumar, Company Secretary as Key Managerial Personnel (KMP) of the company at its meeting held on January 31, 2015.

Necessary resolutions for the appointment/re-appointment etc. of the aforesaid directors have been included in the notice convening the ensuing annual general meeting. Your directors commend their appointment/re- appointment.

Declaration by Independent Directors

All the Independent Directors of your Company have made declaration to the Company that they meet all the criteria of independence laid down under section 149(6) of Companies Act, 2013 and clause 49 of Listing Agreement with the Stock Exchanges.

Familarisation Programme for Independent Directors

Your Company has adopted a 'Familarisation Programme for Independent Directors' to familiarise them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. Your Company aims to provide its Independent Directors, insight into the Company enabling them to contribute effectively.

The details of familiarisation programme is disclosed on the Company's website and may be accessed at the web link http://www.raunaqauto.com/pdfs/Familiarisation-Programme-for- Independent-Directors

NOMINATION AND REMUNERATION POLICY

The Board of Directors of your Company in terms of the Section 178 of the Companies Act, 2013 and clause 49 of the Listing Agreement with Stock Exchange. has on recommendation of Nomination and Remuneration Committee, approved a Nomination and Remuneration Policy. The aforesaid policy of the Company on Director's/ KMP appointment and remuneration including criteria for determining qualifications, positive attributes, independence of directors and other matters is annexed as "Annexure A". The salient points of said policy is stated in the Corporate Governance report forming part of the Directors' Report.

PERFORMANCE EVALUATION OF BOARD, COMMITTEES AND DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of the Directors individually including Independent Directors, Board as a whole and of its various committees, on parameters such as participation in meetings, skills, knowledge, contribution towards corporate governance practices etc.

Independent Directors in terms of Companies Act, 2013, and clause 49 of Listing Agreement, carried out performance evaluation of non-independent directors, Chairman of the Board, Board as a whole and flow of information between the company management and the Board with respect to knowledge to perform the role, participation in meetings & performance of duties etc.

The Directors expressed their satisfaction with the evaluation process.

DISCLOSURES

Audit Committee

The audit committee of your Company comprises of Mr. Raj Kumar Kapoor as the Chairman and Mr. Devender Singh and Mr. Anil Sharma as members. Details in respect of the audit committee is provided in Corporate Governance Report forming part of the Directors' Report.

Whistle Blower Policy/ Vigil Mechanism

Your Company has formulated an "Alert Procedure" to ensure the establishment of vigil mechanism, to provide an avenue to all stakeholders (including employees and directors) to report concerns about unethical behaviour, actual or suspected fraud or violation of the Raunaq's Code of Conduct for Directors and Senior Management Personnel. The said policy is also posted on the website of the Company, which may be accessed at the web-link http://www.raunaqauto.com/pdfs/VIGIL_MECHANISM_WHISTLE_BLOWER_POLICY

Number of Meetings of the Board

During the year under review, four (4) meetings of the Board of Directors were held, details of which are provided in Corporate Governance Report forming part of the Directors' Report.

Particulars of Loans, Guarantees or Investments

There is no investment made by the company and has not provided any loan, guarantee or securities under section 186 of the Companies Act, 2013.

Particulars of Employees and Related Disclosures

Details as required under section 197(12) read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as "Annexure B".

A statement showing the names of employees drawing remuneration in excess of the limits as set out in section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of Companies (Appointment and Qualifications of Directors) Rules, 2014 is annexed as "Annexure C".

Extract of Annual Return

The extract of the Annual Return is detailed in form MGT.9, annexed as "Annexure D".

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars, as prescribed under sub-section 3(m) of section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 are provided in "Annexure E", which forms part of this report.

AUDITORS AND AUDITORS' REPORT

Statutory Auditors

M/s. A. Sachdev & Co., Chartered Accountants, were appointed as statutory Auditors at previous Annual General Meeting to hold office till the conclusion of 34th AGM subject to ratification of the appointment by the members at every AGM. In terms of Section 139 of the Companies Act, 2013, appointment of M/s. A. Sachdev & Co. as Auditors of the Company is recommended for ratification at ensuing Annual General Meeting.

The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark.

Secretarial Auditors

As per section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company appointed M/s. K. K. Malhotra & Co., Company Secretaries, as Secretarial Auditor of the Company for the financial year ended March 31, 2015. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed as "Annexure F".

Cost Auditors

Pursuant to Companies (Cost Records and Audit) Amendment Rules, 2014 notified by the Ministry of Corporate Affairs (MCA) on 31 December, 2014, the Company shall not be mandatorily required to get its Cost Records for the financial year 2014-15 audited in terms of provisions of Section 148 of the Companies Act, 2013 as the Industry under which the Company falls has been Exempted from the Cost Audit by MCA vide Companies (Cost Records and Audit) Amendment Rules, 2014.

RELATED PARTY TRANSACTIONS

In terms clause 49 of the Listing Agreement, Board of Directors of your Company has approved Related Party Transactions Policy on dealing with Related Party Transactions. The policy may be accessed at the weblink http://www.raunaqauto.com/pdfs/Related-Party-Transaction_Policy.

All related party transactions during the financial year were on arm's length basis and were in the ordinary course of business. During the year, there were no material related party transactions made by the Company which could be considered material in accordance with Related Party Transactions Policy of the Company.

RISK MANAGEMENT

The Board of Directors of your Company has laid down a Risk Management Policy for the Company, which provides a risk and controls matrix with identification of risks inherent to the business, corporate governance, functions; and sources of these risks; their possible consequences; and control measures to help manage them. Every unit and function is required to deploy the control measures and ensure timely reporting.

INTERNAL FINANCIAL CONTROL

The Board of Directors of your Company is satisfied with the Internal FinancialControl process. Internal control environment of the Company is reliable with well documented framework to mitigate risks. A detailed analysis is provided in the Management Discussion and Analysis Report.

CORPORATE GOVERNANCE

The Company is committed to maintain and adhere to the highest standards of Corporate Governance practices.

Pursuant to clause 49 of the Listing Agreement with Stock Exchange, Reports on Management Discussion and Analysis and on Corporate Governance have been included elsewhere in this Report as separate sections. A certificate from M/s. A. Sachdev & Co., Chartered Accountants regarding compliance of conditions of corporate governance as stipulated in clause 49 of the Listing Agreement has also been included in the Annual Report.

ENVIRONMENT, HEALTH AND SAFETY

For your Company, the absolute respect of Environment, Health and Safety (EHS) is a priority.

Raunaq Automotive Components Limited gives importance to safety, health and well-being of its employees and all the people working for the Company. Your Company is working hard to reduce the number of accidents to Zero. The Company encourages and ensures not only its employees but also its subcontractors working on Company's plants as well as its customers for complying with occupational health and safety measures.

DISCLOSURES UNDER SECTION 134 OF THE COMPANIES ACT, 2013

Except as disclosed elsewhere in the Annual Report, there have been no material changes and commitments, which can affect the financial position of the Company between the end of financial year and the date of this report.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

5. The annual listing fee for the year under review has been paid to BSE Limited, Mumbai, where your company's shares are listed. The Financial Results of the company can be accessed at the company's website http://www.raunaqauto.com/financials.html.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

ACKNOWLEDGEMENT

Your Directors express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company's executives, staff and workers.

For and on behalf of the Board

for RAUNAQ AUTOMOTIVE COMPONENTS LIMITED

Sd/-

Place: New Delhi Gursharan Singh

Date : August 6,2015 Chairman and Managing Director

Regd Office : 15TH Floor, Chiranjiv Tower- 43,

Nehru Place, New Delhi-110019

Ph. : 91 11 26418622, Fax : 91 11 26448962

Email - investor@raunaqauto.com


Mar 31, 2013

TO THE MEMBERS,

The Directors present 30th Annual Report and Audited Statement of Accounts of your Company for the Financial year ended 31st March, 2013.

FINANCIAL RESULTS :

(Rs.in Lacs)

Particulars 2012-2013 2011-2012

Sales and Other Income 10529 10897

Operational Expenses 9356 9700

Depreciation 332 305

Financial Charges 595 486

Gross Profit/(Loss) 246 406

Provision for Taxes/ Def.Tax

Liab/ including earlier years (88) (134)

Net Profit 158 272

Profit b/f from last year 1089 817

Profit carried to Balance Sheet 12471 1089

MANAGEMENT DISCUSSION AND ANALYSIS

a) The Global Economy 2012-13

Throughout the world all developed economies are showing sign of stagnation or decline except select Asian countries, notably China & India, which were growing over 7% in past 2 vnars However ongoing debt crisis in Europe, fluctuating crude oil prices, heavy fluctuations in inter currency exchange rates & political situation in some European countries is putting severe inflationary pressure on economies throughoutthe world. Although, it is creating additional trade opportunities for developing economies to tap new avenues in the developed countries by providing low cost products and services.

The global recession provided a food for thought to Indian economy to find ways & means for, not only, its survival but consistent growth. The Govt, policies in financial sector proved to the world at large that Indian systems / sectors are one of the best systems that did not yield to the very strong pressure of economic recession as it had shaken the majoi economic powers of the globe.

Indian automotive industry duly backed by robust domestic demand, was growing consistently in the past few years. An emerging middle class sector which got boost from I.T, B.P.O and Banking sectors had been creating a huge demand potential for 2 wheelers & small and mid sized Cars. Similarly growth in agricultural sector duly backed by Government support is considerably boosting the rural economy, which created increased business opportunities for 3 wheelers, light passenger and cargo vehicles. All these factors provided enough stimulus to transport sector, resulting in boosting the sales for medium and heavy commercial vehicles.

However, rise in interest costs, ever increasing fuel costs and heavy inflation witnessed in past one year is creating road blocks for maintaining the consistent growth trends in automotive sector. All these factors are putting the demand squeeze of automobiles, due to which automotive components sector is also under tremendous pressure of low profitability due to decline in demand as well as tremendous cost pressures, since OEMs are having stiff competition between themselves due to which they have put a squeeze on the profit margins of component suppliers. However, component industry has huge demand potential from overseas export customers, as India is still considered a low cost source with acceptable level of quality and price economy. On top of it current decline in INR is attracting overseas buyers to enhance their sourcing activities from Indian component manufacturers which shall create new business opportunities.

b) Opportunities and threats

An Opportunity for Indian Economy

All over the World, Automobiles Giants have been looking towards India as their destination for procurement of their domestic as well as export requirements since Indian components manufacturers could provide them sufficient confidence to achieve the desired quality norms for products at competitive rates, mainly becauseof their strong Engineering skills & low cost of production as compared to their counter parts in other parts of the Globe.

However, it is felt that Indian economy is still struggling against some basic inf rastructural facilities and other problems such as

Good Highways/Ports

Availability of Regular & Cheaper electricity.

Low Cost Raw Material

Simple taxation structure

Latest Technology & RD facilities

Erratic fluctuation in fuels prices / Exchange rate

High inflation rate i

Though, Indian economy has started loosing steam but it has the potential of curbing such temporary downfall in demand and can move faster in every sector, provided Government addresses above areas with a pro-active approach and puts the best policies and requisite funds for speedy development of most essential infrastructure.

Besides above, the Industrial sector itself has to gear up fully to tap the huge opportunity made available by such recession with a particular thrust in the following areas:

Continual improvement in Product quality & environment Management systems.Technology up gradation.Exploring new business avenues in domestic & as well as export market.

Focus on skill development at all levels. Adherence to principles of corporate Governance at international levels.

Threats

Though, the Indian economy enjoys several advantages of being one of the biggest market for vehicle users and has the distinction of being one of the largest automotive components manufacturers in the world still it faces the following threats

- Continued volatility of Raw material prices

- Free Trade/W.T.O.

- Foreign Currency fluctuations

Increased competition from China, Taiwan & other Asian countries

c) Risks & Concerns

Risks

The growth of Automotive Component Industry is entirely dependent upon the performance of Automotive Sector/infrastructure development. - Though, the global recession has adversely affected the export market and recovery may be slower than expected but the efforts made by the company during the last 2 years have yielded good results and the company has bagged prestigious and high valued orders from abroad from some of the world renowned OEM. However, the volatility in the market may further deteriorate the sustainability of business in the long run.

Concerns

The major impediments in the overall growth of the Industry are:

- Inadequacy of good quality of infrastructure specially Highways, Ports, Airports

Lack of Good Quality & continued availability of power at cheaper rates

- Volatility in prices and availability of basic raw material

- Multiple taxation system and other complicated administrative procedures

- Inability to pass on increasing cost to customers

d) Internal Control Systems and their adequacy

The Company has adequate internal control systems, which ensure proper recording of transactions of its operations and also protection against misuse or loss of the company''s assets. Internal audit of the company is carried out at periodic intervals by an independent firm of Chartered Accountants, to ensure that the company''s internal control system is adequately complied with and adhered to.

e) Cautionary Note

Certain statements in the management discussion and analysis section may be forward looking and are stated as required by applicable Laws & Regulations. Many other factors may affect the actual results, which would be different from what the Directors envisage in terms of the future performance and outlook.

PERFORMANCE OF THE COMPANY

In the Financial Year 2012-2013, the company achieved an Income of Rs.10529 Lacs as compared to Rs, 10897 Lacs in 2011-12 thus leading to fall ot 3 %. The company achieved an operating profit of Rs.246 Lacs (PBT) as compared to Rs.406 Lacs (PBT) last year. The company has made a provision of Rs.88 lacs on account of Income Tax''/ Deferred Tax Liabilities.

The company has MAT credit of Rs. 160 Lacs which shall be utilized/ adjusted for payment of Income Tax in future. Company has a Reserve & Surplus of Rs.2474.69 lacs as compared to Rs. 1214.68 Lacs last year.

In the export front the demand from our existing Customers has increased significantly and the company is fully geared up to meet the additional demand of our Export Customers.

During the year under review, the company had been successful in capturing the business from some of the world renowned automotive manufacturers and its further impact shall be visible in the performance of the current year.

During the Financial Year under review, the profit margins of the company have been adversely bit due to seve. nflationary pressure. However, a part of the same has been passed over to customers.

EXPORTS

The company has successfully broadened the export horizons during the year under review. Many prestigious MNCs have been included in our list of customers. The company is not only catering to their existing demand, but has also geared itself for their global requirement. In 2012-13, the company has improved its export sales significantly. It has been exporting goods to every part of globe, may be it is Asian countries, European Countries or USA. Our exports are very well accepted and are being appreciated for their good quality and competitive price.

During the year under review, the company achieved an export turnover of Rs.2946 Lacs as against Rs. 1893 Lacs in 2011-12. Thus, achieving a growth of 55%. The Company has already tapped prestigious business from most reputed global brands. Our export customers are fully satisfied with the quality, timely delivery & cost competitiveness. In the current year we have targeted an overall export sales of Rs.4800 lacs.

FUTURE OUTLOOK

A YEAR OF DIVERSIFIED GROWTH

A) THRUST ON BEST CORPORATE HUMAN RESOURCES PRACTICES

Company has taken sufficient steps to impart practical training to its work force at all levels. A separate cell in HR function has already been created for imparting such training in the plant itself. In order to encourage the senior staff, they are being deputed to attend Conferences, Seminars, In-house Workshops and are even being sent to overseas countries to upgrade their skills to global levels, so that they are satisfied & bring in knowledge & skills to RACL for mutual benefits.

B) INFRASTRUCTURAL & TECHNOLOGY UP GRADATION:

The company is consistently making investment in bringing in State of the Art Technology in the field of Gear Honing, Gear Cutting, Heat Treatment & Gear Finishing processes. A consistent thrust on technology up-gradation is being maintained to ensure technology level in line with global customers demand.

C) TAPPING NEW BUSINESS

The company has been exploring various avenues for development of new customers in Domestic and Export market by participating in Exhibition / National Auto Expo show / states sellers/buyers meets and

other programmes organized by ACMA or other related agencies. With our new installed technology, We have already bagged orders from world class OEMs for sports Motor Cycle segment.

During the previous years RACL has explored business opportunities with various new customers. Some of these are at various stages of development. Commercial production has started for many new products & we are hopeful that commercial production for additional parts shall be commencing in the current year.

Considering the existing business scenario the company has started exploring business opportunities with some new OEMs & we are hopeful that slow down witnessed (if any) by the existing customers shall be compensated by such new customers.

D) SETTING OF A SMALL FORGING UNIT

The company has installed a small forging unit (A Backward integration Initiation) for captive consumption. Though it faced certain startup problems but it is successfully operating & commercial production of a few components have started in-house, which ensures not only uninterrupted supply of Raw Material but ensures cost savings also. The company expects to achieve the maximum capacity utilization shortly with a significant cost saving in Raw material consumption.

E) IMPROVEMENT IN QUALITY SYSTEM & MANAGERIAL SYSTEMS

a) The vigorous efforts put i n by management have yielded good results in lean manufacturing programme and it has benefited the company in a big way.

b) The Company contemplates to implement SPC & SQC techniques to be implemented in all critical process.

c) As planned last year, RACL has started supplier development programme under project name as "UDAAN" for which an external faculty has been organized. The entire programme is co- ordinated by quality and purchasing team to ensure 100% defect free supplies from Job work suppliers at right time. Initially 8 suppliers have been included in this programme. It is targeted that programme shall bring RACL suppliers in line with global requirements of RACL customers.

F) NEW INITIATIVES FOR COST REDUCTIONS

During the year under review, the company hired the professional services for improving the profitability and cost reduction by way of practical training on Theory of constraints. The training imparted to the Sr. Executives of the company has brought a sea-change in the performance of the Sr. Managerial Team, which has been also percolated to the lower streams. We hope the result of this activity shall be visible in the Current Year.

MANUFACTURING EXCELLENCE & DEMING PRIZE JOURNEY

The new Plant & Machinery installed during the last 2 years have made a remarkable change in the quality of goods produced, which can match any international levels quality at local prices. The improved quality system with stringent Quality audit norms shall prove to be a milestone assisting us to achieve our goal of winning the Deming Prize in the near future.

DIVIDEND

Considering the fund requirements for our future plans for up-gradation of machinery / technology up-gradation, the Board of Directors considered it appropriate not to declare any dividend for the current year.

FIXED DEPOSITS

The Company has not accepted any fixed deposits from the public during the financial year ending 31st March, 2013.

LISTING FEES

The annual listing fee for the year under review has been paid to Bombay Stock Exchange Ltd., Mumbai, where your company''s shares are listed.

The Financial Results of the company can be accessed at the company''s website http://www.raunaqauto.com

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement with the Stock Exchange, a Report on Corporate Governance is provided elsewhere in this Annual Report along with the Auditor''s Certificate on the compliance thereof.

DIRECTORS

In accordance with the provisions of The Companies Act, 1956 and Memorandum and Article of Association of the company Mr.D.R. Arya, Director of the company retires by rotation and being eligible offers themselves for reappointment.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility statement it is hereby confirmed

i) that in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) that 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 or loss of the company for that period;

iii) that the directors have taken proper and sufficient care 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;

iv) That the directors have prepared the annual accounts on a going concern basis.

DEVELOPMENT IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company believes that employees are its real strength and their contribution remains main force towards its growth and development.

During the year under review, the relationship between the Workers & Management has been very cordial. The Management has been taking effective steps to raise the morale of work force by introduction of Kaizen Scheme, Incentives for Production, Best worker & most disciplined employees. The company has introduced direct interaction of workforce with the very senior management on frequent intervals which has further boosted morale of the workers.

The Board of Directors recognize and place on record the concerted efforts made by the Company''s Executives, Officers, Staff and Workers at all levels.

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

The information relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 is enclosed at Annexure "A" and forms part of this report.

AUDITORS AND AUDIT REPORT

The Company has obtained the requisite certificate from M/s.A.Sachdev & Co., U/s 224(1 B) of the Companies Act, 1956 according their consent to act as Statutory Auditors of the Company if appointed as per provisions contained under Companies Act, 1956. The Director''s reply to Auditors Report is stated elsewhere in the report. (Please see notes to accounts)

M/s .A .Sachdev & Co., Chartered Accountants, New Delhi Auditors of the company retire at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment.

AUDITORS'' CERTIFICATE

The Auditors have certified the Company''s compliance of the requirements of Corporate Governance in terms of Clause 49 of the Listing Agreement and the same is annexed to the Report on Corporate Governance.

COST AUDIT

The appintment of M/s Jaspreet Singh & Co. as Cost Auditors for Auditing the Cost Accounting Records of the Company for the year ended 31st March, 2013 has been dully approved by the Central Government.

RECONCILIATION OF SHARE CAPITAL AUDIT

As per the directives of the Securities and Exchange Board of India (SEBI), M/s.K.K.Malhotra & Company, Company Secretaries, New Delhi, undertakes a

Reconciliation of Share Capital Audit on quarterly basis. The audit is aimed at reconciliation of total shares held in CDSL, NSDL and in physical form with the admitted, issued and listed capital of the company.

The Reconciliation of Share Capital Audit Reports as furnished by the Auditor on quarterly basis was forwarded to the Bombay Stock Exchange, where the original shares of the Company are listed.

ACKNOWLEDGEMENTS

Your Directors wish to place their appreciation of the continued support, assistance and co-operation extended to the Company by the Company''s Bankers, The Pradeshiya Industrial & Investment Corporation of U.P. Ltd (PICUP), the State and Central Government and other Government Agencies.

Your Directors also wish to place on record their appreciation of the confidence reposed by its valued Customers, Suppliers and Esteemed Shareholders, without whose continuing support the achievements of the company would not have been possible.

For and on behalf of Board

for RAUNAQ AUTOMOTIVE COMPONENTS LIMITED

Place: New Delhi (GURSHARAN SINGH)

Date: 29th July, 2013 Chairman and Managing Director


Mar 31, 2012

The Directors present 29th Annual Report and Audited Statement of Accounts of your Company for the Financial year ended 31st March, 2012.

FINANCIAL RESULTS : (Rs.in Lacs)

Particulars 2011-2012 2010-2011

Sales and Other Income 10897 9125

Operational Expenses 9700 8104

Depreciation 305 283

Financial Charges 486 344

Gross Profit/(Loss) 406 394

Provision for Taxes/ Def.Tax

Liab/including earlier years -134 -134

Net Profit 272 260

Profit b/f from last year 817 558

Profit carried to Balance Sheet 1089 817

PERFORMANCE OF THE COMPANY

In the Financial Year 2011 -2012, the company achieved an Income of Rs.10897 Lacs as compared to Rs.9125 Lacs in 2010-11 thus achieving a growth of 19%. The company achieved an operating profit of Rs.406 Lacs (PBT) as compared to Rs.394 Lacs (PBT) thus registering a marginal growth of 3% as compared to last year. The company has made a provision of Rs. 134 lacs on account of Income Tax / Deferred Tax Liabilities.

The company has MAT credit of Rs. 137 Lacs which shall be utilized/ adjusted for payment of Income Tax in future. Company has a Reserve & Surplus of Rs. 1214.68 lacs as compared to Rs.880 Lacs last year.

The demand from our existing Customers has increased significantly and the company is fully geared up to meet the additional demand of OEM and Export Customers.

During the year under review, the company had been successful in capturing the business from some of the world renowned automotive manufacturers and its further impact shall be visible in the performance of the current year.

During the Financial Year under review, the profit margins of the company have been adversely bit due to severe inflationary pressure. However, a part of the same has been passed over to customers.

EXPORTS

The company has successfully broadened the export horizons during the year under review. Many prestigious MNCs have been included in our list of customers. The company is not only catering to their existing demand, but has also geared itself for their global requirement. In 2011 - 12, the company has improved its export sales significantly. It has been exporting goods to every part of globe, may be it is Asian countries, European Countries or USA. Our exports are very well accepted and are being appreciated for their good quality and competitive price.

During the year under review, the company achieved an export turnover of Rs. 1893 Lacs as against Rs. 1327 Lacs in 2010-11. Thus, achieving a growth of 43%. The Company has already tapped prestigious business from most reputed global -brands. Our export customers are fully satisfied with the quality, timely delivery & cost competitiveness. In the current year we have targeted an overall export sales of Rs.3000 lacs.

FUTURE OUTLOOK

A YEAR OF DIVERSIFIED GROWTH

A) THRUST ON BEST CORPORATE HUMAN RESOURCES PRACTICES

Company has taken sufficient steps to impart practical training to its work force at all levels. A separate cell in Personal department has already been created for imparting such training in the plant itself. In order to encourage the senior staff, they are being deputed to attend Conferences, Seminars, Workshops at home and are even being sent to abroad to upgrade their skills to global levels, so that they are satisfied & bring in technology & skills to RACL for mutual benefits.

B) INFRASTRUCTURAL & TECHNOLOGY UP GRADATION:

The company is consistently making investment in bringing in State of the Art Technology in the field of Gear Cutting, Heat Treatment & Gear Finishing processes. A consistent thrust on technology up- gradation is being maintained to ensure technology level in line with global customers demand.

C) TAPPING NEW BUSINESS

The company has been exploring various avenues for development of new customers in Domestic and Export market by participating in Exhibition / National Auto Expo show / states sellers/buyers meets and other programmes organized by ACMA or other related agencies. With our new installed technology, now we have already bagged orders from world class OEMs for sports Motor Cycle segment.

During the previous years RACL has explored business opportunities with various new customers. Some of these are at various stages of development and for some of the customers commercial production has started & we are hopeful that for some of the customers commencing commercial production in the current year itself.

Considering the existing business scenario the company has started exploring business opportunities with some new OEMs & we are hopeful that slow down witnessed (if any) by the existing customers shall be compensated by such new customers.

D) SETTING OF A SMALL FORGING UNIT (TO REDUCE RAW MATERIAL COST):

The company is already facing pressures on timely availability of forgings at competitive rates, the company has planned to install a small forging unit at the existing location. The project has already been tied up financially with Ratnakar Bank. The building is under construction and the requisite plant & machineries have already been ordered & under the process of procurement & we hope that it shall start commercial production for captive consumption in the current year itself.

E) IMPROVEMENT IN QUALITY SYSTEM & MANAGERIAL SYSTEMS

a) The vigorous efforts put in by management of yielded good results in lean manufactory programme and it has benefited the company in a big way.

b) The Company contemplates to implement SPO & SQC techniques to be implemented in all critical process.

c) Certificate of ISO 18001 & OHSAS Standards has already been obtained.

d) As planned last year, RACL has started supplier development programme under project name as "UDAAN" for which an external faculty has been organized. The entire programme is co- ordinated by quality and purchasing team to ensure 100% defect free supplies from Job work suppliers at right time. Initially 8 suppliers have been included in this programme. It is targeted that programme shall bring RACL suppliers in line with global requirements of RACL customers.

F) NEW INITIATIVES FOR COST REDUCTIONS

During the year under review, the company hired the professional services for improving the profitability and cost reduction by way of practical training on Theory of constraints. The training imparted to the Sr. Executives of the company has brought a sea-change in the performance of the Sr. Managerial Tearn, which has been also percolated to the lower streams. We hope the result of this training shall be visible in the Current Year.

MANUFACTURING EXCELLENCE & DEMING PRIZE JOURNEY

The new Plant & Machinery installed during the last 2 years have made a remarkable change in the quality of goods produced, which can match any international levels quality at local prices. The improved quality system with stringent Quality audit norms shall prove to be a milestone assisting us to achieve our goal of winning the Deming Prize in the near future.

DIVIDEND

Considering the fund requirements for our future plans for up-gradation of machinery / technology up-gradation, the Board of Directors considered it appropriate not to declare any dividend for the current year.

FIXED DEPOSITS

The Company has not accepted any fixed deposits from the public during the financial year ending 31st March, 2012.

LISTING FEES

The annual listing fee for the year under review has been paid to Bombay Stock Exchange Ltd., Mumbai, where your company's shares are listed.

The Financial Results of the company can be accessed at "the company's website http://www.raunaqauto.com

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement with the Stock Exchang a Report on Corporate Governance is provided elsewhere in this Annual Report along with the Auditor's Certificate on the compliance thereof.

DIRECTORS

During the year under review, PICUP has nominated Mr.Devender Singh and Mr.Ashok Mishra as Directors.

In accordance with the provisions of The Companies Act, 1956 and Memorandum and Article of Association of the company Mr.Anil Sharma, Director of the company retires by rotation and being eligible offers themselves for reappointment.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956 with respect to Directors' Responsibility statement it is hereby confirmed

i) that in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) that 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 or loss of the company for that period;

iii) that the directors have taken proper and sufficient care 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;

iv) that the directors have prepared the annual accounts on a going concern basis.

DEVELOPMENT IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company believes that employees are its real strength and their contribution remains main force towards its growth and development.

During the year under review, the relationship between the Workers & Management have been very co-ordial. The Management has been taking effective steps to raise the morale of workforce by introduction of Kaizen Scheme, Incentives for Production, Best worker & Most disciplined employees. The company has introduced direct interaction of workforce with the very senior management on frequent intervals which has further boosted morale of the workers.

The Board of Directors recognize and place on record the concerted efforts made by the Company's Executives, Officers, Staff and Workers at all levels.

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

The information relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 is enclosed at Annexure "A" and forms part of this report.

AUDITORS AND AUDIT REPORT

The Company has obtained the requisite certificate from M/s. A.Sachdev & Co., U/s 224( 1B) of the Companies Act, 1956 according their consent to act as Statutory Auditors of the Company if appointed as per provisions contained under Companies Act, 1956. The Director's reply to Auditors Report is stated elsewhere in the report, (please see notes to accounts)

M/s .A .Sachdev & Co., Chartered Accountants, New Delhi Auditors of the company retire at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment.

AUDITORS' CERTIFICATE

The Auditors have certified the Company's compliance of the requirements of Corporate Governance in terms of Clause 49 of the Listing Agreement and the same is annexed to the Report on Corporate Governance.

SECRETARIAL AUDIT

As per the directives of the Securities and Exchange Board of India (SEBI), M/s.K.K.Malhotra & Company,-Company Secretaries, New Delhi, undertakes Secretarial Audit on quarterly basis. The audit is aimed at reconciliation of total shares held in CDSL, NSDL and in physical form with the admitted, issued and listed capital of the company.

The Secretarial Audit Reports as furnished by the Secretarial Auditors were forwarded on quarterly basis to the Stock Exchange.

ACKNOWLEDGEMENTS

Your Directors wish to place their appreciation of the continued support, assistance and co-operation extended to the Company by the Company's Bankers, The Pradeshiya Industrial & Investment Corporation of U.P. Ltd (PICUP), the State and Central Government and other Government Agencies.

Your Directors also wish to place on record their appreciation of the confidence reposed by its valued Customers, Suppliers and Esteemed Shareholders, without whose continuing support the achievements of the company would not have been possible.

For and on behalf of Board

for RAUNAQ AUTOMOTIVE COMPONENTS LIMITED

Sd/-

Place: New Delhi (GURSHARAN SINGH)

Date: 30th July, 2012 Chairman and Managing

Director


Mar 31, 2010

The Directors present 27th Annual Report and Audited Statement of Accounts of your Company for the Financial year ended 31st March, 2010.

FINANCIAL RESULTS :

(Rs.in Lacs

Particuars 2009-2010 12008-2009

Sales and Other Income 7017 6558

Operational Expenses 6189 5924

Depreciation 267 184

Financial Charges 241 202

Gross Profit 320 248

Provision for Taxes/ Def.Tax

Liab/ including earlier years 71 40

Net Profit 249 208

Profit b/f from last year 309 101

Profit carried to Balance Sheet 558 309

MANAGEMENT DISCUSSION AND ANALYSIS

a) Industrial Scenario 2009-10

The impact of global economic slow down continued in current year also, however, at the fag end of year, it witnessed some economic recovery, which has given some relief to the world economy, but whether it will continue for a long, is a matter of time. The extent of recovery had been different depending upon various economic factors. The pressure of economic recession is still being felt in some parts of the globe & recently some European countries have been under the economic threat. In order to bring these economics out of the recession the respective Govt./Financial institutions are providing financial bailout package but the said bailout package seems to be insufficient for sustainable recovery process. It is expected that by the close of 2010-11, the world economy may start recovering.

Though, Indian economy could not isolate itself totally from the global recession, but due to its own inherent strength & skills, it came to overcome the same, at a much faster pace as compared to world economy. Indian Automotive Industry, having a huge demand potential for automobiles, including automotive component manufacturing has regained its lost strengths and started performing as it was originally performing. Indian Industry learnt good lessons from this recession & it found its strength by resorting to its principles of global quality at low cost & timely delivery.

b) Opportunities and threats

Opportunities

The world wide recession proved blessings in disguise for Indian Industries. The hopes of economists turned into realities as most of the American/European Automobiles Giants have been looking towards India as their destination for procurement of their domestic as well as export requirements since only Indian component manufacturers could provide them the desired quality products, at most competitive rates because of their strong foundation of Engineering skills & low cost of production as compared to their counter parts in other parts of the Globe.

However, it is felt that Indian economy lacks certain basic infrastructural facilities due to which the economic growth is not moving at desired level. Indian economy shall be able to move even faster, provided the Government looks into these infrastructural areas with a pro-active approach and puts the requisite funds for a speedy development of most essential areas.

Besides, the Industrial sector itself has to gear up fully to tap the huge opportunity made available by such recession with a particular thrust in the following areas:

1. Improvement in quality system & environment Management system.

2. Technology upgradation.

3. Exploring new business avenues in domestic as well as export market.

4. Generating more skilled manpower.

5. Adoption of principles of corporate Governance at international levels.

Threats

1. Continued volatility of Raw material prices

2. Free Trade/W.T.O.

3. Foreign Currency fluctuations

4. Increased competition from China, Taiwan & other Asian countries

c) Risks & Concerns

Risks

The growth of Automotive Component Industry is entirely dependent upon the performance of Automotive Sector/infrastructure development. The global recession has adversely affected the export market and recovery may be slower than expected. The volatility in the market may further deteriorate the sustainability of business viability.

Concerns

There are several major concerns which have not been looked into for the last so many years and these are major impediments in the overall growth of the company, such as

1. Poor infrastructure of highways, Ports

2. Good Quality & continued availability of electricity at cheaper rates

3. Volatility in prices and availability of basic raw material

4. Multiple taxation system and other complicated administrative procedure

5. Ability to pass an increasing cost to customers

d) Internal Control Systems and their adequacy

The Company has adequate internal control systems, which ensure proper recording of transactions of its operations and also protection against misuse or loss ofthe companys assets. Intemalauditofthecompany is carried out at periodic intervals by an independent firm of Chartered Accountants, to ensure that the companys internal control system are adequately complied with and adhered to.

During the year under review, ERP System has improved the overall efficiency of the company at every level. The Biometric system installed by the company has significantly improved the working of HRD Deptt. The Company is in the process of broadening & implementing the scope & coverage of other areas of ERP functioning such as manufacturing / PPC / machine loading / capacity utilization which will help the company to improve its efficiency at all levels of operation.

e) Cautionary Note

Certain statements in the management discussion and analysis section may be forward looking and are stated as required by applicable Laws & Regulations. Many otherfactors may affect the actual results, which would be different from what the Directors envisage in terms of the future performance and outlook.

f) Performance of the company

The Company could not isolate itself from the effect of world recession, however, efforts put up by the management in the previous years came to our rescue. Had it not been so the results for the Financial Year under review would have been different. The company could not achieve the budgeted targets but it could record a growth of 11 % in turnover with a significant improvements in profits.

In the Financial Year 2009-10, the company achieved an Income of Rs.7017 Lacs as compared to Rs.6558 lacs in 2008-09 thus achieving a growth of 11%. The company could achieve an operating profits of Rs.320 Lacs (PBT) as compared to Rs.248 Lacs (PBT) thus registering a growth of 30% as compared to last year. The company has made a provision of Rs.71 Lacs on account of Income Tax / Deferred Tax Liabilities.

The company has a MAT credit of Rs.48 Lacs which shall be utilized / adjusted for payment of Income Tax in future. Company has a surplus of Rs.558 Lacs in Profit & Loss Account.

During the year under review, the company had been successful in capturing the business from some of the world reknowned MNC and, its impact shall be visible in the performance of the current year.

The Company is developing more & more new components for many other OEM manufacture as per their specifications and requirement and we are quite confident that in the times to come we shall be able to cater the demands of our New Customers.

The demand from our existing Customers has increased significantly and the company is fully geared up to meet the additional demand of OEM and Export Customers.

During the Financial Year under review, the company through its cost reduction schemes & various other VA/VE methods made a significant improvement in profits as compared to sales.

After completion of two years journey of Cluster IV of ACT (ACMA Centre of Technology) the company has taken up the sustainence programme to further improve the performance of the company and we are hopeful that it will assist us in achieving better productivity, quality goods at competitive price thus enhancing the overall profitability of the company.

EXPORTS

The company has been successful in its efforts to broaden the export horizons during the year under review. Many prestigious MNC has been included in our list of customers. The company is not only catering to their existing demand, but has also geared itself for their global requirement. In 2009-10, the company has improved its export sales significantly. It has been exporting goods to every part of globe, may be it is Asian countries, European Countries or USA. Our export are very well accepted and are being appreciated for their good quality and competitive price.

During the year under review, the company achieved an export turnover of Rs.1117 Lacs as against Rs.755 Lacs in 2008-09. Thus, achieving a growth of 48 %. Our export customers are fully satisfied with the quality, timely delivery & cost competitiveness. In the current year we have targeted an overall export sales of Rs. 1500 lacs.

FUTURE OUTLOOK

Indian Economy is still on the recovery path and RACL has been no exception. Although, the company made a modest recovery / growth to the extent of 11 % in sales . but the profitability and the achievement in export front has given a boost to the company. During the year under review, the company has successfully commissioned world class technology and production facilities.

It has constructed a new Technology Block & has installed latest machines which shall be further supplemented by the similar type of facilities and with these facilities, we shall be considered one of the leading Gear Manufacturer in the Northern Region.

During Financial Year 2010-11, the company proposes to install/upgrade its technological capabilities / infrastructure facilities by way of putting up additional facilities of ¦

a) Gear Hobbing

b) Internal broaching

c) CNC Internal & Cylindrical Grinding with inprocess gauging system

The company has developed a very good product quality & has emerged as one of the quality producer of gears not only in India but its products are purchased by world reknowned MNC all over the globe. The tough competition faced by the company in the previous years has showed the path of organic growth and we look forward for a bright future as outlook is positive and the company has an excellent order book position for the coming years.

DIVIDEND

Although, the company has accumulated profits of Rs.558 lacs but considering the existing fund requirements for our future plans for upgradation of machinery / technology upgradation, the Board of Directors considered it appropriate not to declare any dividend for the current year.

FORFEITURE OF WARRANT APPLICATION MONEY

During the Financial Year 2008-09, the company allotted 19 lacs convertible warrants of Rs.10/- each at a premium of Rs.9/- per warrant aggregating Rs.361 lacs. The company received application money of Rs.38 lacs on such 19 lacs warrants @ Rs.2/- per warrant (including a premium of Re.1/- per warrant) The warrant holders did not pay the allotment money on such warrants which was due on 31.3.2010. Due to non payment of such allotment money, the Board of Directors at their meeting held on 19th April, 2010 forfeited, the said amount of Rs.38 lacs on such convertible warrants.

FIXED DEPOSITS

The Company has not accepted any fixed deposits from the public during the financial year ending 31st March, 2010.

LISTING FEES

The Financial Results of the company can be accessed at the companys website www.raunaqauto.com.

The annual listing fee for the year under review has been paid to Bombay Stock Exchange Ltd., Mumbai, where your companys shares are listed.

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement with the Stock Exchange, a Report on Corporate Governance is provided elsewhere in this Annual Report along with the Auditors Certificate on the compliance thereof.

DIRECTORS

During the year under review, PICUP has nominated Mr.V.K.Seth in place of Mr.Devender Singh as its Nominee Director. The Board of Directors place on record the appreciation for the guidance & services rendered by Mr.Devender Singh during his tenure as Director.

In accordance with the provisions of The Companies Act, 1956 and Memorandum and Articles of Association of the company Mr.D.R.Arya, Director of the company retire by rotation and being eligible offer himself for reappointment.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956 with respect to Directors Responsibility statement it is hereby confirmed:

i) that in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) that 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 or loss of the company for that period;

iii) that the directors have taken proper and sufficient care 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;

iv) that the directors have prepared the annual accounts on a going concern basis.

DEVELOPMENT IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company believes that employees are its real strength and their contribution remains main force towards its growth and development.

During the year under review, the relationship between the Workers & Management have been very co-ordial. The Management has been taking effective steps to raise the morale of work force by introduction of Kaizen Scheme, incentives for Production, Best worker & Most disciplined employees. The company has introduced direct interaction of workforce with the very senior management on frequent intervals which has further boosted morale of the workers.

The Board of Directors recognize and place on record the concerted efforts made by the Companys Executives, Officers, Staff and Workers at all levels.

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

The information relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 is enclosed at Annexure "A" and forms part of this report.

AUDITORS AND AUDIT REPORT

The Company has obtained the requisite certificate from M/s.A.Sachdev & Co., U/s 224(1 B) of the Companies Act, 1956 according their consent to act as Statutory Auditors of the Company if appointed as per provisions contained under Companies Act, 1956. The Directors reply to Auditors Report is stated elsewhere in the report. (please see notes to accounts)

M/s .A .Sachdev & Co., Chartered Accountants, New Delhi Auditors of the company retire at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment.

AUDITORS CERTIFICATE

The Auditors have certified the Companys compliance of the requirements of Corporate Governance in terms of Clause 49 of the Listing Agreement and the same is annexed to the Report on Corporate Governance.

SECRETARIAL AUDIT

As per the directives of the Securities and Exchange Board of India (SEBI), M/s.K.K.Malhotra & Company, Company Secretaries, New Delhi, undertakes Secretarial Audit on quarterly basis. The audit is aimed at reconciliation of total shares held in CDSL, NSDL and in physical form with the admitted, issued and listed capital of the company.

The Secretarial Audit Reports as furnished by the Secretarial Auditors were forwarded on quarterly basis to the Stock Exchange.

ACKNOWLEDGEMENTS

Your Directors wish to place their appreciation of the continued support, assistance and co-operation extended to the Company by the Companys Bankers, The Pradeshiya Industrial & Investment Corporation of U.P. Ltd (PICUP), the State and Central Government and other Government Agencies.

Your Directors also wish to place on record their appreciation of the confidence reposed by its valued Customers, Suppliers and Esteemed Shareholders, without whose continuing support the achievements of the comrjanv would not have been possible.

For and on behalf of Board

for RAUNAQ AUTOMOTIVE COMPONENTS LIMITED

Place: New Delhi Sd/-

(GURSHARAN SINGH)

Date: 30th July, 2010 Chairman and Managing

Director

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