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Directors Report of Scooters India Ltd.

Mar 31, 2015

The Board of Directors of your Company is pleased to present the 43rd Annual Report on the business and operations of the Company together with the audited Balance Sheet and Profit and Loss Account and Auditors' Report thereon for the financial year ended 31st March, 2015.

1. PRODUCTION REVIEW :

The production performance for the year is shown below in physical terms :

(Nos.) Description 2013-2014 2014-2015

Three wheelers 14,584 13,057

2. SALES REVIEW :

The Sales performance for the year is shown below :

2013-2014 2014-2015

Description Physical Financial Physical Financial (in Nos.) (Rs,in lakhs) (in Nos.) (Rs,in lakhs)

Three Wheelers 13,877 17,267.66 11,409 14,876.02

Spares - 546.38 - 405.65

Petrol, Diesel, Lubricants etc. - 1,552.35 - 1,490.11

Other Sales - 68.91 - 8.60

TOTAL - 19,435.30 - 16,780.38

3. FINANCIAL REVIEW :

The salient features of the Company's financial results for the year under review are as follows:

(Rs.in Lakhs)

Description 2013-2014 2014-2015

a) Profit before Depreciation, Interest, Taxes, Prior Year 301.82 692.29 Items & Other Income

b) Profit before Depreciation, Interest, Taxes & Other Income 181.83 707.34

c) PBDIT 1,554.66 1,340.17

d) Profit/(Loss) for the year 1,359.64 1,108.86

During the year under report :

(1) The profit before depreciation, interest & taxes, prior year items & other income has increased by Rs. 390.47 lakhs.

(2) The profit before depreciation, interest & taxes & other income has increased by Rs. 525.41 lakhs.

(3) The profit before depreciation, interest & taxes has decreased by Rs. 214.49 lakhs.

(4) The net profit for the year has decreased by Rs. 250.78 lakhs as compared to the previous year.

4. OPERATIONAL REVIEW

During the year 2014-15 the management adopted a dual strategy of initiating several new measures along with focusing on the various improvement measures undertaken in the previous year to improve the operational efficiency of the company as a result of which the company reported operational profits (PBDIT from operations) to the tune of INR 667.42 Lakhs during the year 2014-15 consecutively for the second financial year in succession. Some of the measures initiated by the management are as follows:-

Focusing on value engineering through weight reduction of vehicle without any effect on the performance has resulted in savings which not only helped in improving the value of product but has also helped in controlling the material cost.

Significant energy savings measures were undertaken during the year like installation of 06 nos. VCB's on 11KV line, replacing the street lights with LED lights, overhauling of 33/11 KV, 5000 KVA main transformer etc. .

There has been substantial improvement in operational profit despite of additional financial impact of INR 99.70 Lakhs due to payment of Interim Relief (IR) from Jan. 2015 onwards to the employees.

Further due to change in computation of depreciation with the introduction of Companies act 2013 during the year there was additional impact of INR 73.93 Lacs.

5. DIVIDEND :

To conserve the resources the directors recommend no dividend during the year under report.

6. CONTRIBUTION TO NATIONAL EXCHEQUER

The company has contributed a sum of Rs. 3,458.47 lakhs (towards duties & taxes) to the exchequer during the period under review vis-a-vis Rs. 4,161.50 lakhs during previous financial year.

7. EXPORTS

The company has not made any exports during the period under review. Further the royalty income during the year by way of foreign exchange remittances also remained nil, in view of ongoing legal cases.

8. EXPENDITURE ON ADVERTISEMENT AND PUBLICITY :

An expenditure of Rs. 26.76 lakhs was incurred on account of advertisement and publicity during the year.

9. STATUS OF REPAYMENT OFLOAN FROM GOI

In terms of Cabinet approval the existing term plan & non-plan loan as of 31st March, 2012 of Rs. 85.21 Crores (Plan loan - Rs. 1.93 Crores & non-plan - Rs. 83.28 crores) of has been converted into equity share capital of Rs. 85.21 crores by issue of 8.52 crores equity shares of Rs. 10/- each at par and further the Equity share Capital of the Company has been reduced by 85.21 crores by cancellation of aforesaid Rs. 85.21 crores equity share capital held by Government of India in terms of BIFR Order dated 24.06.2013. The existing interest Accured as on 31st March, 2012 amounting to Rs. 2,367 lacs on GOI loan (Plan loan of Rs. 193 lacs & Non-plan loan of Rs. 8,328 lacs) has been written off against accumulated losses and no further interest has been provided for on the aforesaid loan from 31st March, 2012 onwards. No provision of interest on Non-Plan loan of Rs. 189 lacs released during the financial year 2012-13 has been made. This matter has been taken up with Department of Heavy Industry/Board of Industrial & Financial Reconstruction for maintaining the status quo.

The Government of India, Ministry of Industries & Public Enterprises, Department of Heavy Industry released funds by way of interest free plan loan amounting to Rs. 2000 lacs during the financial year 2013-14 for working capital under approved revival package of Scooters India Limited by Cabinet/Misc. application approved by BIFR. As per sanction 23.7.2013 the Moratorium period for the loan is 3 years and Installment commence from 31.3.2015. The company has sought by way of Reliefs & concessions in the Draft Rehabilitation Scheme (DRS) under preparation of Operative Agency (SBI) for submission to BIFR for recovery of 5 installments commencing from 23.7.2016 onwards i.e. 3 years from date of sanctioning. The DRS is under consideration of the operating Agency - SBI for submission of BIFR. Therefore repayment is likely to commence based on BIFR sanctioning of scheme w.e.f. 23.7.2016.

10. AUDITOR'S REPORT

M/s D.S. Shukla & Company, Chartered Accountants have been appointed by the Comptroller and Auditor General of India, as Statutory Auditors' of the Company for the year 2014-15. The Statutory Auditors' Report on the accounts of the Company for the financial year ended 31st March, 2015 are enclosed at Annexure-2.

The Accounts of the Company were submitted to the Comptroller and Auditor General of India for their report under section 143(5) of the Companies Act 2013 and their report is appended as Annexure-3.

11. COST AUDITOR

Although in terms of the provisions of the Companies Cost Audit Rules 2014, the Company is not mandated for Cost Audit, however as a good governance measure M/s Sunil Singh & Co., Cost Accountant, Luck now has been appointed as Cost auditor of the Company by the Govt. of India, Ministry of Company Affairs, for auditing cost records relating to manufacture of Motor Vehicles for the financial year ending 31st March, 2016.

12. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED FROM 01.04.2015 TO DATE :

No material change and commitment have been made by the company from 01.04.2014 to date that has adverse effect on the financial position.

13. MANAGEMENT DISCUSSION AND ANALYSIS:

(A) Mission, Vision & Objective

Vision To improve the performance of the company so as to be competitive and profitable through constantly improving existing products, adding new products and expanding customer base.

Mission To fulfill customers' needs for economic and safe mode of road transport and quality engineering products through contemporary technologies.

Objective To sustain production till finalization of revival plan.

To achieve 2% decrease in cost.

Induction of Manpower to fill the gap.

To reduce energy input per unit of production.

(B) MARKET SCENARIO

(i) The total number of 3-wheelers produced and sold in the domestic market by manufacturers in India during the year 2014-15 as against 2013-14 is given below :

Category Production (In Nos.)

Segment/Sub-segment Apr.13 - Mar.14 Apr.14 - Mar.15

Passenger Carrier 733,244 845,606

Goods Carrier 96,864 103,415

Total : 830,108 949,021

Domestic Sales (In Nos.)

Passenger Carrier 385,384 432,234

Goods Carrier 94,701 99,693

Total : 480,085 531,927

Note : Sales excluding Export of 353,392 Nos. in 2013-14 and 407,957 Nos. in 2014-15.

Source-SIAM

Scooters India Limited has been a pioneer in bringing out various models of 3-wheelers running on Diesel, Electric, LPG and CNG for applications as both passengers and load carrier versions. Company has played an important role in popularization of 3-wheelers of larger capacity in the country. With focused efforts and approach, SIL has achieved sales of 11380 nos. in 2014-15. By achieving these sales, SIL has utilized 79.13% of their capacity. This has also resulted in decreasing the SIL market share from 2.89% in 2013-14 to 2.14% in 2014-15.

The company continues to be the leader in larger capacity of vehicles i.e. passenger carrier (6 1) segment and goods carrier exceeding 1 ton of vehicles. The market share of company is 99.87% in 2014-15 (SIL sales 2376 nos. out of 2379 nos.)

(ii) 3-Wheeler growth drivers in future are as under :

Rapid development of infrastructure and focus of both Central as well as State Govt. on infrastructure mainly on roads, the demand of 3-wheeler may see an upward trend in coming years. The demand driver for 3-wheeler are its affordability as an economical viable transport solution. However, the demand for 3-wheeler passenger carrier depends on the availability of permits issued by Local RTOs.

Increased demand from semi-urban and rural areas for 3-wheelers because of its high product maneuverability and drivability Suitability of 3-wheelers for congested Indian roads and tropical conditions.

Self employment opportunity for a large number of youths especially with the Govt. focus on various schemes for the unemployed youth.

3-wheelers of smaller capacity are in great demand in load carrier segment because of increase in organized retail marketing across the country which requires faster and economical transportation.

3-wheeler is a low cost transport solution to daily commuting passenger. Hence the market for 3-wheeler shall continue to be there because of higher cost of transportation in other modes of transport like taxi, contract carriages, buses etc.

3-wheelers are also better earning opportunity for unemployed youth. With a minimum expenditure i.e. Rs. 45,000-50,000 (margin money), one can start earning Rs. 300-400 per day right from the day one of purchasing a new 3-wheeler.

(C) Resources and Liquidity :

In view of the continuing cash losses, the company's liquidity position was under strain.

(D) Quality :

Your company is an ISO 9001 : 2000 company. The company has taken several initiatives including manufacturing of no problem vehicle and up-gradation of its products to ensure that the best quality products are made available to its customers. Vehicle reliability has improved significantly which has generated goodwill leading to better sales.

(E) Opportunities & Threats : E.1. Opportunities :

Growing automobile sector

Untapped markets of South, West, East and Exports

Developing hub and spoke transportation model.

Increasing allocation of funds for poverty alleviation under various Govt. Schemes like PMRY, SC/ST, NREGS etc.

Rapidly growing awareness about vehicular pollution leading to policy formulation for increase use of alternate fuel vehicles.

Options for technology infusion.

Rapidly growing network for CNG/LPG supply.

Replacement market of 4W SCV, like Tata Ace.

E.2 Threats :

Government regular focus and thrust on pushing 3W e-rickshaws.

Increase in product substitution effect by rapidly growing 4 Wheel Small Commercial Vehicle.

Increased competition both from organized and unorganized players.

Strict enforcement of the pollution norms and Passenger Vehicle permits.

Increased customer expectations.

Rising interest and fuel cost could dampen demand for company's products.

Volatility in Raw Materials prices/input and difficulty in passing on cost increase.

(F) Future Outlook :

i) Challenges faced by the Company :

The need for consistency in quality demands for enhanced investment in R&D and up gradation of plant & machinery. Existing over-lived plant & machinery is a cause of concern.

Manpower cost in the company is still high and so is the average age profile of the employees. While your company needs to reduce its manpower cost at the same time it also needs to infuse fresh blood.

Retention of young officers who joined in the last couple of years is difficult as private/ other PSUs are offering substantially higher remuneration. Young executives are regularly leaving for greener pastures.

Though 3-Wheeler as an industry continue to grow but increase in competition and availability of 4-Wheelers in 1.0 ton and sub 1.0 ton category is expected to aggravate the extremely competitive scenario and impact the volumes & margins.

Strict regulatory laws concerning pollution and their strict implementation by banning sale of diesel vehicles in certain states shall act as deterrent for company growth.

SIL has lesser presence in small 3-wheeler segment which has strong market preference. In this segment contribution is lower and competition is higher as established players viz. Piaggio, Mahindra etc. dominate the market.

Employees' aspiration for effecting revision in salary and wages and increase in retirement age from 58 to 60 years.

(ii) Strategic Road Map :

Although there has been negative growth in three wheeler segment of Auto sector in India, the performance of your company has improved considerably in comparison to the previous year. Your company is evaluating various new product development options to cater to various market segments with a view to higher production and sales.

(iii) Status Before BIFR

On 18th February, 2010, BIFR has declared the Company as sick industrial company in terms of the provisions of section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) on reference being made after full erosion of the Net worth of the Company, as per annual accounts for the year ended at 31st March, 2009. BIFR approved the miscellaneous application filed by the Company for seeking necessary permission/appropriate directions for reliefs & concessions enabling issue of shares, restructuring of balance sheet and for release of funds for capital expenditure and working capital in line with the cabinet decision for revival of SIL. The Draft Rehabilitation Scheme (DRS) is under preparation by Operating Agency (SBI) and shall be submitted in due course before BIFR for sanction.

14. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Your company is an ISO 9001: 2000 certified which focuses on quality management system.

Information in accordance with provision of the Companies Act, 2013 regarding the conservation of energy, technology absorption and foreign exchange earnings and outflow are given in Annexure- I, I-A and I-B to this report.

15. PARTICULARS OF EMPLOYEES:

Information under Sec. 197(12) of the Companies Act, 2013 read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 be treated as NIL as none of the employee of the company is getting salary more than the prescribed limit.

16. INDUSTRIAL RELATIONS:

During period under review i.e. 01.04.2014 to 31.03.2015, the industrial relation in the company improved with adhoc release of wage revision (2007).

17. TRAINING AND DEVELOPMENT :

Employees of the Company are the most important constituent and Company understands that without their motivation and development Company cannot progress. The Company has been analyzing developmental needs in technical and managerial areas and provides requisite training and exposure to the employees at all levels in the area on Professional Excellence through Motivation, etc. employees were trained during 01/04/2014 to 31/03/2015 on Acupressure & Naturopathy, Leadership & Risk Management training program as per details given below :

Programme Details Officers Staffs Workmen Trainees Total

Internal 3 18 12 29 62

External 3 - - 12 15

Total 6 18 12 41 77

18. VIGILANCE:

Vigilance Group continues to function with particular emphasis on the aspects of preventive and corrective vigilance. Strict vigil was exercised over various activities as part of Preventive Vigilance measures and suggestions were made to the Management for system improvement Company also observed Vigilance Awareness Week from 27th October 2014 to 1st November, 2014.

19. HUMAN RESOURCE DEVELOPMENT:

Employees of the Company are the most important constituent and Company understands that without their motivation and development Company can not progress. The Company has been analyzing developmental needs in technical and managerial areas and provides requisite training and exposure to the employees at all levels in the area on Professional Excellence through Motivation, Advance Engine Combustion & Diagnostics, Competence Building for Effective Management, Healthcare Services, Part Programming for CNC Machines, Leadership Strategies for Building Excellence, Quest for Excellence Imperatives for India PSUs, Health, Safety, Environment Protection through Legal Reforms & technological Innovations, Building & Leading Effective Teams, Safety Engineering & Management, Value Based Management, Legal framework for Cost Audit Compliances, Finance for Non-finance Executives, International Commercial Practices, Energy Conservation, House Keeping etc.

20. HINDI IMPLEMENTATION:

Official Language Implementation Committee monitors and reviews the progress of implementation of the Annual Programme issued by Department of Official Language, Ministry of Home Affairs, Government of India. Hindi Divas is commemorated every year by observing official language week in the month of September. Various competitions are organized for employees and winners are felicitated on Republic Day.

21. RESERVATION FOR SCHEDULED CASTES & SCHEDULED TRIBE:

As on 31.03.2015 the total strength of the company is 594. Out of these, 130 employees belong to Scheduled Castes and 01 employee to Scheduled Tribe.

22. DIRECTORS, KMP APPOINTED AND RESIGNED

Mr. Dinesh Kumar retired w.e.f. 31.07.2014 on his retirement and Mr. Arvind Kumar has been appointed as Part time official Director in place of Mr. S.K. Singh w.e.f. 08.08.2014. Shri A.M. Manichan, Deputy Secretary (Finance), DHI was appointed as part time official Director in place of vice Shri Dinesh Kumar w.e.f. 23.09.2014. Shri A.K. Deori, Director, DHI was appointed in place of Shri Arvind Kumar as part time official Director with effect from 07.11.2014. Shri Pravin Agrawal, Director, DHI, has been appointed as a part time official Director w.e.f. 23.04.2015 in place of Mr. A.K. Deori.

The Board records the appreciation for contribution made by aforesaid Directors during his association with the Company.

The Company is not having Independent Director as well as women Director in terms of the provisions of the Companies Act, 2013 & Listing agreement. However the matter has been taken up with Ministry for filling up the vacant positions of Independent Director, women Director as well as Director (Finance) on the Board.

The Company has nominated Shri Rahul Bali, Director (Technical) & Shri B.N. Raj, Chief Financial Officer as Key Managerial Personnel.

Ms. Chaitali Panmei was nominated as CVO of SIL on additional charge basis w.e.f. 10.12.2014 on retirement of Miss. Parvinder Kaur. Further Mr. Manish Sahu, CVO, Bharat Pumps & Compressors Limited (BPCL), Allahabad has been nominated as CVO of SIL w.e.f. 1.04.2015.

23. INDEPENDENT DIRECTOR'S DECLARATION :

Directors on the Board of the Company are appointed by the Administrative Ministry. Corporation has been requesting the Ministry to appoint the independent directors. The appointment of Independent directors is yet to be made by the Ministry. During the year there was no independent director on the board of the Company. Thus, the declaration pertaining to independent director does not apply.

24. DISCLOSURE ON REAPPOIINTMENT OF INDEPENDENT DIRECTORS :

During the year there was no independent director on the Board of the Company. Hence, disclosure pertaining to reappointment of independent directors does not apply.

25. NUMBER OF MEETINGS OF THE BOARD

The Board met five times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 and the Listing Agreement.

26. COMPANY'S POLICY ON DIRECTORS' APPOINTMENT & REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, ATTRIBUTES, INDEPENDENCE ETC. :

The Board of Directors of the Company are appointed by the Government of India as per guidelines issued by the Department of Public Enterprises (DPE), Government of India from time to time. The remuneration of Managing Director is fixed as per grade and other terms and conditions issued by the DPE. The Government Directors on the Board of the Company draw their remuneration from Government of India and not from the Company. The independent directors, if any, are paid the sitting fee only (within the limits prescribed under the Companies Act), as per Articles of Association, besides reimbursement of the expenses to attend the meeting. No other remuneration is paid to the independent directors.

As regards, the appointment and remuneration of Key Managerial Personnel and other employees, the appointment of all employees below board level is made as per Recruitment & Promotion Rules of the corporation and remuneration is paid to them as per DPE guidelines.

In absence of Independent Directors on the Board, the Nomination & Remuneration Committee (NRC) has also not been constituted. The other matters relating to remuneration, if any, are placed directly to the Board of Directors.

27. ANNUAL EVALUATION OF PERFORMANCE OF BOARD, ITS COMMITTEE AND DIRECTORS :

The Company enters into MoU with the Administrative Ministry in the month of March every year for the next financial year. Before signing the MoU the targets are negotiated with the corporation in detail by the MoU Task Force constituted by the DPE. For evaluation of the performance of the Managing Director by the Administrative Ministry, a weight age of 75% is given for the achievement of MoU parameters by the corporation. The evaluation of performance of the corporation against MoU parameter is done by DPE every year and MoU score is communicated by it to the corporation through the Administrative Ministry.

28. MANAGING DIRECTOR RECEIVING COMMISSION OR REMUNERATION FROM HOLDING OR SUBSIDIARY COMPANY :

The Company has no holding or subsidiary company, hence not applicable.

29. RATIO OF DIRECTORS' REMUNERATION TO MEDIAN EMPLOYEES' REMUNERATION AND OTHER DISCLOSURES :

During the year, the remuneration of Director (Technical) was Rs. 19.48 lac and median employee's remuneration was Rs. 3.45 lac. The Director (Technical) remuneration comes to 564% of median employees' remuneration.

30. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

As per the requirement of section 186(4) of Companies Act, 2013, particulars of loans given, investments made, guarantees given or securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the financial statements on page number-71. The Company is in compliance with the limits as prescribed under Section 186 of Companies Act, 2013 read with rule 11 of the Companies (Meeting of Board and its Powers) Rules, 2014.

31. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All contracts/arrangements/transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis.

Particulars of contracts or arrangements with related parties referred to in section 188(1) of the Companies Act, 2013, are presented in Annexure-8 to the Directors' Report in Form AOC 2.

32. DIRECTORS' RESPONSIBILITY STATEMENT:

In accordance with the provisions of section 134(3)(c) of the Companies Act, 2013 your Directors confirm that :

a) in preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with the requirements set out under Schedule III of the Act have been followed and that there are no material departures from the same.

b) they 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 ended on March 31, 2015 and of the profit of the Company for the year ended on that date;

c) they have taken proper and sufficient care, to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) they have prepared the annual accounts on a going concern basis.

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively to the best of their knowledge and ability; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.

33. ADEQUACY OF INTERNAL CONTROL :

The Company has proper and adequate system of internal controls to ensure that all activities are monitored and controlled against any unauthorized use of disposal of assets, and that the transactions are authorized, recorded and reported correctly.

The Company ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines.

34. FIXED DEPOSITS:

The Company has not accepted any deposits under the provisions of the Companies Act, 2013 during the year.

35. SECRETARIAL AUDITOR

M/s Amit Gupta & Associates, Practicing Company Secretaries were appointed as secretarial auditors of the Company for the year 2014-15 as required under Section 204 of the Companies Act, 2013 and Rules made there under. The secretarial audit report in Form MR-3 for FY 2014-15 forms part of the Directors Report and is placed at Annexure–5. Regarding comments/qualifications in the sand report, it is submitted that the Company has taken up matter regarding appointment of Independent Directors/women Director with DHI and with the said appointments the Board shall become duly constituted in accordance with the provisions of the Companies Act, 2013 & Listing agreement and necessary compliances regarding constitution of various Committees viz. Audit Committee, Nomination & Remuneration Committee etc. shall also be made. Further the Company is in process of filing of necessary returns with the Registrar of Companies, Kanpur.

The Board has further appointed M/s Amit Gupta & Associates, Practicing Company Secretaries, as secretarial auditor of the Company for the financial year 2015-16.

36. CORPORATE GOVERNANCE :

A Certificate from M/s D S Shukla & Co, Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement along with the report on Corporate Governance is attached as Annexure-4 to this report.

37. SIGNIFICANT AND MATERIAL ORDERS :

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

38. AUDIT COMMITTEE AND VIGIL MECHANISM :

In view of non appointment of Independent Directors by GOI, the Company is not having Audit Committee pursuant to requirement of section 177(1) of Companies Act, 2013 read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules, 2014 and Clause 49 of Listing Agreement.

The Vigil Mechanism of the Company, which also incorporates a Whistle Blower Policy in terms of the Listing Agreement may be accessed on the Company's website at the link : http:// www.scootersindia.com. The policy includes appointment of a Whistle Officer who will look into the matter, conduct detailed investigation and take appropriate disciplinary action. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Whistle Blower Officer. During the year under review, no employee was denied access to Whistle Blower Officer.

39. EXTRACT OF ANNUAL RETURN :

Extract of Annual Return of the Company is annexed herewith as Annexure-6 to this Report.

40. ISSUE OF SHARES WITH DIFFERENTIAL RIGHT, SWEAT EQUITY, EMPLOYEE STOCK OPTION :

The Company has not issued any share with differential right, sweat equity, employee stock option during the year, hence, not applicable.

41. RISK MANAGEMENT :

SIL aims to have a formalized and systematic approach for managing risks across the Company. It encourages knowledge and experience sharing in order to increase transparency on the key risks to the Company to the extent possible. This approach increases risk awareness, and ensures proper management of risks as part of the daily management activities.

The policy on Risk Management may be accessed on the Company's website at the link : http// www.scootersindia.com. The objective of the Company's risk management process is to support a structured and consistent approach to identify, prioritize, mango, monitor and report on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company has introduced several initiatives for risk management including the introduction of audit functions and processes to identify and create awareness of risks, optimal risk mitigation and efficient management of internal control and assurance activities.

42. LISTING :

The Company is listed at BSE Limited and has connectivity from both National Securities Depository Limited (NSDL) & Central Depository Services Limited (CDSL). Delhi Stock Exchange Limited, Delhi has been de-recognized by SEBI vide its order dated November 19, 2014.

43. CORPORATE SOCIAL RESPONSIBILITY :

SIL strongly believes in concept of sustainable development and is committed to operate and grow its operations in a socially and environmentally responsible way.

As per the Companies Act, 2013, all companies with a net worth of Rs. 100 crore or more, or turnover of Rs. 1,000 crore or more or a net profit of Rs. 5 crore or more during any financial year are required to constitute a Corporate Social Responsibility (CSR) committee of the Board of Directors comprising of three or more directors, at least one of whom should be an independent director and such company shall spend at least 2% of the average net profits of the company's immediately preceding three financial years on CSR activities. The Company has duly constituted a Corporate Social Responsibility (CSR) Committee pursuant to the requirement of Section 135(1) of Companies Act, 2013 and the Rules made there under. However as presently the Company is a sick Company and under reference to BIFR, the Company has not spent any amount towards Corporate Social Responsibility.

44. ACKNOWLEDGEMENT:

The Board of Directors would like to express their grateful appreciation for the sincere support and co-operation extended by its Bankers, Financial Institutions, Dealers and Suppliers. The Directors would also like to express their sincere thanks for the co-operation and advice received from Govt. of India, particularly, Deptt. Of Heavy Industry and Public Enterprises, BIFR, BRPSE, the State Govt. and the local authorities for their continued support, co-operation and guidance.

Your Directors wish to place on record their deep sense of appreciation for the devoted services of employees and are deeply grateful to the shareholders for reposing the confidence and faith in us.

For and on behalf of the Board



Rahul Bali R K Singh

Director (Technical) Chairman & Managing Director

DIN : 06549064 DIN : 06459343

Place : Lucknow

Date : 05.08.2015


Mar 31, 2014

Dear Shareholders,

The Board of Directors of your Company is pleased to present the 42nd Annual Report on the business and operations of the Company together with the audited Balance Sheet and Profit and Loss Account and Auditors'' Report thereon for the financial year ended 31st March, 2014.

1. PRODUCTION REVIEW :

The production performance for the year is shown below in physical terms :

(Nos.)

Description 2012-2013 2013-2014

Three wheelers 15,807 14,584

2. SALES REVIEW :

The Sales performance for the year is shown below :

2012-2013 2013-2014

Description Physical Financial Physical Financial (in Nos.) (Rs. in lakhs) (in Nos.) (Rs. in lakhs)

Three Wheelers 15,837 19,020.74 13,877 17,267.66

Spares - 546.27 - 546.38

Petrol, Diesel, Lubricants etc. - 1,415.25 - 1,552.35

Other Sales - 1.44 - 68.91

TOTAL - 20,983.70 - 19,435.30

3. FINANCIAL REVIEW :

The salient features of the Company''s financial results for the year under review are as follows:

(Rs. in Lakhs)

Description 2012-2013 2013-2014

a) PBDIT (286.32) 1,554.66

b) Profit before Interest, Depreciation & Exceptional items (286.32) 1,554.66

c) Profit before Exceptional item (600.06) 1,359.64

d) Profit/(Loss) for the year (600.06) 1,359.64

During the year under report :

(1) The profit before depreciation, interest & taxes has increased by Rs. 1,840.98 lakhs.

(2) The net profit has increased by Rs. 1,959.70 lakhs as compared to the corresponding previous year.

4. OPERATIONAL REVIEW

During the year under review the management undertook several measures to turn around the Company as a result of which after several years of losses, the Company has reported operational profits (PBDIT from operations) of INR 265.39 Lakhs during the year 2013-14. Some of the initiatives undertaken by the management, that helped the Company''s turnaround are highlighted below :

Selection of optimal product mix to enhance value and to suit the market dynamics. The value of the product has improved by 4% (approx).

- Better inventory management & control leading to reduction in material cost by 4% (approx).

- Power savings, reduction in power consumption, control on rejections etc. leading to reduction in the unit energy consumption by approx 3%.

The Company has also reduced its future obligation considerably by initiating several measures like offering leave encashment benefit etc. to employees during the year.

5. CONTRIBUTION TO NATIONAL EXCHEQUER

The company has contributed a sum of Rs. 4,161.50 lakhs (towards duties & taxes) to the exchequer during the period under review vis-a-vis Rs. 4,852.12 lakhs during previous financial year.

6. EXPORTS

The company has achieved exports of Rs. 37.95 lakhs during the period under review. The royalty income by way of foreign exchange remittances is NIL during the year.

7. EXPENDITURE ON ADVERTISEMENT AND PUBLICITY :

An expenditure of Rs. 20.98 lakhs was incurred on account of advertisement and publicity during the year.

8. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED FROM 01.04.2014 TO DATE :

No material change and commitment have been made by the company from 01.04.2014 to date that has adverse effect on the financial position. However it is pertinent to note that GOI has vide letter no. F. No. 3-33/2009 - PE VI dated 22.02.2013 conveyed that Cabinet has approved the revival package of Rs. 201.96 crores, which inter-alia includes the infusion of fresh funds, conversion of plan & non plan loan in to equity & waiver of interest and directed for taking necessary approval from BIFR. Since the Draft Rehabilitation Scheme (DRS) was under preparation by Operating Agency (SBI) and sanction by BIFR was likely to take some time, pending finalization of DRS & sanction by BIFR, SIL filed the Miscellaneous application for seeking necessary permission/ appropriate directions for reliefs & concessions enabling conversion of loan in to equity/issue of shares/reduction of shares capital etc. without further approval of shareholders/Central Government/SEBI/Stock exchanges in terms of provisions of section 81(1A) of the Companies Act, 1956, listing agreement, Securities And Exchange Board Of India (Issue of Capital And Disclosure Requirements) Regulations, 2009 and Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 2011, restructuring of balance sheet and for release of funds for capital expenditure and working capital in line with the cabinet decision for revival of SIL. BIFR in its hearing dated June 19, 2013, allowed the Miscellaneous application of SIL and vide order dated 24.06.2013 issued necessary directions accepting the prayers of SIL. Accordingly SIL has given effect to BIFR order envisaging inter-alia restructuring in share capital & write off of interest on plan & non plan loan against accumulated losses etc. in the annual accounts for the year ended at 31st March, 2013. The Draft Rehabilitation Scheme (DRS) is under preparation by Operating Agency (SBI) and shall be submitted in due course before BIFR for sanction. The Board of Directors of the Company have also recommended the implementation of pay scales (2007) for officers and has submitted proposal to DHI for Presidential directives. The negotiations for wage revision for workmen are also in process.

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Your company is an ISO 9001: 2000 certified which focuses on quality management system.

Information in accordance with provision of Section 217(1)(e) of the Companies Act, 1956 regarding the conservation of energy, technology absorption and foreign exchange earnings and outflow are given in Annexure-I, I-A and I-B to this report.

10. PARTICULARS OF EMPLOYEES:

Information under Sec. 217(2-A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 be treated as NIL as none of the employee of the company is getting salary more than the prescribed limit.

11. INDUSTRIAL RELATIONS:

During under period under review i.e. 01.04.2013 to 31.03.2014, the industrial relation in the company improved with the implementation of long pending negotiated wages (2002) for workmen. However, workmen have been demanding for implementation of wage revision (2007). The negotiations for the same are in process.

12. TRAINING AND DEVELOPMENT :

Employees of the Company are the most important constituent and Company understands that without their motivation and development Company can not progress. The Company has been analyzing developmental needs in technical and managerial areas and provides requisite training and exposure to the employees at all levels in the area on Professional Excellence through Motivation, etc. Employees were trained during 01/04/2013 to 31/03/2014 on Acupressure & Naturopathy, Leadership & Risk Management training program as per details given below :

13. VIGILANCE:

Vigilance Group continues to function with particular emphasis on maintaining strict vigil over various activities of the Company. The Company also observed Vigilance Awareness Week from October 28, 2013 to November 02, 2013.

14. HUMAN RESOURCE DEVELOPMENT:

Employees of the Company are the most important constituent and Company understands that without their motivation and development Company can not progress. The Company has been analyzing developmental needs in technical and managerial areas and provides requisite training and exposure to the employees at all levels in the area on Professional Excellence through Motivation, Advance Engine Combustion & Diagnostics, Competence Building for Effective Management, Healthcare Services, Part Programming for CNC Machines, Leadership Strategies for Building Excellence, Quest for Excellence Imperatives for India PSUs, Health, Safety, Environment Protection through Legal Reforms & technological Innovations, Building & Leading Effective Teams, Safety Engineering & Management, Value Based Management, Legal framework for Cost Audit Compliances, Cost Accounting Record Rules 2011 & Cost Audit Report Rules 2011, Finance for Non-finance Executives, International Commercial Practices, Energy Conservation, House Keeping etc.

15. HINDI IMPLEMENTATION:

Official Language Implementation Committee monitors and reviews the progress of implementation of the Annual Programme issued by Department of Official Language, Ministry of Home Affairs, Government of India. Hindi Divas is commemorated every year by observing official language week in the month of September. Various competitions are organized for employees and winners are felicitated on Republic Day.

16. RESERVATION FOR SCHEDULED CASTES & SCHEDULED TRIBE:

As on 31.03.2014 the total strength of the company is 620. Out of these, 142 employees belong to Scheduled Castes and 01 employee to Scheduled Tribe.

17. DIRECTORS:

The tenure of Shri Ajai Kumar as Chairman cum Managing Director of the Company came to an end w.e.f. 13.04.2013. Shri R K Singh, Jt. Secretary, Department of Heavy Industries, Ministry of Heavy Industries & Public Enterprises, Government of India has been given Additional charge as Chairman & Managing Director w.e.f. 15.05.2013. Shri Rahul Bali has been apointed as Director (Technical) w.e.f. 02.04.2013. Shri S K Singh has been appointment as Part time official director vice Shri Harbhajan Singh w.e.f. 20.12.2013 & Shri Dinesh Kumar has been appointed as part time official director vice Shri S K Goyal w.e.f. 25.03.2014. Mr. Dinesh kumar retired w.e.f. 31.07.2014 on his retirement and Mr. Arvind Kumar has been appointed as Part time official Director in place of Mr. S K Singh w.e.f. 08.08.2014. The Company has taken up the matter with Ministry for filling up the vacant positions of Independent Directors as well as Director (Finance) on the Board.

The Board records the appreciation for contribution made by aforesaid Directors during their association with the Company.

18. DIRECTORS'' RESPONSIBILITY STATEMENT:

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

a) That in the preparation of the accounts for the financial year ended 31st March 2014, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were 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 the year under review;

c) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) That the Directors have prepared the accounts for the financial year ended 31st March 2014 on a ''going concern'' basis.

19. ADEQUACY OF INTERNAL CONTROL:

The Company has proper and adequate system of internal controls to ensure that all activities are monitored and controlled against any unauthorized use of disposal of assets, and that the transactions are authorized, recorded and reported correctly.

The Company ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines.

20. FIXED DEPOSITS:

The Company has not accepted any deposits under Companies (Acceptance of Deposit) Rules, 1975 during the year.

21. STATUS OF REPAYMENT OF LOAN FROM GOI

In terms of Cabinet approval the existing term Plan & non plan Loan as of 31st March, 2012 of RS. 85.21 crores (Plan loan - Rs. 1.93 Crores & non plan Rs. 83.28 Crores) of has been converted into equity share capital of Rs. 85.21 crores by issue of 8.52 crores equity share of Rs. 10 each at par and further the Equity Share Capital of the Company has been reduced by Rs. 85.21 crores by cancellation of aforesaid Rs. 85.21 crores equity share capital held by the Government of India in terms of BIFR order dated 24.06.2013. The existing Interest Accrued as on 31 March, 2012 amounting to Rs. 2,637 Lacs on GOI loan (Plan loan of Rs. 193 lacs & Non plan loan of Rs. 8328 lacs) has been written off against accumulated losses and no further interest has been provided for on the aforesaid loan from 31st March, 2012 onwards. No provision of interest on Non Plan Loan of Rs. 189 lacs released during the financial year 2012-13 has been made.

22. AUDITORS'' REPORT:

M/s D S Shukla & Co., Chartered Accountants have been appointed by the Comptroller and Auditor General of India, as Statutory Auditors of the Company for the year 2013-14. The Statutary Auditor reports on the accounts of the company for the financial year ended 31st March, 2014 in enclosed as Annexure-III.

The Accounts of the company were submitted to the Comptroller & Auditor General of India for their report under Section 619(4) of the Companies Act 1956 and their report is appended as Annexure-IV.

23. COST AUDITOR:

M/s Sunil Singh & Co., Cost Accountant, Lucknow has been appointed as Cost Auditor of the Company by the Govt. of India, Ministry of Corporate Affairs, for auditing cost records relating to manufacture of Motor Vehicles for the financial year ending 31st March 2014.

24. CORPORATE GOVERNANCE:

A Certificate from M/s D S Shukla & Co, Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement along with the report on Corporate Governance is attached as Annexure-II to this report.

25. ACKNOWLEDGEMENT:

The Board of Directors would like to express their grateful appreciation for the sincere support and co-operation extended by its Bankers, Financial Institutions, Dealers and Suppliers. The Directors would also like to express their sincere thanks for the co-operation and advice received from Govt. of India, particularly, Deptt. Of Heavy Industry and Public Enterprises, BIFR, BRPSE, the State Govt. and the local authorities for their continued support, co-operation and guidance.

Your Directors wish to place on record their deep sense of appreciation for the devoted services of employees and are deeply grateful to the shareholders for reposing the confidence and faith in us.

For and on behalf of the Board

R K Singh

Chairman & Managing Director

Place : New Delhi

Date : August 13, 2014


Mar 31, 2013

Dear Shareholders,

The Board of Directors of your Company is pleased to present the 41st Annual Report on the business and operations of the Company together with the audited Balance Sheet and Profit and Loss Account and Auditors'' Report thereon for the financial year ended 31st March, 2013.

1. PRODUCTION REVIEW :

The production performance for the year is shown below in physical terms :

(Nos.)

Description 2011-2012 2012-2013

Three wheelers 17,512 15,807

2. SALES REVIEW :

The Sales performance for the year is shown below :

2011-2012 2012-2013

Description Physical Financial Physical Financial

(in Nos.) (Rs.in lakhs) (in Nos.) (Rs. in lakhs)

Three Wheelers 17,584 20,655.36 15,837 19,020.74

Spares - 654.37 - 546.27

Petrol, Diesel, Lubricants etc. - 1,364.13 - 1,415.25

Other Sales - 123.98 - 1.44

TOTAL - 22,797.84 - 20,983.70

3. FINANCIAL REVIEW :

The salient features of the Company''s financial results for the year under review are as follows:

(Rs. in Lakhs)

Description 2011-2012 2012-2013

a) PBDIT (319.12) (281.43)

b) Profit before Interest, Depreciation & Exceptional items (2.42) (281.43)

c) Profit before Exceptional item (1,677.29) (600.06)

d) Profit/(Loss) for the year (1,993.99) (600.06)

During the year under report :

(1) The loss before depreciation, interest & taxes have decreased by Rs. 37.69 lakhs.

(2) The loss before depreciation, interest, taxes and exceptional items has increased by Rs. 279.01 lakhs.

(3) The net loss before Exceptional items has decreased by Rs. 1,077.23 lakhs as compared to the corresponding previous year.

(4) However, the net loss after exceptional items for the year has decreased by Rs. 1,393.93 lakhs as compared to the previous year.

4. CONTRIBUTION TO NATIONAL EXCHEQUER

The company has contributed a sum of Rs. 4,852.12 lakhs to the exchequer during the period under review vis-a-vis Rs. 4,837.65 lakhs during previous financial year.

5. EXPORTS

The company has achieved exports of Rs. 38.23 lakhs during the period under review.

6. EXPENDITURE ON ADVERTISEMENT AND PUBLICITY :

An expenditure of Rs. 10.12 lakhs was incurred on account of advertisement and publicity during the year.

7. MATERIAL CHANGES AND COMMIMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED FROM 01.04.2013 DATE :

No material change and commitment have been made by the company from 01.04.2013 to date that has adverse effect on the financial position. However it is pertinent to note that GOI has vide letter no. F. No. 3-33/2009 - PE VI dated 22.02.2013 conveyed that Cabinet has approved the revival package of Rs. 201.96 crores, which inter-alia includes the infusion of fresh funds, conversion of plan & non plan loan in to equity & waiver of interest and directed for taking necessary approval from BIFR. Since the Draft Rehabilitation Scheme (DRS) was under preparation by Operating Agency (SBI) and sanction by BIFR was likely to take some time, pending finalization of DRS & sanction by BIFR, SIL filed the Miscellaneous application for seeking necessary permission/ appropriate directions for reliefs & concessions enabling conversion of loan in to equity/issue of shares/reduction of shares capital etc. without further approval of shareholders/Central Government/SEBI/Stock exchanges in terms of provisions of section 81(1A) of the Companies Act, 1956, listing agreement, Securities And Exchange Board Of India (Issue of Capital And Disclosure Requirements) Regulations, 2009 and Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 2011, restructuring of balance sheet and for release of funds for capital expenditure and working capital in line with the cabinet decision for revival of SIL. BIFR in its hearing dated June 19, 2013, allowed the Miscellaneous application of SIL and vide order dated 24.06.2013 issued necessary directions accepting the prayers of SIL. Accordingly SIL has given effect to BIFR order envisaging inter-alia restructuring in share capital & write off of interest on plan & non plan loan against accumulated losses etc. in the annual accounts for the year ended at 31st March, 2013. The Company has also received interest free working capital loan of Rs. 20 crores from GOI and is expecting release of Rs. 31.90 crores from GOI out of CAPEX of Rs. 70.38 Crores approved by GOI.

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Your company is ISO 9001: 2000 certified which focuses on quality management system. Information in accordance with provision of Section 217(1)(e) of the Companies Act, 1956 regarding the conservation of energy, technology absorption and foreign exchange earnings and outflow are given in Annexure-I, I-A and I-B to this report.

10. PARTICULARS OF EMPLOYEES:

Information under Sec. 217(2-A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 be treated as NIL as none of the employee of the company is getting salary more than the prescribed limit.

11. INDUSTRIAL RELATIONS:

During the year under review the industrial relations in the Company improved with the cabinet approval inter-alia for enhancement of the superannuation age from 58 years to 60 years in relaxation of DPE Guidelines. The implementation of 2002 negotiated pay scales for workmen, who are on the rolls of SIL as on 01.04.2013, reduced the discontentment amongst workmen and improved the morale.

12. VIGILANCE:

Vigilance Group continues to function with particular emphasis on the aspects of preventive and corrective vigilance. Strict vigil was exercised over various activities as part of Preventive Vigilance measures and suggestions were made to Management for system improvement. Company also observed Vigilance Awareness Week from October 29, 2012 to November 03, 2013.

13. HUMAN RESOURCE DEVELOPMENT:

Employees of the Company are the most important constituent and Company understands that without their motivation and development Company can not progress. The Company has been analyzing developmental needs in technical and managerial areas and provides requisite training and exposure to the employees at all levels in the area on Professional Excellence through Motivation, Advance Engine Combustion & Diagnostics, Competence Building for Effective Management, Healthcare Services, Part Programming for CNC Machines, Leadership Strategies for Building Excellence, Quest for Excellence Imperatives for India PSUs, Health, Safety, Environment Protection through Legal Reforms & technological Innovations, Building & Leading

Effective Teams, Safety Engineering & Management, Value Based Management, Legal framework for Cost Audit Compliances, Cost Accounting Record Rules 2011 & Cost Audit Report Rules 2011, Finance for Non-finance Executives, International Commercial Practices, Energy Conservation, House Keeping etc.

14. HINDI IMPLEMENTATION:

Official Language Implementation Committee monitors and reviews the progress of implementation of the Annual Programme issued by Department of Official Language, Ministry of Home Affairs, Government of India. Hindi Divas is commemorated every year by observing official language week in the month of September. Various competitions are organized for employees and winners are felicitated on Republic Day.

15. RESERVATION FOR SCHEDULED CASTES & SCHEDULED TRIBE:

As on 31.03.2013 the total strength of the company is 612. Out of these, 143 employees belong to Scheduled Castes and 01 employee to Scheduled Tribe.

16. DIRECTORS:

The tenure of Shri Ajai Kumar as Chairman cum Managing Director of the Company came to an end w.e.f. 13.04.2013. Shri R K Singh, Jt. Secretary, Department of Heavy Industries, Ministry of Heavy Industries & Public Enterprises, Government of India has been given Additional charge as Chairman & Managing Director w.e.f. 15.05.2013. Tenure of Shri P P Sarkar, Director (Technical) came to an end on 15.05.2012 and Shri Rahul Bali has been appointed as Director (Technical) w.e.f. 02.04.2013. The Company has taken up the matter with Ministry for filling up the vacant positions of Independent Directors as well as Director (Finance) on the Board.

The Board records the appreciation for contribution made by aforesaid Directors during his association with the Company.

17. DIRECTORS'' RESPONSIBILITY STATEMENT:

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

a) That in the preparation of the accounts for the financial year ended 31st March 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review;

c) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) That the Directors have prepared the accounts for the financial year ended 31st March 2013 on a ''going concern'' basis.

18. ADEQUACY OF INTERNAL CONTROL:

The Company has proper and adequate system of internal controls to ensure that all activities are monitored and controlled against any unauthorized use of disposal of assets, and that the transactions are authorized, recorded and reported correctly.

The Company ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines.

19. FIXED DEPOSITS:

The Company has not accepted any deposits under Companies (Acceptance of Deposit) Rules, 1975 during the year.

20. STATUS OF REPAYMENT OF LOAN FROM GOI

In terms of Cabinet approval the existing term Plan & non plan Loan as of 31st March, 2012 of Rs. 85.21 crores (Plan loan - Rs. 1.93 Crores & non plan - 83.28 Crores) of has been converted into equity share capital of Rs. 85.21 crores by issue of 8.52 crores equity share of Rs. 10 each at par and further the Equity Share Capital of the Company has been reduced by Rs. 85.21 crores by cancellation of aforesaid Rs. 85.21 crores equity share capital held by the Government of India in terms of BIFR order dated 24.06.2013. The existing Interest Accrued as on 31 March, 2012 amounting to Rs. 2,637.60 Lacs on GOI loan (Plan loan of Rs. 193 lacs & Non plan loan of Rs. 8328 lacs) has been written off against accumulated losses and no further interest has been provided for on the aforesaid loan from 31st March, 2012 onwards. No provision of interest on Non Plan Loan of Rs. 189 lacs released during the financial year 2012-13 has been made.

21. AUDITORS'' REPORT:

M/s S. Srivastava & Co., Chartered Accountants have been appointed by the Comptroller and Auditor General of India, as Statutory Auditors of the Company for the year 2012-13. The Statutory Auditors'' Report on the Accounts of the Company for the financial year ended 31st March 2013 alongwith Management replies are enclosed at Annexure - III.

The Accounts of the company were submitted to the Comptroller & Auditor General of India for their report under Section 619(4) of the Companies Act 1956 and their report is appended as Annexure-IV.

22. COST AUDITOR:

Shri R.N. Tripathi, Cost Accountant, Luck now has been appointed as Cost Auditor of the Company by the Govt. of India, Ministry of Corporate Affairs, for auditing cost records relating to manufacture of Motor Vehicles for the financial year ending 31st March 2013.

23. CORPORATE GOVERNANCE:

A Certificate from M/s S Srivastava & Co, Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement along with the report on Corporate Governance is attached as Annexure - II to this report.

24. ACKNOWLEDGEMENT:

The Board of Directors would like to express their grateful appreciation for the sincere support and co-operation extended by its Bankers, Financial Institutions, Dealers and Suppliers. The Directors would also like to express their sincere thanks for the co-operation and advice received from Govt. of India, particularly, Deptt. Of Heavy Industry and Public Enterprises, BIFR, BRPSE, the State Govt. and the local authorities for their continued support, co-operation and guidance.

Your Directors wish to place on record their deep sense of appreciation for the devoted services of employees and are deeply grateful to the shareholders for reposing the confidence and faith in us.

For and on behalf of the Board

R K Singh

Chairman & Managing Director

Place : New Delhi

Date : August 23, 2013


Mar 31, 2012

The Board of Directors of your Company is pleased to present the 40th Annual Report on the business and operations of the Company together with the audited Balance Sheet and Profit and Loss Account and Auditors' Report thereon for the financial year ended 31st March, 2012.

1. PRODUCTION REVIEW :

The production performance of the Company has increased considerably and recorded highest production during the year as under :

(Nos.)

Description 2010-2011 2011-2012

Three wheelers 14,381 17,512

2. SALES REVIEW :

The Sales performance also increased leading to highest sales during the year as shown below:

2010-2011 2011-2012 Description Physical Financial Physical Financial (in Nos.) (Rs in lakhs) (in Nos.) (Rs in lakhs)

Three Wheelers 14,039 15,770.98 17,584 20,656.36

Spares - 464.42 - 654.37

Petrol, Diesel, Lubricants etc. - 1,240.12 - 1,364.13

Other Sales - 77.85 - 123.98

TOTAL - 17,553.37 - 22,797.84

3. FINANCIAL REVIEW:

The salient features of the Company's financial results for the year under review are as follows:

(in Lakhs)

Description 2010-2011 2011-2012

a) PBDIT (523.84) (319.12)

b) Profit before Interest, Depreciation & Exceptional items (523.84) (2.42)

c) Profit before Exceptional items (1,711.14) (1,677.29)

d) Profit/(Loss) for the year (1,711.14) (1,993.99)

During the year under report :

(1) The loss before depreciation, interest & taxes decreased by Rs. 204.72 lakhs.

(2) The loss before depreciation, interest & taxes and exceptional items has decreased by Rs. 521.42 lakhs.

(3) The net loss before Exceptional items has decreased by Rs. 33.85 lakhs as compared to the corresponding previous year

(4) However, the net loss after exceptional items for the year has increased by Rs. 282.85 lakhs as compared to the previous year

4. CONTRIBUTION TO NATIONAL EXCHEQUER

The company has contributed a sum ofRs. 4,837.65 lakhs to the exchequer during the period under review vis-a-vis Rs. 3,811.49 lakhs during previous financial year

5. EXPORTS

The company has achieved exports ofRs. 60.36 lakhs during the period under review. The royalty income by way of foreign exchange remittances is NIL during the year.

6. MANAGEMENT DISCUSSION AND ANALYSIS:

(A) Mission, Vision & Objective

Vision To improve the performance of the company so as to be competitive and

profitable through constantly improving existing products, adding new products and expanding customer base.

Mission To fulfill customers' needs for economic and safe mode of road Transport and quality engineering products through contemporary technologies.

Objective

- To achieve 10% increase in production.

- To achieve 5% decrease in cost

- Rationalization of Manpower.

To reduce energy input per unit of production.

(B) MARKET SCENARIO

(i) The total number of 3-wheelers produced and sold in the domestic market by manufacturers in India during the year 2011-12 as against 2010-11 is given below :

Category Production

Segment/Sub-seament Apr.10-Mar.11 Apr.11-Mar.12

Passenger Carrier 696,984 767,173

Goods Carrier 102,569 110,538

Total: 799,553 877,711

Sales

Passenger Carrier 425,358 406,236

Goods Carrier 100,666 107,015

Total: 526,024 513,251

Note : Sales excludes Export of 269,968 Nos. in 2010-11 and 362,876 Nos. in 2011-12.

Source-SIAM

Scooters India Limited has been a pioneer in bringing out various models of 3-wheelers running on diesel, electric and CNG for application as both passengers and load carrier versions. Company has played an important role in popularization of 3-wheelers of larger capacity in the country. With focused efforts and approach, SIL has achieved highest ever sales of 17,569 nos. in 2011-12. This is an increase of 25% over the sales made in 2010- 11 whereas the domestic market of three wheelers has shown negative trend (-) 2.43% compared to previous year. This has also resulted in increasing the SIL market share from 2.67% in 2010-11 to 3.43°% in 2011-12.

The company continues to be the leader in larger capacity of vehicles i. e. passenger carrier (6 1) segment and goods carrier exceeding 1 ton of vehicles. The market share of company is 59.1% in 2011-12 (SIL sales 6,904 of vehicles out of 11,685 nos.)

(ii) 3-Wheeler growth drivers in future are as under :

- Rapid development of infrastructure and focus of both Central as well as State Govt, on infrastructure mainly on roads, the demand of 3-wheeler may see an upward trend in coming years. The demand driver for 3-wheeler are its affordability as an economical viable transport solution, however, the demand for 3-wheeler passenger carrier depends by availability of permits issued by Local RTOs.

- Increased demand from semi-urban & rural areas for 3-wheelers because of its high product manoeuvrability and drivability.

- Suitability of 3-wheelers for congested Indian roads and tropical conditions.

- Self employment opportunity for a large no. of youths especially with the Govt, focus on various schemes for the unemployed youths.

3-wheeler of smaller capacity are in great demand in load carrier segment because of increase in organised retail marketing across the country which requires faster and cheaper transportation.

- 3-wheeler is a low cost transport solution to daily commuting passenger Hence the market for 3-wheelers shall continue to be there because of higher cost of transportation in other modes of transport like taxi, contract carriages, buses etc.

- 3-wheelers are also better earning opportunity for unemployed youths. With a minimum expenditure i.e. Rs. 45,000 - Rs. 50,000 (margin money) one can start earning Rs. 300 - Rs. 400 per day right from the day one of purchasing a new 3-wheeler.

(C) Resources and Liquidity :

In view of the continuing cash losses, the company's liquidity position was under strain.

(D) Quality:

Your company is an ISO 9001 : 2000 company. The company has taken several initiatives including manufacturing of no problem vehicle and up-gradation of its products to ensure that the best quality products are made available to its customers. Vehicle reliability has improved significantly which has generated goodwill leading to better sales.

(E) Opportunities & Threats :

E. 1. Opportunities:

- Growing automobile sector including three-wheelers.

- Untapped markets-Rural, South, West & Exports

- Developing hub and spoke transportation model.

- Increasing allocation of funds for proverty alleviation under various Govt. Schemes like PMRY, SC/ST, NREGA etc.

Rapidly growing awareness about vehicular pollution leading to policy formulation for increase use of alternate fuel vehicles.

- Options for technology infusion.

- Rapidly growing network for CNG/LPG supply E.2 Threats :

Increase in product substitution effect by rapidly growing 4 Wheel Small Commercial Vehicle.

- Increased competition both from organized and unorganized players.

- Strict enforcement of the pollution norms and Passenger Vehicle permits.

- Increased customer expectations.

- Rising interest and fuel cost could dampen demand for company's products.

- Volatility in Raw Materials prices/input and difficulty in passing on cost increase.

(F) Future Outlook:

i) Challenges faced by the Company :

- The need for consistency in quality demands for enhanced investment in R & D and upgradation of plant & machinery Existing over-lived plant & machinery is a cause of concern.

Manpower cost in the company is still high and so is the average age profile of the employees. While your company needs to reduce its manpower cost at the same time it also needs to infuse fresh blood.

- Retention of young officers who joined in the last couple of years is difficult as private/ other PSUs are offering substantially higher remuneration. Young executives are regularly leaving for greener pastures.

Though 3-Wheeler as an industry continue to grow but increase in competition and availability of 4-Wheelers in 1.0 ton and sub 1.0 ton category is expected to aggravate the extremely competitive scenario and impact the volumes & margins.

Strict regulatory laws concerning pollution and their strict implementation by banning sale of diesel vehicles in certain states shall act as deterrent for company growth.

- SIL has lesser presence in small 3-wheeler segment which has strong market preference. In this segment contribution is lower and competition is higher as established players viz. Piaggio, Mahindra etc. dominate the market.

- Employees' aspiration for effecting revision in salary and wages and increase in retirement age from 58 to 60 years.

(ii) Strategic Road Map :

Although there has been negative growth in three wheeler segment of Auto sector in India, the performance of your company has improved considerably in comparison to the previous year. Monthly production of vehicles has shown significant improvement Your company is evaluting various new product development options to cater to various market segments with a view to higher production and sales.

(iii) Status Before BIFR

On 18lh February, 2010, BIFR has declared the Company as sick industrial company in terms of the provisions of section 3 (1) (o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) on reference being made after full erosion of the Networth of the Company as per annual accounts for the year ended at 31st March, 2009. Last meeting of BIFR was held on 16h July, 2012, and the next meeting is scheduled on 3rd October, 2012. The Business Plan for revival of SIL is under consideration of GOI.

7. EXPENDITURE ON ADVERTISEMENT AND PUBLICITY:

An expenditure ofRs. 9.74 lakhs was incurred on account of advertisement and publicity during the year.

8. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED FROM 1.4.2011 TO DATE:

No material change and commitments have been made by the company from 01-04-11 to date that has adverse effect on the financial position of the company.

9. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO :

Your company is an ISO 9001 : 2000 certified which focuses on quality management system. Information in accordance with provision of Section 217 (1) (e) of the Companies Act, 1956 regarding the conservation of energy, technology absorption and foreign exchange earnings and outflow are given in Annexure - 1, 1-A and 1-B to this report.

10. PARTICULARS OF EMPLOYEES:

Information under Sec. 217(2-A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 be treated as NIL as none of the employee of the company is getting salary more than the prescribed limit.

11. INDUSTRIAL RELATIONS:

During the year under review, that is 1.4.2011 to 31.3.2012, the industrial relations in the Company continued to be under stress mainly due to non fulfillment of employees' aspirations. The aspiration of employees regarding Wage Revision and retirement age could not be fulfilled due to Company's financial health.

12. VIGILANCE:

Vigilance Group continues to function with particular emphasis on the aspects of preventive and corrective vigilance. Strict vigil was exercised over various activities as part of Preventive Vigilance measures and suggestions were made to Management for system improvement. Company also observed Vigilance Awareness Week from 31.10.2011 to 05.11.2011.

13. HUMAN RESOURCE DEVELOPMENT:

Employees of the Company are the most important constituent and Company understands that without their motivation and development Company can not progress. The Company has been analyzing developmental needs in technical and managerial areas and provides requisite training and exposure to the employees at all levels in the area on Professional Excellence through Motivation, Advance Engine Combustion & Diagnostics, Competence Building for Effective Management, Healthcare Services, Part Programming for CNC Machines, Leadership Strategies for Building Excellence, Quest for Excellence Imperatives for India PSUs, Health, Safety, Environment Protection through Legal Reforms & technological Innovations, Building & Leading Effective Teams, Safety Engineering & Management, Value Based Management, Legal framework for Cost Audit Compliances, Cost Accounting Record Rule 2011 & Cost Audit Report Rules 2011, Finance for Non-finance Executives, International Commercial Practices, Energy Conservation, House Keeping etc.

14. HINDI IMPLEMENTATION:

Official Language implementation Committee monitors and reviews the progress of implementation of the Annual Programme issued by Department of Offical Language, Ministry of Home Affairs, Government of India. Hindi Divas is commemorated every year by observing offical language week in the month of September. Various competitions are organized for employees and winners are felicitated on Republic Day.

15. RESERVATION FOR SCHEDULED CASTES & SCHEDULED TRIBE:

As on 31.3.2012, the total strength of the company is 796. Out of these, 219 employees belong to Scheduled Castes and 01 employee to Scheduled Tribe.

16. DIRECTORS :

Shri Harbhajan Singh, Jt. Secretary, has joined as Part time Official Director w.e.f. 13th Sept. 2011 vice Shri Vikram Gulati who ceased to be Director on 6.9.2011. Tenure of Shri P.P. Sarkar, Director (Technical) came to an end on 15.05.2012. Shri S.K. Goyal has been nominated by GOI as part time non-official Director on the Board of SIL w.e.f. 17.05.2012. The Company has taken up the matter with Ministry for filling up the vacant positions of Independent Directors as well as Director (Finance) & Director (Technical) on the Board.

The Board records the appreciation for contribution made by aforesaid Directors during his association with the Company.

17. DIRECTORS' RESPONSIBILITY STATEMENT:

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

(a) That in the preparation of the accounts for the financial year ended 31st March 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were 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 the year under review;

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

(d) That the Directors have prepared the accounts for the financial year ended 31st March 2012 on a 'going concern' basis.

18. ADEQUACY OF INTERNAL CONTROL:

The Company has proper and adequate system of internal controls to ensure that all activities are monitored and controlled against any unauthorized use of disposal of assets, and that the transactions are authorized, recorded and reported correctly.

The Company ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines.

19. FIXED DEPOSITS:

The Company has not accepted any deposits under Companies (Acceptance of Deposit) Rules, 1975 during the year

20. STATUS OF REPAYMENT OF LOAN FROM GOI

Due to continuing losses the company has not re-paid principal amount of Rs. 2643.83 lakhs and interest ofRs. 2217.38 lakhs as on 31.03.2012.

21. AUDITORS REPORT:

M/s S. Srivastava & Co., Chartered Accountants have been appointed by the Comptroller and Auditor General of India, as Statutory Auditors of the Company for the year 2011-12. The Statutory Auditors' Report on the Accounts of the Company for the financial year ended 31st March, 2012 alongwith Management replies are enclosed at Annexure-V.

The Accounts of the Company were submitted to the Comptroller & Auditor General of India for their report under Section 619(4) of the Companies Act 1956 and their report is appended as Annexure-IV.

22. COST AUDITOR:

Shri R.N. Tripathi, Cost Accountant, Lucknow has been appointed as Cost Auditor of the Company by the Govt. of India, Ministry of Corporate Affairs, for auditing cost records relating to manufacture of Motor Vehicles for the financial year ending 31st March 2012.

Cost audit report for the year ended at 31st March, 2011 was submitted with the Ministry of Corporate Affairs on 26.09.2011.

23. CORPORATE GOVERNANCE :

A certificate from M/s S. Srivastava & Co., Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement alongwith the report on Corporate Governance is attached as Annexure-II to this report.

24. ACKNOWLEDGEMENT :

The Board of Directors would like to express their grateful appreciation for the sincere support and co-operation extended by its Bankers, Financial Institutions, Dealers and Suppliers. The Directors would also like to express their sincere thanks for the co-operation and advice received from Government of India, particularly, Department of Heavy Industry and Public Enterprises, BIFR, BRPSE, the State Government and the local authorities for their continued support, co- operation and guidance.

Your Directors wish to place on record their deep sense of appreciation for the devoted services of employees, and are deeply grateful to the shareholders for reposing the confidence and faith in us.

For and on behalf of the Board

Ajai Kumar

Chairman-cum-Managing Director

Place : Lucknow

Date : August 23, 2012


Mar 31, 2011

Dear Shareholders,

The Board of Directors of your Company is pleased to present the 39th Annual Report on the business and operations of the Company together with the audited Balance Sheet and Profit and Loss Account and Auditors' Report thereon for the financial year ended 31st March, 2011.

1. PRODUCTION REVIEW:

The production performance for the year is shown below in physical terms : I

Description 2009-2010 2010-2011 Three wheelers 12,178 14,381

2. SALES REVIEW:

The Sales performance for the year is shown below :

2009-2010 2010-2011

Description Physical Financial Physical Financial (in Nos.) (Rs in lakhs) (in Nos.) (RS, in lakhs)

Three Wheelers 11,720 12,492.07 14,039 15,770.98

Spares - 468.03 - 464.42

Petrol, Dtesel, Lubricants etc. - 1,024.34 - * 1,240.12

Other Sales - 73.63 - 77.85

TOTAL - 14,058.07 - 17,553.37

3. FINANCIAL REVIEW:

The salient features of the Company's financial results for the year under review are as follows:

(Rs in Lakhs)

Description 2009-2010 2010-2011

a) Profit/(Loss) before Depreciation (2,637.40) (1,577.59)

b) Depreciation 151.44 133.55

c) Profit/(Loss) for the year (2,788.84) (1,711.14)

d) Prior period adjustment (11.70) -

e) Income Tax - -

f) FBT - -

Net Profit/(Loss) (PAT) (2,800.54) (1,711.14)

The production and sales performance of the Company improved during the year under report. However the company registered a loss of Rs 17.11 crores compared to X 28.01 crores in the previous year.

4. CONTRIBUTION TO NATIONAL EXCHEQUER

The company has contributed a sum of Rs 3,811.49 lakhs to the exchequer during the period under review.

5. EXPORTS

The company has achieved exports of Rs 25.40 lakhs during the period under review. The royalty income by way of foreign exchange remittances amounted to Rs 30.37 lakhs during the year.

9. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Your company is an ISO 9001 : 2000 certified which focuses on quality management system.

Information in accordance with provision of Section 217 (1) (e) of the Companies Act, 1956 regarding the conservation of energy, technology absorption and foreign exchange earnings and outflow are given in Annexure - 1, 1-A and 1-B to this report.

10. PARTICULARS OF EMPLOYEES:

Information under Sec. 217(2-A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 be treated as NIL as none of the employee of the company is getting salary more than the prescribed limit.

11. INDUSTRIAL RELATIONS:

During the year under review, that is 1.4.2010 to 31.3.2011, the industrial relations in the Company continued to be under stress mainly due to non fulfillment of employees' aspirations. The aspiratioii of employees regarding Wage Revision and retirement age could not be fulfilled due to Company's poor financial health.

12. VIGILANCE:

Vigilance Group continues to function with particular emphasis on the aspects of preventive and corrective vigilance. In selected areas, surprise checks and system studies were carried out and the improvements suggested were implemented. Company also observed Vigilance Awareness Week from 25.10.2010 to 01.11.2010.

13. HUMAN RESOURCE DEVELOPMENT :

Employees of the Company are the most important constituent and Company understands that without their motivation and development Company can not progress. The Company has been analyzing developmental needs in technical and managerial areas and provides requisite training and exposure to the employees at all levels in the area on Product upgradation, Energy Conservation, Total Productive Maintenance, Safety, Customer Satisfaction, Quality & Environmental Management Systems, Productivity and Work Culture.

14. HINDI IMPLEMENTATION:

Official Language implementation Committee monitors and reviews the progress of implementation of the Annual Programme issued by Department of Offical Language, Ministry of Home Affair, Government of India. Hindi Divas is commemorated every year by observing offical language week in the month of September. Various competitions are organized for employees and winners are felicitated.

15. RESERVATION FOR SCHEDULED CASTES & SCHEDULED TRIBE:

As on 31.3.2011, the total strength of the company is 1011. Out of these, 246 employees belong to Scheduled Castes and 02 employees to Scheduled Tribe.

16. DIRECTORS:

Shri P. Muthusamy, Director (Finance), has been relieved from SIL w.e.f. 17th March, 2011. The Company has taken up the matter with DHI for filling up the vacant positions of Independent Directors as well as Director (Fin.) on the Board.

Shri S.K. Tripathi, Independent Director, retired w.e.f. 5th July, 2010.

The Board records the appreciation for contribution made by aforesaid Directors during their association with the Company.

17. DIRECTORS' RESPONSIBILITY STATEMENT:

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

(a) That in the preparation of the accounts for the financial year ended 31st March 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were 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 the year under review;

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

(d) That the Directors have prepared the accounts for the financial year ended 31st March 2011 on* a 'going concern' basis.

18. ADEQUACY OF INTERNAL CONTROL:

The Company has proper and adequate system of internal controls to ensure that all activities are monitored and controlled against any unauthorized use of disposal of assets, and that the transactions are authorized, recorded and reported correctly.

The Company ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines.

19. FIXED DEPOSITS:

The Company has not accepted any deposits under Companies (Acceptance of Deposit) Rules, 1975 during the year.

20. STATUS OF REPAYMENT OF LOAN FROM GOI

Due to continuing losses the company has not re-paid principal amount of Rs 787.20 lakhs and interest of Rs 658.58 lakhs as on 31.03.2011.

21. AUDITORS REPORT:

M/s S. Srivastava & Co., Chartered Accountants have been appointed by the Comptroller and Auditor General of India, as Statutory Auditors of the Company for the year 2010-11. The Statutory Auditors' Report on the Accounts of the Company for the financial year ended 31st March, 2011 alongwith Management replies are enclosed at Annexure-V.

The Accounts of the Company were submitted to the Comptroller & Auditor General of India for their report under Section 619(4) of the Companies Act 1956 and their report is appended as Annexure-IV.

22. COST AUDITOR:

Shri R.N. Tripathi, Cost Accountant, Lucknow has been appointed as Cost Auditor of the Company by the Govt, of India, Ministry of Corporate Affairs, for auditing cost records relating to manufacture of Motor Vehicles for the financial year ending 31st March 2011.

"Cost audit report for the year ended at 31st March, 2010 was submitted with the Ministry of Corporate Affairs on 27.09.2010

23. CORPORATE GOVERNANCE:

A certificate from M/s S. Srivastava & Co., Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement alongwith the report on Corporate Governance is attached as Annexure-4 to this report.

24. ACKNOWLEDGEMENT:

The Board of Directors would like to express their grateful appreciation for the sincere support and co-operation extended by its Bankers, Financial Institutions, Dealers and Suppliers. The Directors would also like to express their sincere thanks for the co-operation and advice received from Government of India, particularly, Department of Heavy Industry and Public Enterprises, BIFR, BRPSE, the State Government and the local authorities for their continued support, co- operation and guidance.

Your Directors wish to place on record their deep sense of appreciation for the devoted services of employees, and are deeply grateful to the shareholders for reposing the confidence and faith in us.

For and on behalf of the Board

Lucknow Ajai Kumar

30th August, 2011 Chairman-cum-Managing Director


Mar 31, 2010

The Board of Directors of your Company is pleased to present the 38th Annual Report on the business and operations of the Company together with the audited Balance Sheet and Profit and Loss Account and Auditors Report thereon for the financial year ended 31st March, 2010.

1. PRODUCTION REVIEW:

The production performance for the year is shown below in physical terms :

Description 2008-2009 2009-2010

Three wheelers 10,107 12,178

2. SALES REVIEW:

The Sales performance for the year is shown below :

2008-2009 2009-2010

Description Physical Financial Physical Financial (in Nos.) (Rs.in lakhs) (in Nos.) (Rs.in lakhs)

Three Wheelers 11,139 11,872.03 11,720 12,492.07

Spares - 738.88 - 468.03

Petrol,Diesel, Lubricants etc. - 947.30 - 1,024.34

Other Sales - 104.05 - 73.63

TOTAL 13,662.26 - 14,058.07



3. FINANCIAL REVIEW:

The salient features of the Companys financial results for the year under review are as follows:

(Rs. in Lakhs) 2008-2009 2009-2010

a) Profit/(Loss) before Depreciation (2,599.94) (2,637.40)

b) Depreciation 173.91 151.44

c) Profit/(Loss) for the year (2,773.85) (2,788.84)

d) Prior period adjustment 15.18 (11.70)

e) Income Tax - -

f) FBT 6.76 -

Net Profit/(Loss) (PAT) (2,765.43) (2,800.54)

The production and sales performance of the Company improved during the year under report. However the company registered a loss of Rs. 28.01 crores (including extra-ordinary provision of Rs. 5.77 crores on account of enhancement of entitlement limit of gratuity from Rs. 3.5 lacs to Rs. 10 lacs) compared to Rs. 27.65 crores in the previous year.

4. CONTRIBUTION TO NATIONAL EXCHEQUER

The company has contributed a sum of Rs. 2,700.00 lakhs to the exchequer during the period under review.

5. EXPORTS

The company has achieved exports of Rs. 23.71 lakhs during the period under review. The royalty income by way of foreign exchange remittances amounted to Rs. 134.96 lakhs during the year.

16. DIRECTORS:

Shri Ajai Kumar & Shri P. Muthusamy retire by rotation at ensuing annual general meeting and being eligible had offered themselves for re-appointment. The Board commends for their re- appointment at ensuing annual general meeting. Term of Shri S. Chakraborty, Shri P.K. Brahma & Shri S.K. Tripathi, Part time Non official Directors (Independent Directors) completed on 30.01.2010, 07.02.2010 & 05.07.2010 respectively. The Board records the appreciation for contribution made by aforesaid Independent Directors during their association with the Company. The Company has taken up the matter with DHI for filling up the vacant positions on the Board.

17. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed :

(a) That in the preparation of the accounts for the financial year ended 31st March 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were 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 the year under review;

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

(d) That the Directors have prepared the accounts for the financial year ended 31st March 2010 on a going concern basis.

18. ADEQUACY OF INTERNAL CONTROL:

The Company has proper and adequate system of internal controls to ensure that all activities are monitored and controlled against any unauthorized use of disposal of assets, and that the transactions are authorized, recorded and reported correctly.

The Company ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines.

19. FIXED DEPOSITS:

The Company has not accepted any deposits under Companies (Acceptance of Deposit) Rules, 1975 "during the year.

20. STATUS OF REPAYMENT OF LOAN FROM GOI

Due to financial crisis the company has not re-paid principal amount of Rs. 398.80 lakhs and interest of Rs. 228.37 lakhs during the period under review.

21. AUDITORS REPORT:

M/s S. Srivastava & Co., Chartered Accountants have been appointed by the Comptroller and Auditor General of India, as Statutory Auditors of the Company for the year 2009-10. The Statutory Auditors Report on the Accounts of the Company for the financial year ended 31st March, 2010 alongwith Management replies are enclosed at Annexure-lll & V.

The Accounts of the Company were submitted to the Comptroller & Auditor General of India for their report under Section 619(4) of the Companies Act 1956 and their report is appended as annexure-IV.

22. COST AUDITOR:

Shri R.N. Tripathi, Cost Accountant, Lucknow has been appointed as Cost Auditor of the Company by the Govt, of India, Ministry of Corporate Affairs, for auditing cost records relating to manufacture of Motor Vehicles for the financial year ending 31st March 2010.

23. CORPORATE GOVERNANCE:

A certificate from M/s S. Srivastava & Co., Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement alongwith the report on Corporate Governance is attached as Annexure-ll to this report.

24. REFERENCE TO BIFR/BRPSE:

On 18th February, 2010, BIFR has declared the Company as sick industrial company in terms of the provisions of section 3(1 )(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) on reference being made after full erosion of the Networth of the Company, as per annual accounts for the year ended at 31st March, 2009. Your Company being a Central PSU has also been referred to BRPSE in addition to BIFR.

The business plan for revival of SIL is under consideration of GOI.

25. ACKNOWLEDGEMENT:

The Board of Directors would like to express their grateful appreciation for the sincere support and co-operation extended by its Bankers, Financial Institutions, Dealers and Suppliers. The Directors would also like to express their sincere thanks for the co-operation and advice received from Government of India, particularly, Department of Heavy Industry and Public Enterprises, BIFR, BRPSE, the State Government and the local authorities for their continued support, co- operation and guidance.

Your Directors wish to place on record their deep sense of appreciation for the devoted services of employees, and are deeply grateful to the shareholders for reposing the confidence and faith in us.

For and on behalf of the Board

Ajai Kumar Chairman-cum-Managing Director

Place : Lucknow Date : August 27th, 2010

 
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