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Directors Report of Swaraj Engines Ltd.

Mar 31, 2016

The Directors present their 30th Annual Report together with Audited Accounts for the financial year ended 31st March, 2016.

A. FINANCIAL RESULTS AND OPERATIONAL REVIEW :

(Rs. in Crores)

Year Ended Year Ended 31st March, 2016 31st March, 2015

Net Operating Revenue 525.91 539.70

Profit before Other Income, Depreciation, Finance Charges,

Exceptional items and Tax 73.59 74.72

Other Income 16.30 16.31

Profit before Depreciation, Finance Charges, Exceptional items and Tax 89.89 91.03

Finance Costs 0.04 0.01

Depreciation 13.80 13.20

Profit before Exceptional/ Extraordinary items & tax 76.05 77.82

Exceptional / Extraordinary Items - -

Profit Before Tax 76.05 77.82 Tax Provision

- Current 23.25 26.44

- Deferred 1.60 (0.46)

Profit After Tax 51.20 51.84

Surplus - Opening Balance after adjustment for carrying value of Assets 39.50 36.99 Surplus available for Appropriation : 90.70 88.83

Appropriations :

Proposed Dividend 40.99 40.99

Tax on Proposed Dividend 8.34 8.34

Surplus - Closing Balance 41.37 39.50

Performance Review

The financial year 2015-16 was the challenging year for your Company as the domestic tractor industry, which has direct linkage on the performance of your Company, registered de-growth for the second consecutive year. However, against the industry''s declining trends, your Company was able to sustain its engines sale volume for the year under review by posting a sale of 64,088 units which were almost at par with last year''s 64,595 units.

On above engines sale volume, net operating revenue for the financial year 2015-16 reached Rs. 525.91 crores as against last year''s Rs. 539.70 crores due to change in product mix. However, with its continued thrust on cost control initiatives, your Company was able to maintain its profit margins both at operating and after tax level. While Profit before tax for the year stood at Rs. 76.05 crores (previous year Rs. 77.82 crores), Profit after tax of Rs. 51.20 crores (previous year Rs. 51.84 crores) translates into Basic Earnings Per Share of Rs. 41.22 (previous year Rs. 41.74).

Further, the capacity enhancement project announced in January 2014 to increase the annual capacity to 1,05,000 units, has been completed during the year. With this, your Company is now geared up to meet any future upswing in the demand.

Finance

The fund position of the Company remained comfortable throughout the year under review and after meeting the capital expenditure and working capital requirements to support operations, the Company has generated an income of Rs. 16.09 crores (previous year Rs. 16.14 crores) on surplus funds.

Dividend

Your Directors are pleased to recommend an equity dividend of Rs. 15.00 per share of the face value of Rs. 10 each for the financial year ended 31st March, 2016. Further, keeping in view the Company''s surplus cash position, the Board, over and above the said normal dividend, has also recommended a special dividend of Rs. 18.00 per share, taking the total dividend to Rs. 33.00 per share for the financial year 2015-16, same as in previous year. This dividend would be payable to those Members whose names shall appear in the Register of Members as on Book Closure date. The total equity dividend outgo for the financial year 2015-16, including dividend distribution tax, surcharge and education cess will absorb a sum of Rs. 49.33 crores (previous year Rs. 49.33 crores).

Current Year''s Review

As witnessed in the fourth quarter of last fiscal, tractor industry has started showing pick up in the demand. The forecast of good monsoon for this year and government''s enhanced thrust on agri sector would be positive for the tractor industry and in this backdrop, the engine business of your Company is also expected to move in tandem with the industry.

B. INTERNAL FINANCIAL CONTROL SYSTEMS

The Company has laid down adequate internal financial controls with reference to financial statements, commensurate with the size, scale and complexity of its operations. During the year, such controls were tested and no reportable material weakness in its operating effectiveness was observed.

C. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed analysis of the Company''s performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

D. RELATED PARTY TRANSACTIONS

All related party transactions that were entered during the financial year 2015-16 were in the ordinary course of the business and were on arm''s length basis. There were no materially significant related party transactions made by the Company which may have a potential conflict of the interest with its Promoters, Directors, Key Managerial Personnel or other persons. All such related party transactions are placed before the Audit Committee for approval, wherever applicable. Prior omnibus approval for normal transactions is also obtained from the Audit Committee for the related party transactions which are of repetitive nature as well as for the transactions which cannot be foreseen and the same are subsequently shared with Audit Committee on regular intervals. The policy on materiality of and dealing with related party transactions as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Company and the link for the same is (http://www.swarajenterprise.com/ NCC.asp). The disclosure of related party transactions pursuant to Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is annexed herewith as "Annexure A".

E. BOARD AND COMMITTEES

Directors

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In terms of Section 152 of the Companies Act, 2013, Shri Vijay Varma and Shri Rajan Wadhera shall retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a system has been put in place to carry out performance evaluation of the Board, its Committees and individual Directors. Criteria for performance evaluation is covered in the Corporate Governance Report.

Remuneration Policy

The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy on appointment of Directors and Senior Management and their remuneration. The Remuneration Policy is covered in the Corporate Governance Report.

Board Meetings and Annual General Meeting

A calendar of Meetings is prepared and circulated in advance to the Directors. During the year, five meetings of Board and four meetings of the Audit Committee were convened and held. The details are covered in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

The Independent Directors of the Company meet at least once in every financial year without the presence of Non-Independent Directors, Executive Director and any other management personnel. The meeting(s) is conducted in a manner to enable the Independent Directors to discuss matter pertaining to, inter alia, review of performance of Non-Independent Directors and the Board as a whole, assess the quality, quantity and timeliness of flow of information between the Company''s management and the Board that is necessary for the Board to effectively and reasonably perform their duties. During the year, one meeting of Independent Directors was held.

The 29th Annual General Meeting of the Company was held on 28th July, 2015.

Directors'' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, your Directors, based on representations received from the Operating Management, and after due enquiry, confirm that:

a) in the preparation of Annual Accounts for the financial year ended 31st March, 2016, the applicable accounting standards have been followed;

b) in the selection of accounting policies, consulted the Statutory Auditors 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 as at 31st March, 2016 and of the profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken for 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 irregularities;

d) the Annual Accounts have been prepared on a going concern basis;

e) internal financial controls to be followed by the Company have been laid down, which are adequate and operating effectively;

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

Audit Committee

The Audit Committee currently comprises of the following Directors viz. Shri Dileep C. Choksi (Chairman of the Committee), Dr. T.N. Kapoor, Shri S. Durgashankar and Smt. Neera Saggi. Except Shri S. Durgashankar, all the Members are Independent Directors. All the Members of the Committee possess strong accounting and financial management knowledge. The Company Secretary of the Company is the Secretary of the Committee.

All the recommendations of the Audit Committee were accepted by the Board.

F. CORPORATE GOVERNANCE

Listing Agreement

The Securities and Exchange Board of India, by replacing the earlier listing agreement, had issued SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 effective from 1st December, 2015. Accordingly, your Company has executed fresh Listing Agreements with BSE Limited and National Stock Exchange of India Limited.

Corporate Governance

A Report on Corporate Governance along with a Certificate from the Auditors of the Company regarding the compliance of conditions of Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report.

Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism through Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has put in place anti sexual harassment policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The policy is gender neutral. Internal complaints committee has been set up to redress complaints received, if any, regarding sexual harassment. During the year, no complaint was received.

Risk Management

Pursuant to the requirement of Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is having Risk Management framework covering identification, evaluation and control measures to mitigate the identified business risks.

G. EMPLOYEES

Key Managerial Personnel (KMP)

The following have been designated as the Key Managerial Personnel of the Company pursuant to Sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

Shri M.N. Kaushal, Whole Time Director

Shri M.S. Grewal, Company Secretary

Shri Rajinder Arora, Chief Financial Officer

There was no change in KMPs during the year under review.

Employees'' Stock Option Scheme

During the year, pursuant to the Employees'' Stock Option Scheme ("the Scheme") approved by the Members in the Annual General Meeting of the Company held on 28th July, 2015, the Nomination and Remuneration Committee have granted 9389 options to eligible employees which will become due for exercise in subsequent period. There was no change in the Scheme during the year. Requisite disclosure in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014 is annexed as "Annexure B".

Industrial Relations

Industrial relations remained cordial throughout the year under review.

Particulars of Employees

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees'' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

Safety, Health and Environmental Performance

Your Company is committed towards excellence in Safety, Occupational Health and Environment. This is also to ensure sustainable business growth. The Company has a well-established Safety, Occupational Health and Environmental Policy which inter alia ensures safety of public, employees, plant and equipment by ensuring compliance with all statutory rules and regulations on regular basis. Your Company also imparts training to its employees as per the predefined training calendar, carries out statutory safety audits of its facilities as per legal requirement and promotes eco-friendly activities. Showing its commitment to improve the well-being of its employees, Medical Check-ups, both curative and preventive have been organized regularly, including educating the employees on Industrial Hygiene at the work place. The Company''s plant is certified under OHSAS 18001:2007 and EMS ISO 14001:2004.

H. AUDITORS

Statutory Auditors and Auditors'' Report

M/s Davinder S. Jaaj & Company, Chartered Accountants, Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. They have expressed their willingness to act as Auditors of the Company, if appointed, and have further confirmed that the said appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment. The Members are requested to appoint Auditors and fix their remuneration.

The Audit Report issued by the Auditors of the Company forms part of the Annual Report and does not contain any qualification, reservation or adverse remark.

Secretarial Auditors

Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s A. Arora & Co., Company Secretaries in practice (CP No. 993) to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as "Annexure C". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Cost Auditors

Pursuant to Section 148(3) of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors on the recommendation of Audit Committee has appointed M/s V. Kumar & Associates, Cost Accountants, as the Cost Auditors of the Company for the financial year ending on 31st March, 2017. M/s V. Kumar & Associates have confirmed that their appointment, if approved, will be within the limits of Section 141(3)(g) of the Companies Act, 2013 and have also certified that they are free from disqualification specified under Section 141(3) of the Companies Act, 2013. The Audit Committee has also received a certificate from the Cost Auditors certifying their independence and arms length relationship with the Company.

I. CORPORATE SOCIAL RESPONSIBILITY AND RELATED MATTERS

Corporate Social Responsibility

Keeping with Company''s core value of Good Corporate Citizenship, your Company is committed to its social responsibility by taking various initiatives which would benefit the society at large. As a major CSR initiative, your Company had adopted two nearby villages under Swaraj Swachh Bharat Integrated Sanitation Programme and provided community toilets and waste collection/management system. In addition, the Company has also upgraded infrastructure of the Govt. Schools located in these villages and the said initiatives are well appreciated by the local residents. In short span of last eight months, there is a noticeable improvement in these villages in the areas of Company''s focus. Further, your Company has made significant contribution towards girl education, tree plantation at various locations, organizing medical camps, celebration of festivals with under privileged, public awareness camps for road safety and pollution etc. The Company has also contributed Rs. 60.00 lacs to the Prime Minister National Relief Fund.

Further, in compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted Corporate Social Responsibility (CSR) Committee comprises Shri Sudhir Mankad (Chairman) and S/Shri Vijay Varma, Rajan Wadhera and M.N. Kaushal as other members. The Annual Report on CSR activities is annexed herewith as "Annexure D".

Sustainability Initiative

Your Company is conscious of its responsibility towards preservation of natural resources and continuously taking various initiatives to reduce the consumption of electricity and water.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

Particulars in respect of the above activities stipulated under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as "Annexure E".

J. SECRETARIAL

Share Capital

The Issued and Paid-up Share Capital of the Company remained unchanged during the year and stood at Rs.12.42 crores at the end of the financial year 2015-16.

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as "Annexure F".

Particulars of Loans, Guarantees and Investments

During the year under review, the Company has not extended any loans, given guarantees or provided securities and made investment pursuant to Section 186 of the Companies Act, 2013.

Deposits

The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

The Company has not made any loans / advances and investment in its own shares, associates, etc. during the year.

General

The Whole Time Director is not receiving any commission from the Company. However, he has been granted Stock Options of the Company which will become due for exercise in the subsequent period.

The Company has no holding / subsidiary company.

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

1. issue of equity shares with differential voting rights or sweat equity.

2. significant or material orders passed by the Regulators / Courts / Tribunal which impact the going concern status of the Company and its future operations.

3. voting rights which are not directly exercised by the employees in respect of shares for the subscription / purchase for which loan was given by the Company (as there is no scheme pursuant to which such person can beneficially hold shares as envisaged under Section 67(3)(c) of the Companies Act, 2013).

4. fraud reporting by the auditors.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to acknowledge the contributions of all the stakeholders and are grateful for the co- operation of various Government Authorities, excellent support received from the Shareholders, Banks and other Business Associates. The Directors also recognize and appreciate the hard work and efforts put in by all the employees and their continued contribution to the Company.

FOR AND ON BEHALF OF THE BOARD

Place : Mumbai (SUDHIR MANKAD)

Date : 26th April, 2016 Chairman


Mar 31, 2015

THE MEMBERS

The Directors present their 29th Annual Report together with Audited Accounts for the financial year ended 31st March, 2015.

FINANCIAL RESULTS :

(Rs. in Crores) Year Ended Year Ended 31st March, 2015 31st March, 2014

Net Operating Revenue 539.70 608.28

Profit before Other Income, Depreciation, Finance Charges, 74.72 90.63

Exceptional items and Tax

Other Income 16.31 17.49

Profit before Depreciation, Finance Charges, Exceptional items and Tax 91.03 108.12

Finance Costs 0.01 0.04

Depreciation 13.20 9.12

Profit before exceptional items & tax 77.82 98.96

Exceptional Items [Expenses / (Income)] - 1.15

Profit Before Tax 77.82 97.81

Tax Provision

- Current 26.44 30.20

- Deferred (0.46) 0.61

Profit After Tax 51.84 67.00

Surplus - Opening Balance after adjustment for carrying value of Assets 36.99 28.15

Surplus available for Appropriation : 88.83 95.15

Appropriations :

Proposed Dividend 40.99 43.47

Tax on Proposed Dividend 8.34 7.38

Transfer to General Reserve - 7.00

Surplus - Closing Balance 39.50 37.30

DIVIDEND

Your Directors are pleased to recommend an equity dividend of Rs. 15.00 per share of the face value of Rs. 10 each for the financial year ended 31st March, 2015. In addition, continuing with its Investor friendly approach and keeping in view the Company''s surplus cash position, the Board, over and above the said normal dividend, has also recommended a special dividend of Rs. 18.00 per share, taking the total dividend to Rs. 33.00 per share for the financial year 2014-15, as against Rs. 35.00 per share, including special dividend of Rs. 20.00 per share, declared and paid for previous year. This dividend would be payable to those members whose names shall appear in the Register of Members as on Book Closure date. The total equity dividend outgo for the financial year 2014-15, including dividend distribution tax, surcharge and education cess will absorb a sum of Rs. 49.33 crores (previous year Rs. 50.85 crores).

REVIEW OF OPERATIONS

During the financial year 2014-15, your Company''s engines sale stood at 64,595 units as against 74,062 units sold during the previous year. As your Company is supplying engines for the fitment in tractors, the business of your Company has been directly impacted by the significant drop witnessed in the domestic tractor industry during the second half of the fiscal 2015.

As a result of lower engines off takes, the net operating revenue for the year under review restricted to Rs. 539.70 crores as compared to last year''s Rs. 608.28 crores. While due focus on cost front has helped to restrict the overall costs but lower absorption of fixed expenses due to drop in volume coupled with higher depreciation and CSR expenses mandated by the provisions of the Companies Act, 2013, the profit before tax stood at Rs. 77.82 crores (previous year Rs. 97.81 crores). Profit After Tax of Rs. 51.84 crores (previous year Rs. 67.00 crores) translates into an Earning Per Share of Rs. 41.74 (previous year Rs. 53.95).

Taking note of the overall slowdown in tractor industry and its current scenario, your Company, by following a prudent approach, has decided to go little slow towards capacity enhancement project to increase the annual capacity to 1,05,000 units announced in January 2014, which is now expected to complete by end of second quarter of current fiscal instead of initial plan of first quarter of financial year 2015-16.

SHARE CAPITAL

The Company has neither issued any shares with differential voting rights nor granted stock options or sweat equity during the year under review. The Issued and Paid-up Share Capital of the Company remained unchanged during the year and stood at Rs.12.42 crores at the end of the financial year 2014-15.

FINANCE

The fund position of the Company remained comfortable throughout the year under review and after meeting the capital expenditure and working capital requirements to support operations, the Company has generated an income of Rs. 16.14 crores (previous year Rs. 17.43 crores) on surplus funds.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

During the year under review, the Company has not extended any loans, given guarantees or provided securities and made investment pursuant to Section 186 of the Companies Act, 2013.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed analysis of the Company''s performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance along with a Certificate from the Auditors of the Company regarding the compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

INDUSTRIAL RELATIONS

Industrial relations remained cordial throughout the year under review except for minor IR issue with Diploma Engineer Trainees. While the matter was fully resolved, there was no loss of production due to the same.

SAFETY, HEALTH AND ENVIRONMENTAL PERFORMANCE

Your Company is committed towards excellence in Safety, Occupational Health and Environment. This is also to ensure sustainable business growth. The Company has a well-established Safety, Occupational and Environmental Policy which inter alia ensures safety of public, employees, plant and equipment by ensuring compliance with all statutory rules and regulations on regular basis. Your Company also imparts training to its employees as per the predefined training calendar, carries out statutory safety audits of its facilities as per legal requirement and promotes eco-friendly activities. Showing its commitment to improve the well-being of its employees, Medical Check-ups, both curative and preventive have been organized regularly, including educating the employees on Industrial Hygiene at the work place. The Company''s plant is certified under OHSAS 18001:2007 and EMS ISO 14001:2004.

CORPORATE SOCIAL RESPONSIBILITY

Keeping with Company''s core value of Good Corporate Citizenship, your Company is committed to display its social responsibility by taking various initiatives which would benefit the society at large. These initiatives includes contribution towards girl education, tree plantation at various locations, organizing medical camps, celebration of festivals with under privileged, public awareness camps for road safety and pollution etc.

Further, in compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has constituted Corporate Social Responsibility (CSR) Committee comprises Shri Sudhir Mankad (Chairman) and S/Shri Vijay Varma, Rajan Wadhera and M.N.Kaushal as other members. The Annual Report on CSR activities is annexed herewith as "Annexure A".

SUSTAINABILITY INITIATIVE

Your Company is conscious of its responsibility towards preservation of natural resources and continuously taking various initiatives to reduce the consumption of electricity and water.

DIRECTORS

Consequent to their resignations, Shri G.PGupta, Chairman of the Board of Directors of the Company and Shri S.C.Bhargava ceased to be the Directors of the Company after the conclusion of the last Annual General Meeting of the Company held on 31st July, 2014. The Directors placed on record their gratitude for the notable contributions made by Shri Gupta and Shri Bhargava during their association with the Company. In view of the resignation of Shri Gupta, the Directors have appointed Shri Sudhir Mankad as the Chairman of the Board of Directors of the Company.

As shared in the last year''s Directors'' Report, consequent upon their resignations, Shri Rajesh Jejurikar and Shri V.S.Parthasarathy ceased to be Directors of the Company with effect from 28th April, 2014 and 29th April, 2014 respectively and Shri Rajan Wadhera and Shri S.Durgashankar joined the Company''s Board with effect from 29th April, 2014 and 18th June, 2014 respectively. Further, Members also approved the appointments of Shri Sudhir Mankad, Dr. T.N.Kapoor, Shri Dileep C. Choksi and Smt. Neera Saggi as Independent Directors under the Companies Act, 2013 for a period of 5 years, not liable to retire by rotation.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges.

In terms of Section 152 of the Companies Act, 2013, Dr. Pawan Goenka and Shri R.R.Deshpande shall retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

The Whole-time Director is not receiving any commission from the Company. The Company has no holding / subsidiary company.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a system has been put in place to carry out performance evaluation of the Board, its Committees and individual Directors. Criteria for performance evaluation is covered in the Corporate Governance Report.

REMUNERATION POLICY

The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy on appointment of Directors and Senior Management and their remuneration. The Remuneration Policy is covered in the Corporate Governance Report.

DIRECTORS'' MEETINGS

A calendar of Meetings is prepared and circulated in advance to the Directors. During the year, four Meetings of Board and Audit Committee were convened and held. The details are covered in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

DIRECTORS'' RESPONSIBILITY STATEMENT

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

a) in the preparation of Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departure, if any;

b) in the selection of the accounting policies, consulted the Statutory Auditors and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken for 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) the Annual Accounts have been prepared on a going concern basis;

e) internal financial controls to be followed by the Company have been laid down, which are adequate and operating effectively;

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

AUDIT COMMITTEE

The Audit Committee comprises Shri Dileep C. Choksi (Chairman) and Dr. T.N.Kapoor, Shri S.Durgashankar and Smt. Neera Saggi as other members. All the recommendations made by the Audit Committee were accepted by the Board.

KEY MANAGERIAL PERSONNEL

Shri M.N.Kaushal, Whole Time Director, Shri M.S.Grewal, Company Secretary and Shri Rajinder Arora, Chief Financial Officer of the Company are the Key Managerial Personnel of the Company as per the provisions of the Companies Act, 2013. While Shri Kaushal and Shri Grewal were already in the office before the commencement of the Companies Act, 2013, the Board appointed Shri Rajinder Arora as Chief Financial Officer with effect from 29th April, 2014.

RISK MANAGEMENT

Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company is having Risk Management framework covering identification, evaluation and control measures to mitigate the identified business risks.

INTERNAL FINANCIAL CONTROL SYSTEMS

The Company has laid down adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no material weakness in their operating effectiveness was observed.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism through Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered during the financial year 2014-15 were in the ordinary course of the business and were on arm''s length basis. There were no materially significant related party transactions made by the Company which may have a potential conflict of the interest with its Promoters, Directors, Key Managerial Personnel or other persons. All such Related Party Transactions are placed before the Audit Committee for approval, wherever applicable. Prior omnibus approval for normal transactions is also obtained from the Audit Committee for the related party transactions which are of repetitive nature as well as for the transactions which cannot be foreseen and the same are subsequently shared with Audit Committee on regular intervals. The policy on materiality of and dealing with Related Party Transactions as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Company and the link for the same is (http://www.swarajenterprise.com/ NCC.asp).

AUDITORS

M/s Davinder S. Jaaj & Company, Chartered Accountants, Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. They have expressed their willingness to act as Auditors of the Company, if appointed, and have further confirmed that the said appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment. The Members are requested to appoint Auditors and fix their remuneration.

The Audit Report issued by the Auditors of the Company forms part of the Annual Report and does not contain any qualification, reservation or adverse remark.

COST AUDITORS

Pursuant to Section 148(3) of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors on the recommendation of Audit Committee has appointed M/s V.Kumar & Associates, Cost Accountants, as the Cost Auditors of the Company for the financial year ending on 31st March, 2016. M/s V.Kumar & Associates have confirmed that their appointment, if approved, will be within the limits of Section 141(3)(g) of the Companies Act, 2013 and have also certified that they are free from disqualification specified under Section 141(3) of the Companies Act, 2013.

The Cost Audit Report for the financial year 2013-14 was filed within the due date on 25th September, 2014.

SECRETARIAL AUDIT

Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s A. Arora & Co., a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as "Annexure B". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

DEPOSITS

The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

The Company has not made any loans / advances and investment in its own shares, associates, etc. during the year which are required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of the Listing Agreement.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

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

CURRENT YEAR

In view of the unseasonal rains and lower crop prices, tractor sales during the first half of the fiscal 2016 is expected to remain moderate. However, prediction of normal monsoon and positive signs in infrastructure sector could improve the overall market scenario and lead to growth in the tractor industry in the second half of the year. In this background, it is expected that the engine business of your Company will also move in tandem with the tractor industry.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars in respect of the above activities stipulated under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as "Annexure C".

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT9 is annexed herewith as "Annexure D". PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees'' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to acknowledge the contributions of all the stakeholders and are grateful for the co- operation of various Government Authorities, excellent support received from the Shareholders, Banks and other Business Associates. The Directors also recognise and appreciate the hard work and efforts put in by all the employees and their continued contribution to the Company.

FOR AND ON BEHALF OF THE BOARD

Place : Mumbai SUDHIR MANKAD Date : 27th April, 2015 Chairman


Mar 31, 2013

TO THE MEMBERS

The Directors present their 27th Annual Report together with Audited Accounts for the financial year ended 31st March, 2013.

FINANCIAL RESULTS :

(Rs. in Crores)

Year Ended Year Ended 31st March, 2013 31st March, 2012

Net Operating Revenue 479.03 448.58

Other Income 15.32 12.24

Profit before Depreciation, Finance Charges and Tax 86.81 81.61

Finance Costs 0.15 0.08

Depreciation 7.16 4.26

Profit Before Tax 79.50 77.27

Tax Provision

– Current 20.97 23.17

– Deferred 3.13 1.28

Profit After Tax 55.40 52.82

Surplus - Opening Balance 26.70 23.64

Surplus available for Appropriation 82.10 76.46

Appropriations :

Proposed Dividend 40.99 16.14

Tax on Proposed Dividend 6.96 2.62

Transfer to General Reserve 6.00 31.00 Surplus - Closing Balance 28.15 26.70

DIVIDEND

Your Directors are pleased to recommend an equity dividend of Rs. 13.00 per share of the face value of Rs. 10 each for the financial year ended 31st March, 2013. In addition, following its Investor friendly approach and keeping in view the Company''s surplus cash position, the Board, over and above the said normal dividend, has also recommended a special dividend of Rs. 20.00 per share, taking the total dividend to Rs. 33.00 per share for the financial year 2012-13, as against Rs.13.00 per share declared and paid for previous year. This dividend would be payable to those members whose names shall appear in the Register of Members as on Book Closure date. The total equity dividend outgo for the financial year 2012-13, including dividend distribution tax, surcharge and education cess will absorb a sum of Rs. 47.95 crores (previous year Rs. 18.76 crores).

REVIEW OF OPERATIONS

Members would be happy to note that your Company''s engines sale for the financial year 2012-13 registered a growth of 4% to reach 57,377 units against 55,239 units sold during the previous year. This increase in the sales was achieved despite the fact that the overall domestic tractor industry, which has direct bearing on Company''s performance, declined by 2% during the year.

Based on the above performance, Company''s net operating revenue for the year stood at Rs. 479.03 crores as compared to Rs.448.58 crores for the previous year - a growth of 7%. During the year, your Company has also completed the phased capacity expansion plan within the projected cost and timelines. Accordingly, enhanced capacity of 75,000 engines per annum is available from the beginning of current fiscal 2014. The higher depreciation due to said expansion coupled with enhanced spend on R&D related activities impacted the profit for the year under review to some extent, but with continuous focus on cost control and higher returns on surplus funds, Profit Before Tax for the year reached Rs. 79.50 crores as against last year''s profit of Rs. 77.27 crores. Profit After Tax of Rs. 55.40 crores (previous year Rs. 52.82 crores) translates into an Earning Per Share of Rs. 44.61 (previous year Rs. 42.53).

FINANCE

The fund position of the Company was comfortable throughout the year under review. As a result, after meeting routine capital expenditure and working capital requirements to support operations, a total income of Rs. 15.22 crores was generated on surplus funds.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed analysis of the Company''s performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance along with a Certificate from the Auditors of the Company regarding the compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

INDUSTRIAL RELATIONS

Industrial Relations remained cordial throughout the year under review.

SAFETY, HEALTH AND ENVIRONMENTAL PERFORMANCE

Your Company is committed towards excellence in Safety, Occupational Health and Environment. This is also to ensure sustainable business growth. The Company has a well-established Safety, Occupational and Environmental Policy which inter alia ensures safety of public, employees, plant and equipment by ensuring compliance with all statutory rules and regulations on regular basis. Your Company also imparts training to its employees as per the predefined training calendar, carries out statutory safety audits of its facilities as per legal requirement and promotes eco-friendly activities. Showing its commitment to improve the well being of its employees, Medical Check-ups, both curative and preventive have been organized regularly, including educating the employees on Industrial Hygiene at the work place. The Company''s plant is certified under OHSAS 18001:2007 and EMS ISO 14001:2004.

CORPORATE SOCIAL RESPONSIBILITY

Keeping with Company''s core value of Good Corporate Citizenship, your company is committed to display its social responsibility by taking various initiatives which would benefit the society at large. These initiatives includes tree plantation at various locations, organizing medical camps, celebration of festivals with under privileged, etc.

SUSTAINABILITY INITIATIVE

Your Company is conscious of its responsibility towards preservation of natural resources and continuously taking various initiatives to reduce the consumption of electricity and water.

DIRECTORS

Shri D.R.Swar and Shri Hardeep Singh who were liable to retire by rotation at the last Annual General Meeting of the Company and expressed their desire not to seek re-appointment, ceased to be the Directors of the Company at the conclusion of the Annual General Meeting held on 31st July, 2012. Your Board has placed on record its sincere appreciation of the valuable guidance and significant contributions made by Shri Swar and Shri Hardeep Singh during their association with the Company.

Consequent upon his resignation, Shri Bishwambhar Mishra, Vice Chairman, ceased to be a Director of the Company with effect from 1st April, 2013. Your Board has placed on record its sincere appreciation of the valuable guidance and significant contributions made by Shri Mishra during his association in building the Company to its present position of eminence.

Shri Sudhir Mankad and Shri Rajesh Jejurikar were appointed as Additional Directors of the Company with effect from 31st July, 2012 and 22nd April, 2013 respectively. Shri Mankad and Shri Jejurikar hold office upto the date of the forthcoming Annual General Meeting. The Company has received notices under section 257 of the Companies Act, 1956 from Members signifying their intention to propose Shri Mankad and Shri Jejurikar for the office of Directors at the forthcoming Annual General Meeting.

Shri S.C.Bhargava, Dr. Pawan Goenka and Shri V.S.Parthasarathy retire by rotation, and being eligible, offer themselves for re-appointment.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors, based on the representations received from the Operating Management, and after due enquiry, confirm that :

a) in the preparation of Annual Accounts, applicable accounting standards have been followed;

b) they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonable and prudent judgment and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2013 and of the profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken for 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) the Annual Accounts have been prepared on a going concern basis.

AUDITORS

The Company''s Statutory Auditors, M/s Davinder S. Jaaj & Company, Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. They have expressed their willingness to act as Auditors of the Company, if appointed, and have further confirmed that the said appointment would be in conformity with the provisions of Section 224(1B) of the Companies Act, 1956. The Members are requested to appoint Auditors and fix their remuneration.

COST AUDITORS

In conformity with the directives of Central Government, the Board of Directors of the Company appointed M/s V.Kumar & Associates, Cost Accountants, as Cost Auditors of the Company for conducting the cost audit for the year ended 31st March, 2013. Subsequently, their appointment was also approved by the Central Government.

Further, pursuant to Section 233B(2) of the Companies Act, 1956, the Board of Directors on the recommendation of Audit Committee has re-appointed M/s V.Kumar & Associates, Cost Accountants, as the Cost Auditors of the Company for the financial year ending on 31st March, 2014. M/s V.Kumar & Associates have confirmed that their appointment, if approved, will be within the limits of Section 224(1B) of the Companies Act, 1956 and have also certified that they are free from disqualification specified under Section 233B(5) read with Section 224 and sub section (3) or sub section (4) of the Section 226 of the Companies Act, 1956.

The Audit Committee has also received a certificate from the Cost Auditors certifying their independence and arm''s length relationship with the Company.

As per the circulars issued by Ministry of Corporate Affairs, due date for filing of Cost Audit Report for the financial year ended 31st March, 2012 in XBRL mode was 28th February, 2013. The Report was filled on 31st January, 2013.

DEPOSITS

The Company has not accepted deposits from the public or its employees during the year under review.

The Company has not made any loans / advances and investment in its own shares, associates, etc. during the year which are required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of the Listing Agreement.

CURRENT YEAR

The current financial year (2013-14) has begun on a positive note and in line with the higher engines demand from its key customer, engines sale during April – May 2013 period moved to 11,945 units as against 9,218 units sold during the corresponding period of the previous year - a growth of 30%.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ETC.

Particulars in respect of the above activities under the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure to this Report.

PARTICULARS OF EMPLOYEES

In accordance with section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of employees) Rules, 1975 as amended, the Company had no employee who was in receipt of remuneration of not less than Rs. 60,00,000 per annum and was employed throughout the year ended 31st March, 2013 or not less than Rs.5,00,000 per month and was employed for a part of the financial year 2012-13.

ACKNOWLEDGEMENTS

Your Directors recognise and appreciate the hard work and efforts put in by all the employees of the Company and their contribution to the progress of the Company in a very challenging environment. The Directors also take this opportunity to acknowledge the contributions of all the stakeholders and are grateful for the co-operation of various Government Authorities, excellent support received from the Shareholders, Banks and other Business Associates.

FOR AND ON BEHALF OF THE BOARD

Place : S.A.S. Nagar (Mohali) G.P.GUPTA

Date : 14th June, 2013 Chairman


Mar 31, 2012

The Directors present their Twenty Sixth Annual Report together with Audited Accounts for the financial year ended 31st March, 2012.

FINANCIAL RESULTS :

(Rs. in Crores)

Year Ended Year Ended 31st March, 2012 31st March, 2011

Net Operating Revenue 448.58 361.03

Other Income 12.24 8.19

Profit before Depreciation, Finance Charges and Tax 81.61 68.85

Finance Costs 0.08 0.04

Depreciation 4.26 4.46

Profit Before Tax 77.27 64.35

Tax Provision

- Current 23.17 21.20

- Deferred 1.28 (0.76)

Profit After Tax 52.82 43.91

Surplus - Opening Balance 23.64 20.17

Surplus available for Appropriation : 76.46 64.08

Appropriations :

Proposed Dividend 16.14 12.42

Tax on Proposed Dividend 2.62 2.02

Transfer to General Reserve 31.00 26.00

Surplus - Closing Balance 26.70 23.64

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.13.00 per Equity Share for the financial year 2011-12 as against Rs. 10.00 per share declared and paid for previous year, payable to those members whose names appear in the Register of Members as on Book Closure date. The dividend including dividend distribution tax, surcharge and education cess will absorb a sum of Rs.18.76 crores.

REVIEW OF OPERATIONS

Financial year 2011-12 was yet another year of achieving new highs. Taking the full advantage of enhanced engine demand from Mahindra & Mahindra Limited - Swaraj Division, your Company for the first time has crossed the 50,000 mark - both for production and sale of engines. Timely increase of production capacities coupled with productivity improvement initiatives enabled the Company to achieve this milestone.

Based on stepped up demand, the engine sales volume posted a growth of 17% during the year under review and reached 55,239 units as compared to previous year's sale of 47,413 units. Accordingly, Company's net operating revenue moved to Rs.448.58 crores from previous year's revenue of Rs. 361.03 crores - a growth of 24%. While Profit Before Tax for the year reached Rs. 77.27 crores (previous year Rs. 64.35 crores), Profit After Tax of Rs. 52.82 crores (previous year Rs. 43.91 crores) translates into an Earning Per Share of Rs. 42.53 (previous year Rs. 35.35).

As Members are aware, the Company had undertaken an expansion project to increase its annual capacity to 75,000 engines in two phases. While the first phase of expansion to increase the capacity to 60,000 engines per annum is near completion barring some equipments which are still under installation, the second phase which will take the total capacity to 75,000 engines per annum is progressing well and is expected to be completed by the end of current calendar year.

FINANCE

The fund position of the Company was comfortable throughout the year under review. As a result, after meeting routine capital expenditure and working capital requirements to support operations, a total income of Rs. 12.08 crores was generated on surplus funds.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed analysis of the Company's performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance along with a Certificate from the Auditors of the Company regarding the compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

INDUSTRIAL RELATIONS

Industrial Relations remained cordial throughout the year under review.

SAFETY, HEALTH AND ENVIRONMENTAL PERFORMANCE

Your Company is committed towards excellence in Safety, Occupational Health and Environment. This is also to ensure sustainable business growth. The Company has a well-established Safety, Occupational and Environmental Policy which inter alia ensures safety of public, employees, plant and equipment by ensuring compliance with all statutory rules and regulations on regular basis. Your Company also imparts training to its employees as per the predefined training calendar, carries out statutory safety audits of its facilities as per legal requirement and promotes eco-friendly activities. Showing its commitment to improve the well being of its employees, Medical Check-ups, both curative and preventive have been organized regularly, including educating the employees on Industrial Hygiene at the work place.

CORPORATE SOCIAL RESPONSIBILITY

Keeping with Company's core value of Good Corporate Citizenship, your company is committed to display its social responsibility by taking various initiatives which would benefit the society at large. These initiatives includes tree plantation at various locations, organizing medical camps, celebration of festivals with under privileged.

DIRECTORS

Consequent upon his resignation, Shri A.M.Sawhney ceased to be a Director of the Company with effect from 26th March, 2012. Your Board has placed on record its deep appreciation of notable contributions of Shri Sawhney as Director of the Company.

Upon completion of his current tenure as Executive Director on 31st March, 2012, the Board of Directors at its meeting held on 27th January, 2012 has approved continuation of Shri Bishwambhar Mishra as Non-Executive Director of the Company with effect from 1st April, 2012 and will continue to be the Vice Chairman of the Board of the Company.

Taking note of emerging needs, the Board of Directors at its meeting held on 27th January, 2012 has approved the appointment of Shri M.N.Kaushal as Whole-time Director for a period of 5 years with effect from 1st April, 2012. Appropriate resolution for his appointment has been proposed for the approval of the Shareholders at the forthcoming Annual General Meeting.

Shri Vijay Varma and Shri G.P. Gupta retire by rotation, and being eligible, offer themselves for re-appointment. Shri D.R. Swar and Shri Hardeep Singh also retire by rotation at the ensuing Annual General Meeting and have expressed their desire not to seek re-appointment. The Company does not intend to fill the vacancies caused by the retirement of Shri D.R. Swar and Shri Hardeep Singh.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors, based on the representations received from the Operating Management, and after due enquiry, confirm that :

a) in the preparation of Annual Accounts, applicable accounting standards have been followed;

b) they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonable and prudent judgment and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 and of the profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken for 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) the Annual Accounts have been prepared on a going concern basis.

AUDITORS

The Company's Statutory Auditors, Messrs Davinder S. Jaaj & Company, Chartered Accountants, hold office until the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. The Company has received a certificate from them to the effect that their re-appointment, if made, would be within the limits specified under Section 224(1B) of the Companies Act, 1956. Members are requested to appoint Auditors and fix their remuneration.

COST AUDITORS

As per the Order of the Central Government and in pursuance of Section 233B of the Companies Act, 1956, your Company's cost records are subject to Cost Audit. The due date for filing of the Cost Audit Report with the Ministry of Corporate Affairs for the financial year ended 31st March, 2011 was 30th September, 2011. This Report was filed on 2nd September, 2011. The Board of Directors has upon recommendation of the Audit Committee appointed Messrs V. Kumar & Associates, Cost Accountants to audit the cost accounts of the Company for the financial year ending 31st March, 2013, subject to the approval of the Central Government. As required under the provisions of Section 224(1B) of the Companies Act, 1956, the Company has obtained a written confirmation from Messrs V. Kumar & Associates to the effect that they are eligible for appointment as Cost Auditors under Section 233B of the Companies Act, 1956. The Board of Directors of the Company has also received a certificate from the Cost Auditor certifying their independence and arm's length relationship with the Company.

DEPOSITS

The Company has not accepted deposits from the public or its employees during the year under review.

The Company has not made any loans / advances and investment in its own shares, associates, etc. during the year which are required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of the Listing Agreement.

CURRENTYEAR

As the operations of the Company are directly linked to tractor industry, taking note of recent tractor industry scenario, the demand during fiscal 2013 is expected to remain moderate. In this backdrop, engines sale during April - May 2012 period was 9,218 units against 9,447 units sold during the corresponding period of the previous year.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ETC.

Particulars in respect of the above activities under the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure to this Report.

PARTICULARS OF EMPLOYEES

In accordance with Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of employees) Rules, 1975 as amended, the Company had no employee who was in receipt of remuneration of not less than Rs. 60,00,000 per annum and was employed throughout the year ended 31st March, 2012 or not less than Rs.5,00,000 per month and was employed for a part of the financial year 2011-12.

FOR AND ON BEHALF OF THE BOARD

Place : S.A.S. Nagar (Mohali) G.PGUPTA

Date : 26th June, 2012 Chairman


Mar 31, 2011

The Directors present their Twenty Fifth Annual Report together with Audited Accounts for the financial year ended 31st March, 2011.

FINANCIAL RESULTS:

(Rs. In Crores)

Year Ended Year Ended

31st March, 2011 31st March, 2010

Net Operating Revenue 360.63 282.44

Other Income 2.37 4.18

Profit before Depreciation, Finance Charges and Tax 63.08 53.75

Finance Charges (Net) (5.73) (5.80)

Depreciation 4.46 4.84

Profit Before Tax 64.35 54.71

Tax Provision

- Current 21.20 18.54

- Deferred (0.76) (1.18)

Profit After Tax 43.91 37.35

Balance of Profit

from Prior Years 20.17 16.40

Surplus available for Appropriation: 64.08 53.75

Appropriations:

Proposed Dividend 12.42 9.93

Tax on Proposed Dividend 2.02 1.65

Transfer to General Reserve 26.00 22.00

Balance carried to Balance Sheet 23.64 20.17

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.10.00 per Equity Share for the financial year 2010-11 as against Rs. 8.00 per share declared and paid for previous year, payable to those members whose names appear in the Register of Members as on Book Closure date. The dividend including dividend distribution tax, surcharge and education cess will absorb a sum of Rs.14.44 crores.

REVIEW OF OPERATIONS

The financial year 2010-11 was a year of sustained growth for your Company. During the year under review, taking advantage of stepped up schedules from Mahindra & Mahindra Limited - Swaraj Division and backed up by productivity improvement initiatives, your Company raised engine output to 48,015 units, a growth of 22% over 2009-10 production of 39,254 units.

On the strength of increased engine demand scenario, your Company recorded its all time high yearly engine sales volume of 47,413 units compared to 39,143 units during previous fiscal - a growth of 21%. Concurrently, supplies of hi-tech engine components to SML Isuzu also registered a growth of 20% and reached Rs. 22.68 crores against previous years supplies valuing Rs. 18.95 crores.

Reflecting the above enhanced engine sales coupled with growth in hi-tech engine components business, net operating revenue for the year under review touched Rs. 360.63 crores as against previous years revenue of Rs. 282.44 crores. While Profit Before Tax for the year reached Rs. 64.35 crores (previous year Rs. 54.71 crores), Profit After Tax of Rs. 43.91 crores (previous year Rs. 37.35 crores) translates into an Earning Per Share of Rs. 35.35 (previous year-Rs. 30.08).

To meet the increased upcoming engine demand, your Company during the year had also approved expansion programmes to increase its total installed capacity to 75,000 engines per annum. Besides capacity augmentation, investment will also be made towards sharpening Companys engineering and quality edges. Expansion programme is progressing well and plant capacity will move upto 60,000 engines per annum by end of fiscal 2012 and full annual capacity of 75,000 engines is expected to be in place by June 2012. The entire capex of Rs. 94 crores on the proposed expansion will be met from internal resources.

FINANCE

The fund position of the Company was comfortable throughout the year under review. As a result, after meeting routine capital expenditure of Rs. 7.22 crores and working capital requirements to support operations, a total income of Rs. 8.10 crores was generated on surplus funds.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed analysis of the Companys performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance along with a Certificate from the Auditors of the Company regarding the compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

INDUSTRIAL RELATIONS

Industrial Relations remained cordial throughout the year under review.

SAFETY, HEALTH AND ENVIRONMENTAL PERFORMANCE

Your Company is committed towards excellence in Safety, Occupational Health and Environment. This is also to ensure sustainable business growth. The Company has a well-established Safety, Occupational and Environmental Policy which inter alia ensures safety of public, employees, plant and equipment by ensuring compliance with all statutory rules and regulations on regular basis. Your Company also imparts training to its employees as per the predefined training calendar, carries out statutory safety audits of its facilities as per legal requirement and promotes eco-friendly activities. Showing its commitment to improve the well being of its employees, Medical Check-ups, both curative and preventive have been organized regularly, including educating the employees on Industrial Hygiene at the work place. During the year, your Company has also received Occupational Health and Safety Management System Standard (OHSAS) certification for safety culture improvement.

CORPORATE SOCIAL RESPONSIBILITY

Keeping with Companys core value of Good Corporate Citizenship, your company is committed to display its social responsibility by taking various initiatives which would benefit the society at large. These initiatives includes tree plantation at various locations, organizing medical camps, distribution of study material to students and refreshments among weaker section of society.

DIRECTORS

Shri A.M.Sawhney, Shri V.S.Parthasarathy, Shri R.R.Deshpande and Dr. T.N.Kapoor retire by rotation, and being eligible, offer themselves for re-appointment.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors, based on the representations received from the Operating Management, and after due enquiry, confirm that:

a) in the preparation of Annual Accounts, applicable accounting standards have been followed;

b) they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonable and prudent judgment and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2011 and of the profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken for 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) the Annual Accounts have been prepared on a going concern basis.

AUDITORS

The Companys Statutory Auditors, Messrs Davinder S. Jaaj & Company, Chartered Accountants, hold office until the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. The Company has received a certificate from them to the effect that their re-appointment, if made, would be within the limits specified under section 224(1 B) of the Companies Act, 1956. Members are requested to appoint Auditors and fix their remuneration.

DEPOSITS

The Company has not accepted deposits from the public or its employees during the year under review.

The Company has not made any loans / advances and investment in its own shares, associates, etc. during the year which are required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of the Listing Agreement.

CURRENTYEAR

During the period 1st April, 2011 to 31st May, 2011, 9,447 engines were despatched as against 7,757 engines during the corresponding period of the previous year - a growth of 22%. Taking note of expected demand from its key customer - Mahihdra & Mahindra Limited - Swaraj Division, the prospects for growth in the current fiscal is positive.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION ETC.

Particulars in respect of the above activities under the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure to this Report.

PARTICULARS OF EMPLOYEES

In accordance with section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of employees) Rules, 1975 as amended, the Company had no employee who was in receipt of remuneration of not less than Rs. 60,00,000 and was employed throught the year ended 31st March,.2011 or not less than Rs.5,00,000 per month and was employed for a part of the financial year 2010-11.

FOR AND ON BEHALF OF THE BOARD

G.P.GUPTA

Chairman

Place : S.A.S. Nagar (Mohali)

Date : 20th June, 2011



 
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