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Directors Report of Wendt India Ltd.

Mar 31, 2017

REPORT OF THE DIRECTORS

(Including Management Discussion and Analysis)

TOTHE MEMBERSOFWENDTINDIALTD

The Board of Directors is pleased to present the 35th Annual Report of the Company together with the Audited Financial Statements for the year ended 31st March 2017. The Management Discussion & Analysis Report forms part of the Directors Report to avoid duplication and repetition.

ECONOMIC OVERVIEW

During the year 2016-17 the Indian economy witnessed upsurge in economic activities both in private and government sector, resulting in positive sentiments and strengthening demand conditions in domestic market. Both Global and Indian economy now seem to be in a much better shape than earlier years. The key factors supporting the confidence are rapid recovery from demonetization-related down turn, softer inflationary pressures, proposed GST Roll out and public-sector disinvestments.

The Indian economy achieved a moderate growth of around 7.1% during the year because of increase in manufacturing activities except for the temporary dip due to demonetization effect witnessed during second half of the year. Strengthening of investor''s I confidence including foreign direct investments is strongly seen in some I of the key areas such as defense production, electronics component I manufacturing, medical devices as well as in non-manufacturing sectors | like insurance and professional services. Despite the temporary dip during the third quarter, the automobile sector, overall, ended the year on a positive note on account of new launches by leading manufacturers reporting corresponding sales growth during the year.

Reflecting the overall optimism, other industry segments such as Engineering, Refractory, Ceramics, Cutting Tools and Glass have also achieved reasonable growth over the previous year. On the contrary, India''s overall export continued to be lower than expected due to falling prices of metals and commodities & world oil prices. World trade has been shrinking as demand in key American and European markets has slowed down and remained sluggish. Moreover, Brexit and consequent depreciation of the British pound has put Indian exporters in a difficult situation due to volatility in currency and increasing competition from low cost economies.

FY 2016- 2017

FY 2015- 2016

Sales (net of excise duty)

12,779

11,655

Other Income

543

648

Profit Before Tax

1,570

1,499

Profit After Tax

1,169

1,041

Earnings per Share - Rs

58.71

52.06

RESULTS OF OPERATIONS

During the year under review, your company achieved a Top line of Rs.12779 Lakhs (net), which is 10% higher compared to the previous year by putting its best efforts both in the domestic and export market. The demand for your company''s products and services in the domestic market has seen reasonable traction from industry segments such as Automobile, Auto component. Ceramics, Cutting Tools and Engineering resulting in a growth of 17% over the previous year. However, the export business has seen a de-growth of 8% on account of shrinkage in demand in some of the advanced markets and overall continued slow recovery. Your company continued its efforts in addressing the challenges in some of the overseas markets such as USA,

Russia, Thailand as well as countries in the European market which have greatly contributed to achieving the above results despite uncertainties.

Your Company continues to conduct its business under three clearly Defined business verticals such as Super Abrasives, Non-Super Abrasives and International Business. Your company also recognizes the importance of the "Make in India" campaign started '' by the Indian Government two years back and the growth opportunities it would provide for your company from the ongoing investments, innovation, adoption of new methods and technologies by customers, providing the much-needed impetus for

- Higher growth. Accordingly, your company continues to allocate the required investments in high growth areas and other resources to attain its long-term business objectives. Your company continues putting focused efforts in enhancing its presence in ten identified countries for growing it''s exports. On domestic front, your company continues to focus on top 200 customers having significant contributions to your company''s overall business.

During the year, your company actively participated in the IMTEX 2017 exhibition where it showcased its products and capabilities to both the Domestic & the international audience including launch of four new models of machines during the exhibition.

The Super Abrasive Business consisting of Diamond/CBN grinding Wheels in various bonding systems. Rotary Dressers, Stationary Dressers, Hones and Segmented products achieved a growth of 14% as compared to the previous year amidst many challenges and high competition in both domestic and overseas markets. This has I been possible through continued efforts and various initiatives for new application and product developments addressing import substitutions. Your company successfully launched new products such as Dressing Rolls for Taps and bearing applications, Resin Bond Spiral CBN Wheels for Razor Blade grinding. Double Disc Fine grinding Wheels for certain Ceramic, Automotive and Engineering applications. Vitrified CBN Wheels for internal grinding applications. During the year, your company successfully completed integration of the STAR Diamond Business into its operations and commencement of regular production from Hosur. The renovation of the Electroplating facility was also undertaken cater to the increased demand in terms of higher quantity & precision. Today you can claim of Wendt having one of the most modern and state-of-the-art Plating facility in the world.

Your Company continues to work on strengthening its Research and Development Centre by enhanced efforts in Bond / Matrix formulations towards building self-reliance on the technological front. Accordingly, your company has added new capabilities and competencies towards development of new applications / products for various industries such as Glass, Auto component. Ceramics etc. during the year.

The Non-Super Abrasive Business comprising of Machine Tools & Precision Components performance was about 4% lesser than previous year. Although machine sales in the domestic market achieved an impressive growth of 40% on the back of good orders from various customers, the exports sawa negative growth.

During the year, your company has launched many new models / variants which includes four new CNC machines - Wheel Dressing & Profiling Machine, Creep Feed Grinder, Cylindrical Grinder with Angular Wheel Head and Cylindrical Grinder

with Straight Wheel Head apart from developing Vertical Honing Machine - Twin spindle with Robotics and Horizontal Honing Machine with added features. These Machines have been received well by the customers and the company expects to a positive response from the market.

The Precision Components Business, during the year, faced few challenges in terms of lower volume off take by the customers due to slow revival in auto sector and delay in getting final approvals for starting the new projects. As a result, the performance of precision components was 11 % lower than the previous year.

Nevertheless, company''s efforts in enhancing the product basket by adding components for non-auto and non-metallic sectors have started generating business for the company, although in smaller volume during the year. It is expected to contribute in a major way to the overall precision component business in coming year.

In order to strengthen the precision component business, the company is in various stages of approval on testing of some of the new components with few potential customers and expects to start the business in the current year.

FOCUS ON PROCESS EFFICIENCY

Your Company continues to focus on improving operational efficiency as well as optimal utilization of various resources in manufacturing and production areas. This is being supported through continuing implementation of LEAN for last three years. This initiative has been found beneficial in addressing some of the key areas like planning and scheduling, production reliability, materials availability and product delivery. One of the key objectives is the elimination of waste through optimum usage of all critical resources. The lean management is a philosophy and way of life for deriving long terms benefits by elimination of non-value-added activities, effective utilization of resources and helps in garnering higher level of customer satisfaction.

As part of continuing LEAN, your company has started driving this end to end whereby all support functions are also brought into its domain as important enablers for achieving organizational results.

Some of the major benefits are

- Reduced lead time for products

- Reduced Work in Progress

- Effective Raw Material Planning

- Controlling inventory levels

- Improved employee productivity

PROSPECTS

Your Company continually works on narrowing the gap between its strategies and objectives based on the market dynamics to achieve the set goals and improved performance year on year through various initiatives. The company recognizes the fact that high level of focus on product and process innovation, careful selection and deployment of new technologies and processes are critical to achieve its long-term objectives. Your company accordingly works on improving product performance by use of technology & superior manufacturing methods towards meeting the objective.

While the existing products would continue to be offered, new products, new application developments including development on import substitutes would be the focus for your company for growth. Together with, efforts of market penetration to increase the share of business with top customers, both domestic and overseas would continue. Your company would continue to work on enhancing it''s competitive edge, through improving capability, service levels and offering value added services. This would ensure higher performance & improved engagement with the customer.

Future growth of your company lies in constantly watching and monitoring changes in the external environment and customer needs that are emerging. Accordingly, your company has been working on the mega trends and underlying new opportunities that these trends unfold & is constantly focusing on new products to address this trend in all concerned industry segments.

Your Company would fully complement these efforts by maximizing it''s participation in major national and international exhibitions & trade shows & will continue to put efforts and initiatives towards increasing the global presence in identified countries through strategic alliances and co-operations besides taking advantage of the CUMI Distribution network & its ‘focus on digital marketing .

The acquisition of Winterthur Technology Group (WTG) by the US multinational 3M Corporation and resultant indirect acquisition of 40% equity shareholding in your Company continues to be a matter of contention while not being an issue. The matter has been moved to The National Company Law Tribunal (NCLT), Bangalore and matter remains sub judice.

SUBSIDIARY COMPANIES

Wendt Grinding Technologies Limited, Thailand

Your company''s 100% owned subsidiary Wendt Grinding Technologies Limited, Thailand, has achieved a topline of Thai Baht 857 Lakhs (Rs.1645 Lakhs) which is at the same level as the previous year, despite continued downtrend, political instability, declining export and rising costs in the region. The Profit Before Tax was Thai Baht 131 Lakhs (Rs 265 lakhs) and the Profit After Tax 1 has been Thai Baht 104 Lakhs (Rs.214 Lakhs) which is - 12% higher than previous year.

Like previous years, continued initiatives & efforts has been the key to this performance sustainability of your subsidiary company. New customer additions and widened product basket have compensated for the decline in automotive sector and related industries. In addition to constantly looking for new opportunities, enhancing product basket, the new projects being envisaged would help your subsidiary to achieve better performance in the coming year.

Your subsidiary continues to take part in the important Industrial and Trade Exhibitions, exploring new businesses and strengthening networking with industry leaders for business promotion and development.

Wendt Middle East FZE, Sharjah

The second wholly owned subsidiary of your company, Wendt Middle East FZE, Sharjah, has achieved a reasonable performance for the year under review despite the continuing oil crisis, political disturbance and slowdown in new projects in the region. During the year, the subsidiary has achieved an annual sale of AED 25 Lakhs (Rs.449Lakhs) which is 20% lower than the previous year. As such, the Profits have also been lower at AED 2.87 Lakhs (Rs.52 Lakhs) which is at 40% level as compared with that of previous year despite its best efforts.

As mentioned earlier, the manufacturing sector in the whole region has been undergoing severe pressure due to lower demand, underutilized capacity, rising costs etc. & due to continuing socioeconomic issues, higher inflation and regional disturbances with very few new investments by the Government.

To address these challenges, your subsidiary continues to put its best efforts and has taken many new initiatives, adding new customers and industries apart from enhancing the product basket and offering to achieve better results in the coming year.

APPROPRIATIONS

Available for appropriation

(Rs in Lakhs)

Profit After Tax

1169

Add: Balance brought forward from previous year

3995

Total

5164

Recommended appropriations

Transfer to General Reserve

120

Dividend

-Interim Rs 10/-per share

200

-Final (Dividend paid for 201 5-16 Rs 1 5/- per share of face value of Rs 10/- each)

300

Dividend Tax

-Interim

41

-Final (for 201 5-16)

61

Balance carried forward

4442

Total

5164


CORPORATE SOCIAL RESPONSIBILITY

For your company, corporate social responsibility remains as one of the key areas along with transparency. The company continues to make contributions to the society that is not limited but extends to communities in the vicinity, local schools, orphanages, homes for destitute etc. This is based on your company''s firm belief that an organization''s true value lies beyond its business and is reflected by the services it extends to the society. Your company also gives importance to green environment and tree plantation in the nearby communities by distributing and planting free saplings every year.

Your Company''s running of the Skill Development Centre has been a major initiative towards addressing the social responsibility. The main objective being providing of high quality vocational and technical training towards uplifting the lives of young children drawn from poor and deprived background. Not only does this initiative helps continuance of formal education for these apprentices, but also helps them to seek gainful employment and leading a meaningful life upon successful completion of the course.

With the enactment of CSR provisions in the Companies Act 2013, your Company has put in place a CSR policy incorporating the requirements therein which is also available on Company''s website at the following link http://www.wendtindia.com/pdf/csrpolicy.pdf

You’re Company, during theyear2016-17. Has spent of Rs 32.34 Lakhs towards the CSR activities in line with the provisions of the Companies Act, 2013,.

The Annual Report on CSR activities in the prescribed format is annexed herewith as ANNEXURE II.

DIVIDEND

The Board of Directors of the Company had approved the Dividend Distribution Policy on 20th March''2017 in line with the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The policy is uploaded in the Company''s website www.wendtindia.com.

In line with the policy, the Directors are pleased a recommend a Final Dividend of Rs 1 5/- per equity share of face value Rs 10/-each (150 %) for the year ended 31st March 2017. This is in addition to the Interim Dividend of Rs 10/- per equity share of face value of Rs 10/- each which was paid on 22nd February 2017.

The Final Dividend is subject to approval of members at the 35th Annual General Meeting & will be paid to those shareholders whose names appear on the register of members of the company as on 1st August 2017. If approved, the total Dividend for the financial year, including the interim dividend, amounts to Rs 25/- per equity share and will absorb Rs 602 lakhs including dividend distribution tax of Rs 102 Lakhs.

TRANSFER TO RESERVES

Your Company proposes to transfer Rs. 120 lakhs to the General Reserve. An amount of Rs. 4443 Lakhs is proposed to be retained in the Statement of Profit & Loss.

FIXED DEPOSITS , M

Your Company has not accepted any fixed deposits during the year 2016-17 and as such, there are no outstanding fixed deposits from the public as on 31 st March 2017.

INVESTMENTS

Details of investments covered under section 186 of the Companies Act 2013 are given in the notes no 6 b to the financial statements.

TRANSFER TO THE INVESTOR EDUCATION & PROTECTION FUND

Pursuant to the provision of Section 124 of the Companies Act, 2013, your Company has transferred an amount of Rs.1.71 lakhs (Interim Dividend 2008-09) and Rs.1.88 lakhs (Final Dividend 2008-09) being unclaimed dividend during the year, to the Investor Education and Protection Fund (IEPF) established by the Central Government after sending due reminders to the shareholders.

CONSOLIDATED FINANCIAL RESULTS

The Consolidated Financial Statements of the company (incorporating the operations of the Company and its two wholly owned overseas subsidiaries), for the financial year 2016-17 are prepared in compliance with the applicable provisions of the Companies Act, Accounting Standards as prescribed by Regulation 33 of the Securities and Exchange Board of India (SEBI) Regulations-201 5, under Listing Obligations and Disclosure Requirements (LODR).

The Consolidated Financial Statements have been prepared based on the audited financial statements of the company, its subsidiaries, as approved by their respective Board of Directors.

Pursuant to provisions of Section 136 of the Act, the Financial Statements of the Company, the Consolidated Financial Statements, along with the relevant documents and the Auditors'' Report thereon form part of this Annual Report. A statement of summarized financials of all subsidiaries of your company including capital, reserves, total assets, total liabilities, details of investment, turnover etc. pursuant to General Circular issued by MCA forms part of this report. The audited annual accounts and related information of the subsidiaries is available in our website-www.wendtindia.com.

The key financial data for the consolidated operations are as follows: -

KEY CONSOLIDATED FINANCIAL SUMMARY

(Rs in Lakhs)

FY 2016-2017

FY2015-2016

Sales (net of excise duty)

14,466

13,335

Other Income

313

381

Profit Before Tax

1,657

1,580

Profit After Tax

1,205

1,078

Earnings pershare-Rs.

60.26

53.88

QUALITY

The most critical aspect of the products that are offered by your company are high precision, accuracy and assurance of quality in terms of exacting standards required by the customer including the functionality for the desired applications.

Your Company''s Super Abrasives product range comprises of Diamond & CBN grinding wheels and Tools in various bonding systems. The Machine Tools & Precision Component business include a range of machines such as Rotary Surface Grinding, Notch Milling, TC Ring Grinding, Vertical & Horizontal Honing, Cylindrical grinding & accessories that are fully compliant with the International standards and CE certification fulfilling the European safety norms. Precision Components being a part of Non-Super Abrasives business, requires high level of precision and close tolerance limits necessitating utmost care and adherence to quality parameters and process controls.

To ensure that your company''s products meet these requirements, your company has put in place the necessary Quality & Management standards such as ISO 9001, ISO 14001, TS 16949, OHSAS and SA 8000. Your company has also successfully implemented EN 13236 Standards to address the safety norms and requirements of overseas customers. All of these standards are regularly reviewed and upgraded based on the changing requirements of global customers & are audited and certified by TUV& concerned certifying Body at regular intervals.

Superior quality and consistency in performance of the products being the main differentiators, you company has ensured deployment of an effective Quality Management System (QMS) and practice at each stage of material flow in the manufacturing cycle. Needless to mention that, your company endeavors to enhance quality and consistency in every aspect of its business on a continual basis. Accordingly, it accords high importance and care while imparting training on New Processes, New Technologies & Newer methods to its employees in the respective areas.

The necessary investments on machines, equipment & application software solutions are also being done to update & address Quality Standards. To improve on our product delivery Reliability and quality on time delivery, your company has successfully completed implementation of Bar Coding System in most of the production areas during the year.

SAFETY, HEALTH AND ENVIRONMENT (SHE)

Your Company is highly committed towards good health and workplace safety for its employees. The company makes sure that the workforce follows the safety standards and practices religiously so that the work environment is safe and free from accidents, incidents and any occupational hazards.

With respect to Environment Management, preservation and maintenance, your company is committed to and accords high importance to this aspect both within the company and the neighborhood as well. The senior management takes responsibility for this and due efforts are made to keep a close watch on maintaining the required safety standards and protection of environment through deployment of relevant processes and guidelines in line with ISO 14001 and OHSAS 18001 standards.

As mentioned above, your company considers its employees as the most valuable assets and gives utmost importance to their sound health and adopts good safety practices. The company continues to take various initiatives and programs such as annual health check-up, eye camp, cardio test, fitness and physiotherapy including awareness trainings so as to ensure good health and wellness of the employees and their families.

Your Company periodically conducts safety mock drills to address employee''s awareness & preparedness towards fire, chemical, electrical & medical urgencies.

You will be pleased to know that your company has again recorded Zero accident with no loss of man days in its operations during the year. During the year, your company has successfully upgraded to latest SA8000-2014 standards, which is more rigorous as compared to the earlier version. Your company is one of the few companies in the country to have implemented this standard.

RECOGNITIONS AND AWARDS

Your Company continues to motivate the employees to pitch in several national & international competitions. As in the past, the company has received many awards and recognitions and accolades from organizations and establishments of repute. Needless to mention that these recognitions and accolades enhance the passion and optimism among the employees and act as confidence builder for the Company.

During the year, your company has received the following major awards.

- Quality Circle Awards

Your Company''s employees continued to exhibit their skills in various Quality Circle competitions as below

International Level organized by ICQC, Thailand

- "Gold" Award for Kaizen-1 team

- "Silver" Award for SGA-1 team

National Level organized by NCQC

-"Par Excellence Award"-SGA: 1 team

- "Excellence Award" - Kaizen: 1 team

- Pride of Murugappa Group-Best Practice

Your Company''s employees have won the 2nd Runner Up

Award on Customer Centricity Category in the Pride of Murugappa Group - Best Practice. The annual best practice competition at the group level, involving large number of initiatives and best practices among all group companies.

- MGTC Cricket Tournament

Your company''s employees participated in the Group Level Cricket tournament and won the "Winners" Trophy during the year.

- MGTC Women Sports Tournament

Your company''s women employees participated in the Group level sports competitions and won awards in Carom, Chess and Relay competitions.

- Cufest 2016 Awards

Your Company''s employees participated in Group-level Quality competitions "Cufest 2016" (Quality Festival of CUMI), and won awards for 5S, Poster, Slogan, Kaizen and CFT.

! MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In the sections that follow, the information required to be given in the Management Discussion and Analysis Report have been provided.

GENERAL PERFORMANCE REVIEW

i The Indian economic conditions have started seeing improvements and positive sentiments among various sectors resulting in a modest growth in some of the I industry segments including manufacturing. However, the pace of recovery has been rather slower than expected.

During the year, your company continued to put its best efforts on new initiatives and new product & application developments in addition to working as closely as possible with customers for new opportunities including import substitutions to maintain its leading position in the domestic market.

ECONOMIC OUTLOOK

There seems to be lot of optimism and improved confidence across all the industrial segments. The proposed GST Rollout, the controlled inflation, the disinvestment drive, supported by Government reforms and initiatives is likely to propel demand and the resultant manufacturing & servicing activities.

For the coming year, the Indian economy is expected to achieve a growth rate in excess of around 7.5% as per various reports and studies by leading agencies. Several important performance indicators including index of industrial production (IIP) and wholesale price index (WPI) have shown upward movement in last few quarters. In recent years, the government has embarked upon many initiatives towards ease of doing business including the Make in India campaign, attracting foreign direct investments, reforms in banking sector, skill development, infrastructure development etc. These initiatives are expected to significantly enhance the purchasing power of people and the resultant increase in consumption demand boosting the socio-developmental activities in the country.

The industry sectors that are likely to derive benefit from the above initiatives are Automotive, Engineering, Construction, Aerospace, Defense, Infrastructure, Mining, Roads, Railways, Power, Steel, Consumer Durables & Electronics during the coming year.

INDUSTRY STRUCTURE & DEVELOPMENTS

Your Company continues to be preferred supplier for Super Abrasive Tooling for many customers including several MNCs. With the wide product range and comprehensive offering in terms of products, capability and industry | segments, your company is recognized as Total Grinding & Honing Solution Provider. The Indian Super Abrasive tooling market is fragmented in nature and continues to operate in a highly competitive environment with the presence of few organized players such as your Company and a host of proprietor- driven units, which are often single owner, small set-ups mainly with regional focus. Major contribution to your Company''s top line continues to come from sectors such as Automotive, Engineering, Cutting Tools, Refractory & Ceramics, Steel, Aerospace and Defense, which are likely to derive the benefit from government initiatives briefed above.

To reduce dependency on few industry segments, your company is persistently working on developing products for varied industry segments having long term growth prospects. Your company''s effort in this direction has resulted in development of many new products towards addressing the changing needs of the industries like Automobile, Aerospace, Defense, Glass, Paint, Razor Blade, Ceramics.

PERFORMANCE OVERVIEW

Key Financial Summary (Rs in Lakhs)

Particulars

2016-17

2015-16

% change

Domestic Sales including excise duty

10,891

9,315

17

Export Sales

3,019

3,301

-9

Total Sales

13,910

12,616

10

Operating Profit before Finance cost

1,209

1,014

19

Capital Employed

10,243

9,744

5

OPPORTUNITIES & THREATS Opportunities:

Your Company takes due cognizance of the economic growth prospects and its importance on its overall performance. Nonetheless, it would continue its pursuit and drive for higher growth year on year on the back of its industry spread, product range, technological edge and I competitiveness for seeking new opportunities in the industry segments it operates. Secondly, the wide range of products and its comprehensiveness provides enough room for accelerating growth. Developing products and aligning the business with the strong signals of Mega trends would be another area of focus for your company going forward.

The bedrock for success for your company has been its long and accumulated experience in offering products and services based on the application study and deep understanding of customer requirements. In this, superior technology continues to play important role for both Super Abrasive tooling and Grinding & Honing machines. This has complemented well towards our manufacture of precision components for our demanding customer. Your company would continue to leverage this unique advantage and derive maximum benefits from being the provider of Total Grinding & Honing Solutions which only few can aspire to have.

As a part of continuous journey, your Company would continue to work on the identified new projects in Super Abrasive tooling. Machines Tools and Precision components several of which are already in the pipeline. As for precision components, it holds lot of promise and potential to become a separate business vertical very soon and the company has been working on projects having high possibility of making significant positive impact on the overall performance in the near future.

Threats

As mentioned earlier, the Super Abrasive tooling market in the domestic arena is entrenched with the presence of few organized players and host of small & unorganized players. While on one side, these small enterprises, focus on specific markets and addressing customer requirements with lower prices and continue to cater to a set of customers with limited offering, on the other side, the large organized players from both domestic and global arena focus on technology, application engineering and product developments. The global players tie up as OEMs with machine manufacturer that

I always benefit them in terms of ready access to the business right from the beginning.

Your Company addresses this unique challenge, by I adopting its proven and tested technology, processes & I delivery system, offering economical and innovative I products for both, the low-end price sensitive customers I and the high-end quality conscious segment. The focus on I technology, value added services, application engineering I and product development including prove-out by joining hands with the customers , remains the value proposition J for your company providing it a distinctive edge .

i BUSINESS OUTLOOK

While the business environment presents many uncertainties, and remains challenging, your Company''s primary focus would continue to maintain its leadership position in the domestic arena. Increasing the presence in the identified overseas markets with suitable offerings specific to meet the customer needs is another important area for accelerating export business growth. Improving customer engagements and satisfaction levels will be ensured by improving awareness about the company.

knowledge about products and services, brand recall, prompt value added services, participation in both Domestic & International exhibitions and regular visits & interactions.

In the Super Abrasive Business, your Company will continue to focus on existing key products, new product development, new application engineering including product indigenization for achieving the growth objectives it has set for itself. While doing so, the company''s focus would be on maintaining the fine balance between stability and capitalizing on the new and emerging opportunities. The recently acquired STAR Business has been successfully integrated into the company''s operations and the same is expected to make significant contributions to the overall growth of your company in the future.

Non-Super Abrasive Business is in the process of consolidation by strengthening its position in the market, applications, industry in terms of its range/ models/ new launches and offering. The population of machines in the domestic market is steadily increasing and the numbers are expected to further increase in coming years. For the coming year too, your company has planned launch of few new machines for engineering, ceramics, aerospace and cutting tool industry.

Your Company is putting its best efforts to strengthen the precision component business with addition of new components and new customers. Your company has planned addition of few more precision components including the distance piece project in the coming year.

Growing the International Business and establishing its presence firmly and as quickly as possible continues to be one of the focus areas for your company. While it would continue

to pursue business through the existing Wendt / 3M and CUMI''s overseas network, to increase the market reach and higher penetration, your company would work on strategic partnerships & alliances to grow business in various global locations, also would explore adding new partners by looking at newer opportunities. Towards this, your company has also identified Top 10 Focus Countries for growing exports. As you may be aware, your company has already started promoting its products under CUMI & Neutral Brand as well as private label with a view to expand its presence in overseas markets.

Your 100% owned subsidiary Wendt Grinding Technologies Ltd, in Thailand would continue to achieve better results year on year despite being affected by muted global recovery, auto industry downtrend, lower demand, falling exports and political instability. As is evident in the past, the subsidiary shows steadfastness and confidence for achieving the results in the coming year. To accelerate its growth, your subsidiary company has been looking at few new projects in the coming year for which the finer specifics including the potential benefits are under evaluation.

Your second fully owned subsidiary, Wendt Middle East FZE, Sharjah has been consistent in its performance over the last tew years. For the last two years, the business environment in the region has been challenging in items of I political issues, war, downslide in oil price, stalled projects | and very few new investments and project expansions. I Despite these difficulties and hardships, your subsidiary I continues to put all its efforts on certain markets and I industries that have given good results during these tough I times. Your subsidiary would continue to operate as the I Product Availability Point (PAP) for the entire GCC region I with focus on General Engineering, Aerospace, Steel, I Ceramics, Auto component & associated industry segments and holds enough promise for better performance in the coming year.

RISK & CONCERN

Risk management is a very important part of the Company''s business policy. Your Company''s Risk Management structure spans across different levels whereby the Company continuously identifies, classifies and formulates mitigation measures.

I Your Company adopts a comprehensive and robust risk

- Appraisal, mitigation and management process in the areas of I operations, financial, technology and other business risk. The senior management of your Company is involved in mapping

- The risks arising out of both internal and external environment I and initiate plans to mitigate the same. The key risk I management practices include risk assessment, measurement, ] reporting, mitigation actions and integration with strategy | and business planning.

The key risks associated with the various processes of the Company''s business are analyzed in detail, identifying cause and source of the risk, logical sequence of triggering events i.e. (Key Risk Indicators), positive and negative consequences and the likelihood of occurrence of such consequences, the severity of the impact, both in quantitative and qualitative terms. The Key Risk Indicators are mapped to the job functions of the respective executives and the reporting and monitoring frequencies are also defined.

The Risk management process for your Company encompasses the following sequence:

- Identification of risks with the associated risk owners

- Evaluation of the risks as to the likelihood of occurrences and related consequences

- Assessment of options for risk mitigation

- Prioritizing the risk management actions

- Development of risk management plans

- Authorization for the execution of the risk management plans

- Implementation and review of the risk management process

Your Company has a Risk Management Committee comprising of Senior Management which takes the overall responsibility of total risk management processes in the organization. Through its pursuit of anticipation and

identifying risks before risks control your company''s actions, the Risk Management Committee of your Company analyses the potential areas of risks and on the current business portfolio and decides which business should receive more focus, where to invest, what needs to be added or discontinued from the product portfolio etc. to mitigate the risks.

Your Company continuously strives to identify, assesses, review, manage and works on developing the robustness of the system in terms of adequate internal controls and compliances. Some of the risks associated with the business and the related mitigation plans are given below. However, the risks given below are not exhaustive and the assessment of risk is based on management''s perception.

User Industry Concentration Risk

Why is it considered as a Risk

- Significant exposure to select sectors like auto & auto ancillaries.

- Time lag in passing cost escalation / variations in input costs to the customers.

- Effect on Customer Relationship with change in ownership. ''

- Decline in demand due to Global economic slowdown.

- Cessation of technology agreement and access to new '' process & product developments in the Super Abrasive field.

- Rebranding of products and the resultant delay in brand establishment.

- Disruptive innovation & process changes.

Mitigation Plan / Counter Measure to address

- Widening the customer base/ new industry segment & new geographies thereby De-risking the business.

- Exploring growth opportunities in sectors like Construction, Infrastructure, Steel, Defense, Aerospace, Glass, Ceramics and other industries.

- Improving the on-time delivery levels through operational efficiency measures like LEAN addressing the sustained competitive advantage.

- Continuously pursuing product innovation and new application development for diverse sectors.

- Leveraging relationship and Engagement with the customer - e.g. WOW initiative / Exhibitions like IMTEX, participation in international exhibitions like GRINDTEC -Germany, MAC - United Kingdom, IMTS - USA, CIMT -China, CRM & Knowledge Management application.

- Setting up of In-house DSIR approved R&D center. Also, thrust on innovation with focus on New Product Development, is now well embraced at Wendt to yield long term results.

- Developing and promoting alternative brands-one being well known "CUMI" brand and now alternately STAR brand.

- Entering new geographies globally.

- Focus on Make in India.

Competition Risk

Why is it considered as a Risk

- Cheaper Imports from countries like China and Taiwan.

- Import directly and through OEM route.

- Presence of many unorganized regional players often adopting Low pricing strategy, free samples, higher credit days etc.

- New Organized Players entry by setting up manufacturing base in India consequent to Make in India Drive.

Mitigation Plan / Counter Measure to address

- Offer sustained competitive advantage to customer through operational efficiencies

- Focus on Lean & Address QCD - Superior Quality, Cost competitive products & Reliable, Faster Delivery

- Internal Efficiency Measures/process automation/Reduce through put time

- Continued drive on Innovation on products, process and applications

- Creating entry barriers for competition / exit barriers for customers - Key Account Management

- Increased focus on New product development

- Enhancing value added services

- Increasing the product basket & offerings

- Building agile Supply chain by capitalizing on CUMI dealer network

- Explore E-Commerce and online sales

- Automation and Robotization to address Lower manufacturing cost and enhance Competitiveness

Technology Risk

Why is it considered as a Risk

- The rapid changes taking place in the fields of grinding /honing technology and material science.

- Adoption of Disruptive technologies like 3D printing.

- Access to New Alternate technology following the expiry & Non- renewal of technical collaboration agreement with Wendt GmbH post Sept 2012.

Mitigation Plan / Counter Measure to address

- Indigenous development of Bonds with external consultant support,

- Collaboration with external consultants

- Established DSIR approved R&D center and build on self-sufficiency in technology

- Association with external Research laboratories/Technical institutes for technology upgradation.

- Product and Process Innovations

HR & Legal Risk

Why is it considered as a Risk

- Attrition of skilled/trained manpower leading to disruption of operations or knowledge gap

- Contractual liability, e.g. Product liability Mitigation Plan / Counter Measure to address

- Inauguration of Knowledge Management Portal whereby all major established applications are safely documented

- Succession planning

- Career Development

- CCSD (CUMI Centre for Skill Development) providing employable technicians

- Compensation revision in line with the market

- All contracts cleared by the Legal team

Online Data & Information Security Risk

Why is it considered as a Risk

- Data breach leading to loss and critical information infrastructure breakdown Mitigation Plan / Counter Measure to address

- Policy in place for Technical Controls

- Business Continuity Plan and Disaster Recovery Strategy in place.

- Authorized access to the Data center

- Crisis Management Group in Place.

INFORMATION TECHNOLOGY

One of the key success factors for your company''s sustainability and consistent operations has been the use of technology and SAP ERP system, thus leveraging on the benefits for smooth functioning and steady flow of information across various functions.

Your Company has been working on the project of IT enabled Knowledge Management System which is expected to further facilitate the company''s application engineering capabilities and offering technology solutions to the customers worldwide. This initiative is slated to become fully functional during the coming year. During the year, your company has completed the implementation of Closed Circuit TV Surveillance Camera (CCTV) project as part of pre-empting any untoward incidence and further enhancing safe work practices of its employees. Implementation of Bar Coding Facility for on-line work completion and monitoring in the key production areas is one of the major milestones for your company during the year.

INTERNAL CONTROL SYSTEM & ADEQUACY

The Company has adequate internal controls consistent with the nature of business and size of its operation, to effectively provide for safety of its assets, reliability of financial transactions with adequate checks and balances, adherence to applicable statutes, accounting policies, approval procedures and to ensure optimum use of available resources. These measures are regularly reviewed and updated by incorporating changes in the regulatory provisions. These are regularly tested for their effectiveness by Statutory as well as Internal auditors. Material errors and irregularities are detected and prevented in time. Your company is committed in its endeavor & ensures an effective internal control environment that provides assurance on the efficiency and effectiveness of operations, reliability of financial reporting, statutory compliance.

Your Company''s Capital and revenue expenditures are monitored and controlled with reference to approved budgets. Budget overrides, if any is brought to the notice of the Board and suitable actions is taken to control the expenditure.

The internal audit function is carried by external independent Chartered Accountant firm covering all operational areas and ensuring that Revenue is correctly deployed and there is no wastage / leakage of any resources. The Internal Audit firm reports to the Chairman of the Audit committee. The scope of the Internal Audit is firmed up with inputs from the Audit Committee, Board of Directors, Statutory auditors and the Company management to ensure that all the critical areas are covered. Significant audit observations and corrective & preventive actions thereon are presented to the Audit Committee.

During the year, there were no changes in internal control over financial reporting that have materially affected, or are likely to have any financial reporting lapse.

The company strives to align all its processes and controls with the best global practices.

Internal Controls Over Financial Reporting (ICFR)

Your Company has in place adequate internal financial controls commensurate with its size, scale and complexity of its operations. During the year, such controls were tested and no reportable material weakness in the design and operations were observed. The company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

Your Company has a comprehensive Budgetary Control system to monitor revenues and expenditure against approved budgets on an ongoing basis.

The Company has adopted accounting policies which are in line with the Accounting Standards and the Act. These are in accordance with generally accepted accounting principles in India. Changes in policies, if required, are made in consultation with the Auditors and are approved by the Audit Committee.

The Company has a robust financial closure, certification mechanism for certifying adherence to various accounting policies, accounting hygiene and accuracy of provisions and other estimates.

FINANCIAL REVIEW Earnings Revenues

During the year, your company achieved total sales of Rs.13910 Lakhs, higher by 10% as compared to 2015-16. While the domestic sales recorded a robust growth of 17% over the last year at Rs.10891 Lakhs, the export sales were lower by 9% compared to the previous year at Rs.3019 Lakhs. As briefed earlier, the major industry segments which contributed to the growth of domestic business are engineering, cutting tools, steel, defense, trading and ceramics. The de-growth in export was due to lower sales to countries like Germany, Indonesia, Singapore, Middle East etc. during the year.

Profit before Tax

The profit before tax is higher by 5% at Rs.1 570 Lakhs compared to Rs.1499 Lakhs in 2015-16. The higher profit is because of the improved product and process efficiency measures taken by the Company and control over the fixed cost.

Profit after Tax

The profit after tax is higher by 12%, at Rs.1169 Lakhs, compared to Rs.1041 Lakhs in 201 5-16.

Liquidity and Cash Equivalents

Your company continues to be debt free company, maintaining sufficient cash and cash equivalents to meet its strategic initiatives. This is achieved by being prudent in its investment policy over the years, maintaining a reasonably high level of cash and cash equivalents which enable the company to completely eliminate short and medium term liquidity risks.

The Company has a robust Cash Management Policy whereby it:

a. Conserves sufficient cash as reserves to aid the company in venturing into meaningful business opportunities that unfold during the year.

b. Use cash to provide sufficient working capital to address business objectives of the company & to add value to all stakeholders by continued enhancement.

c. Prudently Invest surplus funds that the business generates in debt schemes of mutual funds as per Group norms and prior approval from the Board. This ensures availability, safety and liquidity of Company''s funds while allowing reasonable yield as per the prevailing market rates. The surplus funds are generated through stringent control on working capital.

During the year, your company''s investment in mutual funds increased from Rs.930 Lakhs to Rs.1072 Lakhs as on 31 st March 2017 ie. a growth of 1 5%.

As the earnings are ploughed back, the capital expenditure need of your company for the year was met entirely form the mutual funds investment.

Costs

Your Company has done judicious cost control whereby the fixed costs excluding depreciation has grown by 3% compared to last year. Thereby, the fixed cost as percentage of sales has been controlled at 32% against 34% of last year.

The variable costs have been controlled during the year through indigenization of raw material and other input costs which has helped in improving the margins of the company. The Lean Management Initiative undertaken by your company has also helped in significant savings during the year. Your Company''s price correction initiative from both customer’s domestic and exports and key suppliers during the current year is expected to improve its profitability in the coming year.

Financial Position Share Capital

The paid-up equity share capital as on March 31, 2017 was Rs.200 Lakhs. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity.

Share-holders Funds

The shareholders fund as on 31.03.2017 was Rs.10243 Lakhs against Rs.9744 Lakhs of previous year, an increase of 5%. Accordingly, the book value of the share stands at Rs.512/- as compared to Rs.487/- during the previous year.

Loan Funds

Your Company Continues to utilize its cash credit limit with State Bank of India to bridge the short-term fund requirement and for meeting the temporary mismatches in its cash flow. Your Company does not have any interest-bearing term loan.

During current year too, the working capital limits of your Company continues to be rated by ICRA as AA-(pronounced ICRA double A minus) rating assigned to the Rs.2 crore Long term Fund facilities of your Company which signifies low credit risk and stable. The short Term Rating assigned to the Rs 6 crore Non-Fund Based working capital limit also continued to be reaffirmed as A1 (pronounced ICRA A one plus). Overall your Company''s rating continues to be stable and low credit risk.

ASSETS FIXED ASSETS

Your Company continues with the policy of being prudent in its capex spend. During the current year, the capital expenditure was Rs.986 Lakhs. The major capex spent was on addition of new plant & machinery towards capability building in fast growing products and new products capacity enhancements, which are critical for the future growth of the company. Company continued to adopt policy of funding all the capex through the internal accruals.

Inventories and Sundry Debtors

The Company follows rigorous Working Capital Management, based on a well-organized process of continuous monitoring and control on Receivables, Inventories and other parameters. The overall inventory levels as on 31st March 2017 is Rs. 1844 Lakhs, an increase by 3% over the last year, despite sales growing by 10%. There was an increase in the Work In Process inventory by Rs.157 Lakhs due to delay in dispatch / clearance for from few customers.

Receivables as on 31 st March 2017 were at Rs. 2872 Lakhs against last year''s figure of Rs.2907 Lakhs, despite sales growth of 10%. This has been possible due to continuous monitoring and control measures adopted by the company. Despite the tough liquidity position post demonetization drive, your Company has been able to maintain the receivable average credit days at 79 days similar to previous year. This is possible through aggressive receivable management system including close follow ups and credit lock through the SAP system to ensure that receivables are kept under control and payments received in time.

Foreign Exchange Hedging

Your Company, being a net exporter, continues to follow the policy of natural hedging of foreign exchange earnings and outflow and hence it does not take any forward covers. The net forex gain during the year has been Rs.20 Lakhs.

Enhancing Shareholder Value

Your Company firmly believes that its success in the marketplace and a good reputation are among the primary determinants of value to the shareholder. The organizational vision is founded on the principles of good governance and by the resolve to be a customer centric organization which motivates the company''s management to be aligned to deliver highly customized products with dependable after sales services.

Your Company is committed to creating and maximizing long-term value for shareholders and essentially follows a four-pronged approach to achieve this end.

a) By increasing all round operational efficiencies

b) By identifying strategies that enhance its competitive advantage

c) By managing risks and pursuing opportunities for profitable growth, and

d) By building relationship with other important stakeholder groups through meaningful engagement processes and mutually rewarding associations that enable it to create positive impacts on the economic, societal and environmental dimensions of the Triple Bottom Line.

Underlying this is also a dedication to value friendly financial reporting that assures the shareholder and investor of receiving transparent and unfettered information on the Company''s performance.

Financial Performance with respect to Operational Performance

Your Company strives to keep its Operating profit and Contribution better than the industry average and record reasonable growth despite difficult economic situation. This is ensured by stringent control measures taken for improved operational efficiency led by the LEAN Initiative undertaken by your company, also the better product mix made its'' due contribution. This was aided by accurate information & customer data, centralized drawing management system, better planning & scheduling through SAP ERP System and effective vendor management. Your Company''s improved MIS reporting and ability to respond to customer with real time information helped in giving rich experience to the customers there by providing value addition to the customer.

INSURANCE

Your company continued its adequate care on providing required insurance cover for your company''s asset buildings, plant and machinery including inventories, and for liabilities under legislative enactments. Besides, adequate Group Personnel Accident (GPA), Group Mediclaim (GMC) insurance coverage is taken for the employees and their dependents to cover the risk arising out of accidents or sickness.

HUMAN RESOURCE

The people policies and practices of your company are effectively aligned to the organizational goals and objectives. Your company has in place the well-established human resource processes for attracting, retaining and nurturing talent by adopting a transparent system of performance evaluation and rewarding performers. This has been evident from the fact that your company''s employees have longer average tenure and low attrition rate. Individual KRAs are derived from the Business Plan & annual BSC (Balanced Score Card) and carefully deployed at all level, which are reviewed periodically.

To sustain its leadership position in India, your company finds it pertinent to remain customer-focused, performance-driven and future-capable. Your Company''s Human Resource Development strategy seeks to fulfill this mandate through careful selection and effective implementation of a range of innovative programmes and interventions. Needless to mention that the human resource policies of your company ensure motivation to the employees to give their best and remain committed to achieve the overall objective of the company. It is a constant endeavor for your company to adopt some of the industry best practices and aligning them with the strategic directions, goals and objectives in terms of people processes.

Your Company''s Human Resource policies are continuously reviewed and realigned based on people expectations, making it more employee-friendly thereby creating an engaged workforce which focuses on productivity.

To meet the growth plans set by the Company and to fulfill the ever-changing needs and expectations of the customers, your Company continues to focus on competency building, skill enhancement and overall development so that its people are well prepared to take on the challenges.

Every employee of your company is considered as an appreciating asset, thus the personal development plans focus on how each individual''s strength can be best leveraged to deliver to his/her full potential. To this effect, your company provides specific training programmes and cross functional learning opportunities. The company attains high degree importance to enhancing employees'' competency and skills through on the job training and external training programmes. Special attention is given on improving the health and safety of the employees.

Your Company focuses on Business Excellence and continual improvement journey (TQM) in its quest to improve the quality of products, processes and systems. All this requires ongoing learning, job enrichment, aligning rewards and recognition with performance, high engagement levels, conducive work environment and a cordial industrial relationship. Your Company continues to have a smooth and enabling work climate that promotes performance, customer focus and innovative thinking while adhering to the highest standards of integrity, trust and ethical behavior. Your Company continues to enjoy the support of a committed, experienced and satisfied workforce. To this effect, your company offers a compensation package which is one of the best in industry.

Employee relations continue to be smooth and cordial and the work atmosphere remained congenial throughout the year. The manpower strength of confirmed employees of your company as on 31 st March 2017 was 370.

RELATED PARTY TRANSACTIONS

All related party Transactions that were entered into during the financial year were on arm''s length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company with Promoters, Directors, key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee for their approval on quarterly basis

The Policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website.

None of the Directors have any pecuniary relationships or transactions vis-a-vis the Company.

GOVERNANCE BOARD OF DIRECTORS

The Board of Directors have appointed Ms. Hima Srinivas as an Additional Director on the Board of the Company with effect from 24th April 2017 and she holds office till the date of the ensuing Annual General meeting. The Company is proposing to appoint her as an Independent Director under section 149 of the Companies Act, 2013 fora term of five years. Ms. Hima Srinivas has offered herself for this appointment.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. K Srinivasan, Director retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The necessary Resolution is being placed before the shareholders for approval. The Board of Directors of your company feels that his continued association with the Board will be beneficial to the company and recommend his re-election.

All the Directors of the company have confirmed that they are not disqualified from being appointed as directors in terms of Section 164 of the Companies Act, 2013. All the independent Directors have given a declaration under section 149(6) of the Companies Act 2013, confirming their independence.

BOARD MEETINGS

A calendar of Board Meetings is prepared and circulated in advance to the Directors.

During the year, five Board Meetings and four Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

BOARD EVALUATION

Pursuant to the provision of the Companies Act, 2013 and SEBI Regulations, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Stakeholder Relationship, CSR and Nomination & Remuneration Committees. The manner in which evaluation has been carried out has been explained in the Corporate Governance Report.

REMUNERATION POLICY

The Board has framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration policy is stated in the Corporate Governance Report.

STATUTORY AUDITORS AND AUDITORS'' REPORT

As per the provisions of Section 139 of the Companies Act''2013, the term of M/s Deloitte Haskins & Sells, Chartered Accountants, as the statutory auditors of the Company, Bangalore will conclude from the close of the forthcoming Annual General Meeting of the Company.

The Board of Directors places on record its appreciation for the services rendered by M/s Deloitte Haskins & Sells as the Statutory Auditors of the Company.

Subject to the approval of Members, the Board of Directors of the Company has recommended the appointment of M/s Price Waterhouse Chartered Accountants LLP, (ICAI Firm Registration Number. 012754N/N500016) as the Statutory Auditors of the Company pursuant to Section 139 of the Companies Act''2013.

The notes on accounts referred to in the Auditors'' Report are self- explanatory and do not call for any further comments.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Act, and the Rules framed there under, the Company has appointed M/s Apeksha Nagori, practicing Company Secretary to undertake the secretarial audit for the financial year 2016-17. The Report of the Secretarial Auditor confirming compliance with the applicable provisions of the Companies Act 2013 and other rules and regulations issued by SEBI/other regulatory authorities forms part of the Annual Report.

The explanation to the observations of the Secretarial Audit Report by the Secretarial Auditor has been furnished in the respective sections of the Corporate Governance Report.

KEY MANAGERIAL PERSONNEL

Mr. Rajesh Khanna, Chief Executive, Mr. Mukesh Kumar Hamirwasia, Chief Financial Officer and Ms. Akanksha Bijawat, Company Secretary are the Key Managerial Personnel of the Company pursuant to Section 2 (51) and Section 203 of the Companies Act 2013.

None of the Key Managerial Personnel have resigned during the year under review.

CORPORATE GOVERNANCE

Your Company has inculcated strong culture of values, ethics and integrity living with the Five Lights- The Spirit of the Murugappa Group. The Company continues to maintain high standards of Corporate Governance in all its interactions with various stakeholders. The company strives to be a sustainable and trusted organization as sustained governance is the cornerstone in building and maintaining relationship with all its stakeholders. It rigorously pursues a policy of 100% compliance with all statutory requirements and has a robust review system in place. The Board fully supports and endorses Corporate Governance practices in accordance with provisions of Regulation 27 of the SEBI (LODR) Regulations 2015. The Corporate Governance Report along-with the Auditors'' Certificate regarding compliance of the conditions of Corporate Governance pursuant to Regulation 27 of the Listing Regulations is annexed hereto and forms part of the Annual Report. To this effect, as required under Regulation 17 (8) of the SEBI (LODR) Regulations 201 5, a certificate from the Chief Executive and the Chief Financial Officer of your Company is being annexed with this Report.

VIGIL MECHANISM UNDER WHISTLE BLOWER POLICY

The Company has a vigil mechanism under Whistleblower Policy to provide necessary safeguards for protection of Directors, employees, customers, vendors from reprisals or victimization. The details of the policy are explained in the Corporate Governance Report and are also posted on the website of the Company.

Extract of Annual Return

The extract of the Annual Return in form MGT 9 as required under Section 92(3) of the Act and the Rules framed thereafter is annexed to and forms part of this report. (FORMAT IN ANNEXURE I).

RATIO OF REMUNERATION TO EACH DIRECTOR:

Details / Disclosures of Ratio of Remuneration to each Director to the median employee''s remuneration as ANNEXURE- III.

Directors Responsibility Statement

Pursuant to the provisions of Section 134(3) (c) and 134 (5) of the Companies Act, 2013, the Board of Directors of your Company, make the following statements, to the best of their knowledge and belief and according to the information furnished and explanations obtained by them:

- That in the preparation of the annual financial statements for the year ended 31st March 2017, the applicable accounting standards have been followed and there have been no material departures there from.

- That they have selected appropriate 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 as at the end of accounting year and of the profits of the Company for the year ended 31st March 2017.

- That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- That the annual financial statements have been prepared on a going concern basis.

- That proper internal financial controls have been laid down to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

Disclosure of Statutory Particulars

- The particulars as prescribed under Section 134(3)(m) of the Companies Act,2013, read with Rules 8(3) of The Companies (Accounts) Rules 2014 are set out in Annexure A which forms part of this report.

- The information required under Section 197(12) of The Companies Act, 2013 read with Rules 5(2) & (3) of The Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 as amended by the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 and forming part of Directors report for the year ended 31st March 2017 is annexed in Annexure III.

ACKNOWLEDGEMENTS

The Directors acknowledge and would like to place on record the commitment and dedication on part of the employees of your Company for their continued efforts in achieving good results. Your Directors also look forward for their continued involvement and support in future.

Your Directors would also like to express their sincere appreciation to investors, bankers, customers, suppliers, business associates, shareholders, auditors and other statutory authorities who have extended their precious continued support and encouragement to your company during the year. Your Directors extend their sincere gratitude to all the regulatory agencies like SEBI, Stock Exchanges, Registrar of Companies and other Central and State Government authorities/agencies. Stakeholders, vendors and sub-contracting partners for their support.

Finally, the Directors also wish to place on record their gratitude to the members of the Company for their Continued Support & Confidence.

By order of the Board

For Wendt (India) Limited

Place: Chennai M M Murugappan

Date: 24th April 2017 Chairman


Mar 31, 2015

Dear Members,

The Board of Directors has pleasure in presenting the 33rd Annual Report together with the Audited Financial Statements for the year ended 31st March 2015. The Management Discussion & Analysis Report has been included in the Directors Report so as to avoid duplication and repetition.

ECONOMIC OVERVIEW

The Indian economy has been experiencing slow revival with gradual pick-up in domestic demand after continued slowdown for last three years. Undoubtedly, both Indian & Global economy appear to be in a better shape now than by gone years. Growth projection for India in coming year remains positive, mainly due to the new Government at helm and its various growth oriented programmes being planned towards boosting the demand.

During the year, the Indian industry achieved a moderate growth of around 6% helped by positive expansion in manufacturing which witnessed similar growth in last few quarters although there is still some amount of reluctance and caution when it comes to capital investments for expansions and new projects. Negative sentiments that were affecting the Domestic consumer demand is now tapering. The performance of basic goods, intermediate goods and consumer durables has also improved mildly in last few quarters. Improved coal production and higher electricity generation during the year has helped raise the overall output for mining, cement, fertilizer, agriculture and other core industries.

The automobilesector, except the commercial vehicle segment, closed the year on a positive note despite interest costs with major companies reporting sales growth during the fiscal. While other industry segments such as Cutting Tools, Engineering, Ceramics, Glass, Refractories have achieved moderate growth over the previous year, segments like Steel have continued to be affected due to prolonged slowdown and weak global demand.

India's export continued to be positive in major export markets such as US and European countries excepting the OPEC economies which are facing Oil crisis for some time now.

The improvement in industrial output in last two quarters has signalled positive trend and has an overall favourable effect on the GDP. Although the CPI inflation is experiencing sharp rise mainly driven by higher food inflation, the edging down of core inflation has more than offset the same which has resulted in a comfortable headline inflation of around 6% - much lower than 9.5% in 2013-14.

COMPANY PERFORMANCE OVERVIEW

31st March 2015 31st March 2014

Sales 10,560 9,449

Other Income 800 611

Profit Before Tax 1,764 1,640

Provision for Tax 279 453

Profit After Tax 1485 1,187

Earnings per Share - Rs 74.24 59.34

RESULTS OF OPERATIONS

Amidst slow pace of recovery in the domestic market and weak global demand, your company continued to put its best efforts to achieve a Top line of Rs.10560 Lacs during the year under review with a growth of 12% as compared to the previous year. With the gradual pick-up in demand in the domestic market, some of the industry segments such as Automobile, Ceramics, Cutting Tools, Engineering, Refractory and Glass have positively contributed resulting in 11% growth over the previous year. On the export front, while some of the advanced countries witnessed a moderate growth, in the developing nations especially in the South East Asian region, the demand continued to remain weak due to persistent negative forces. However, your company's good efforts in addressing some of these challenges have more than offset the uncertainties resulting in a

14% growth compared to the previous year.

In the pursuit of growth and taking cognizance of medium and long term perspective, your company continues its business by focusing on three verticals- Super abrasives, Non-Super abrasives and International Business. Your company also strongly believes that the "Make in India" initiative by the Indian Government, which is slowly gaining momentum, would provide the much needed impetus for growth. Accordingly, your company continues to make necessary investments in the identified growth areas and deploy resources in order to sustain long term business growth.

Super abrasive Business comprises of Diamond/CBN grinding Wheels in various bonding systems, Hones, Diamond Dressing Rolls, Segmented products & Stationary Dressers, achieved a growth of 9% over the previous year against, stiff competition from both global and local. This above average industry growth achieved mainly on account of continued focused initiatives on new product developments & new application Areas including some of the import substitutions. During the year under review, your Company successfully launched some of new products which include Resinoid Wheels for Cutting Tools, Vitrified Products for Auto Component, Electroplated products for Engineering, Gear and Ceramics, Brazed Diamond Products for Textile and Precision Dressing Rolls for Defence, Gears and Bearing and certain other automotive applications.

Three years back your company established its Research and Development Centre and since then, it has been strengthening its capabilities and continued augmenting the efforts in Bond / Matrix formulations & development towards building self-reliance on the technological front.

During the year, your company has added new capabilities and competencies in developing some of the new applications / products for various industries. As you may be aware, your company's R & D Centre being recognized by Department of Science and Industrial Research (DSIR), Government of India also provided ample opportunity for jointly taking up research work and projects along with other well- established research laboratories on emerging technologies and new developments.

The Machine Tools & Precision Components business achieved a growth of 18% over the previous year. It has been another difficult year for the Machine Tool business due to continued capex-hold / deferment of investments on projects by the targeted customers. Despite these difficulties, the performance has rather been a decent one. During the year, your company has continued to develop & launch many new models/variants of machines including CNC Rotary Surface Grinding Machines and Honing Machines. The Company has launched 7 new machines during the year which includes Vertical Single & Double spindle

Honing machines. Angular Head Grinding machine and Surface Grinding Machine. These new models are expected to cater to a wider range of applications areas , while also increasing the customer and reference base, enhancing also the product basket. Your company has participated in IMTEX - 201 5 exhibition held at Bangalore and showcased its growing strength & Focus I on Machine Tools along with Precision Super Abrasive products.

On the Precision Components front, your company, during the year has enhanced the volume of production of two new components which got added to its basket last year. Your company is constantly exploring opportunities, where it can deploy its core competency - Expertise, Experience and Knowledge on Machines & Super Abrasive Tools for producing related precision components. Your company focuses on providing Sustained competitive advantage to its customers. Consequently your company is in advanced stage of discussion with some of the prospective customers to further strengthen the precision component business and to eventually roll it out as a separate vertical for growth, going forward.

FOCUS ON CUSTOMER CENTRICITY

Your Company has completed implementation of Customer Relationship Management (CRM) application in association with SAP. This Initiative would benefit your company in enhancing the reach and building better relationships with the customers spread not just in India but across the Globe. The CRM system will enhance the company's approach towards customer along with seamless integration of all the minute facet of marketing and sales process, which directly influence customers both in domestic and export market. Besides enhancing business relationship, it would create new opportunities for long term value creation for both customers as well as the company.

Some of the major benefits:

- Global reach through offering value proposition and effectively addressing customer needs

- Effective Knowledge Management & one-stop solution platform through integration with company's Knowledge Portal, helping the team with faster responses, real time accurate information against queries and higher productivity

- Faster and better service levels thereby strengthening company's competitive position

- 360 degree view of customers and insightful customer analysis through dashboards

FOCUS ON PROCESS EFFICIENCY

Your Company continues to invest on its journey of Lean Management in order to enhance operational efficiency and optimum use of resource in the area of manufacturing. During the year, your company has found this initiative extremely meaningful, this addresses some of the key operational areas such as process bottlenecks, process integration in quality, planning, scheduling, and production. Your company has started realising benefits by optimal utilization of machines and equipment through proper planning and scheduling of material movement besides streamlining the process in order to drive efficiency, improvement in on time delivery and waste elimination. Overall, the implementation of lean management system in your company would ensure elimination of non-value added activities, process streamlining, effective utilization of resources and higher level of customer satisfaction.

Some of the major benefits are

- Reduction in lead time for product delivery

- Reduction in rejection levels

- Better control on Work in Progress and Raw Material Planning

- Reduction in outsourcing cost

- Improved employee productivity

- Cost effective products

FUTURE PROSPECTS

Your Company continuously strives to align its Strategies and Business Objectives with the market in order to achieve better performance on a sustainable basis. Your company recognizes that focus on product and process innovation, adoption and deployment of new technologies and processes are critical in order to achieve its long term objectives.

Accordingly, your company continues to accord high level of importance in areas such as Bond development, new product development and automation. Special efforts would I be accorded to encash on the new and emerging opportunities through New Products and Applications. It will continue to expand its business in New * Markets by offering Existing range of products and applications through I marketing initiatives. Based on the Mega trends, in the past few years, your I company has been strengthening its presence by developing new products for I industry segments such as Infrastructure, Construction, Aerospace, Defense, Railways and Health care to ensure future growth and would continue its efforts in this direction to explore new opportunities in other emerging industries. All these pursuits and efforts by your company in the direction would be supplemented by participation in major national and international exhibitions, trade shows, and presence in leading industry forums, e-commerce initiatives. Your Company harnessing requisite technology on CRM and knowledge management and other value added services would enable to address the surfacing Mega trends. On the export front, your company will continue to enhance its global presence in identified countries through strategic alliances and tie-ups, exclusive Industry wise Management Representatives and continue to take advantage of the CUMI network in certain geographies enhancing global market presence.

The acquisition of Winterthur Technology Group (WTG) by the US multinational 3M Corporation and resultant indirect acquisition of 40% equity shareholding in your Company continues to be a matter of contention while not being an issue. The matter continues to be under the purview of The Honorable Company Law Board (CLB), Chennai and your company expects the ownership matter to be resolved soon.

, SUBSIDIARY COMPANIES

Wendt Grinding Technologies Limited, Thailand

Wendt Grinding Technologies Limited, Thailand, your company's 100% owned subsidiary has once again delivered superior performance. During the year, it has achieved a top line of Thai Baht 858Lacs (Rs.1620 Lacs) 19% growth over last year. The Profit Before Tax was Thai Baht 139 Lacs (Rs.274 Lacs) 5% higher and the Profit After Tax has been Thai Baht 112 Lacs (Rs.222 Lacs) 8% higher than last year. This better performance has been achieved despite continued slowdown, political issues and upheaval in the region.

Delivering consistent results year-on-year has been the hallmark for your subsidiary company and its steadfastness to repeat the same in the coming year as well. New customer additions, enhancing product basket and exploring new business opportunities have made up for the drop that arose as a result of decline in automobile production, lower export as well as shifting of some of the Japanese businesses out of Thailand.

During the year, your subsidiary company continued its focus on participation in many Industrial and Trade Exhibitions for networking and promotions besides organizing plant visits for some of the key customers. These efforts are expected to yield long term benefits for your subsidiary.

Wendt Middle East FZE, Sharjah

The second wholly owned subsidiary of your Company, Wendt Middle East FZE, Sharjah has churned out another superior performance for the year under review. During the year, it has achieved an annual sale of AED 38 lacs (Rs.627 Lacs) a commendable growth of 51% over the previous year. The Profits have been AED 8 Lacs (Rs.139 Lacs) which is 28% higher when compared to previous year.

As you may be aware, the manufacturing scenario in the entire region including , the neighbouring countries has been severely impacted on account of continued socio-economic instability and mired by political issues resulting in contraction of average capacity utilization to around 50% level with hardly any sizeable new investments announcement by the Government and Foreign players. The UAE region being a primarily an economy driven by Oil, Construction and Tourism, continuous fluctuation in these sectors has resulted in sharp rise in inflation.

Despite these challenges and continued slowdown and adversaries, your subsidiary has put its best efforts and focused on many initiatives like addition of new markets and customers, better service levels addition to enhancing product basket in the region to churn out a better than expected results.

APPROPRIATIONS

Available for appropriation (Rs in Lacs)

Profit After Tax 1485

Add: Balance brought forward from previous year 3233

Tota 4718

Less : Depreciation on transition to Schedule II of Companies 126

Act 2013 on tangible fixed assets with nil remaining useful life 4592

Recommended appropriations

Transfer to General Reserve 400

Dividend

-Interim Rs 10/-per share 200

-Final (Proposed dividend Rs 15/- per share of face value of Rs 10/- each) 300

Dividend Tax

-Interim 40

-Final (Proposed) 60

Balance carried forward 3592

"Total 4592

CORPORATE SOCIAL RESPONSIBILITY

Your Company firmly believes that an organization's true worth lies beyond its business and is best reflected by the service it renders to the community and the society. For your company, Corporate Social responsibility has always been based on the core values and transparency in all its business dealings and as such the contributions your company makes for economic development which is not limited to the workforce and their families alone but extends to the local communities, schools and society at large.

Your Company makes regular contributions to various social causes like education of underprivileged school children, old age homes, orphanages and basic sanitation and toilet facility. In addition, your company lays special emphasis on tree plantation and green environment not only within its premises but also the surrounding communities by distributing free saplings.

Your Company has been successfully running the Government Approved Skill Development Centre for last four years now with sole objective of providing formal vocational training in five industrial trades for uplifting the lives of young children drawn from poor, underprivileged and back-ward classes of the society. This initiative not only serves continuance of formal educations for these children but also helps them to seek gainful employment in various industries in future. With the enactment of the CSR provisions in the Companies Act 2013, the Company has put in place a CSR policy incorporating the requirements therein which is also available on the Company's website at the following link.

http://www.wendtindia.com/pdf/csrpolicy.pdf

As per the provisions of the Companies Act, 2013, the Company is required to spend Rs 38.49 Lacs out of which the Company has already spent Rs 36.33 Lacs towards CSR activities during the year 2014-15.

The Annual Report on CSR activities in the prescribed format is annexed herewith as ANNEXURE II.

DIVIDEND

Your Directors are pleased a recommend a Final Dividend of Rs 1 5/- per equity share of face value Rs 10/- each (1 50%) for the year ended 31 st March 201 5. This is in addition to the Interim Dividend of Rs 10/- per equity share of face value of Rs 10/- each, which was paid on 23rd February 2015.

The Final Dividend, subject to approval of members at the 33rd Annual General Meeting will be paid to those shareholders whose names appear on the register of members of the company as on 23rd July'2015. If approved, the total Dividend for the financial year, including the interim dividend, amounts to Rs 25/- per equity share and will absorb Rs . 600 lacs including dividend distribution tax of Rs 100 Lacs.

The Dividend will be tax-free in the hands of the shareholders

TRANSFER TO RESERVES

Your Company proposes to transfer Rs. 400 lacs to the General Reserve. An amount of Rs. 3592 Lacs is proposed to be retained in the Statement of Profit & Loss.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits during the year 2014-15 and as such, there are no outstanding fixed deposits from the public as on 31st March 2015.

INVESTMENTS

Details of investments covered under section 186 of the Companies Act 2013 are given in the notes no 13 to the financial statements.

TRANSFER TO THE INVESTOR EDUCATION & PROTECTION FUND

Pursuant to the provision of Section 124 of the Companies Act, 2013, your Company has transferred an amount of Rs. 2.45 lacs being unclaimed dividend during theyeartothe Investor Education and Protection Fund (IEPF) established j by the Central Government.

CONSOLIDATED FINANCIAL RESULTS

The Consolidated Financial Statements (incorporating the operations of the Company and its two wholly owned overseas subsidiaries), in terms of Clause 32 of the Listing Agreement and prepared in accordance with Accounting Standard 21 as specified in Companies (Accounting Standards) Rules, 2006 & also as per Sec 129 of the Companies Act'2013 , form part of this Annual Report. A statement of summarized financials of all subsidiaries of your company including capital, reserves, total assets, total liabilities, details of investment, turnover etc pursuant to General Circular issued by MCA forms part of this report. The audited annual accounts and related information of the subsidiaries is available in our website- www.wendtindia.com.

The key financial data for the consolidated operations are as given below:-

KEY CONSOLIDATED FINANCIAL SUMMARY (Rs in Lacs)

31st March 2015 31st March 2014

Sales 12,274 10,890

Other Income 324 304

Profit Before Tax 1,686 1,675

Profit After Tax 1,354 1,166

Earnings per share-Rs. 67.70 58.30

QUALITY

High level of precision, accuracy and engineering are the most critical aspects for your company's products which in turn calls for meeting the exacting quality standards demanded by the customers across the range of industry segments. The Super Abrasives product range for your company comprises of Diamond & CBN grinding wheels and Tools in various bonding systems. The Machine Tools & Precision Components vertical include a range of precision machines, often customized, like Rotary Surface Grinding, Notch Milling, TC Ring Grinding, Honing Machines and accessories complying with the international standards and CE certifications in terms of their safety and operations.

Precision Components which is again falling under Non Super abrasives require very high level of precision as well as tolerance limits requiring strict adherence to quality standards and process controls and measurements. In order to ensure these requirements, your company has put in place all the Management standards such as ISO 9001, ISO 14001, TS 16949, OHSAS and SA8000. In addition, in order to fulfill the safety features and requirements of overseas customers, your company has successfully implemented and obtained the coveted EN 13236 Standards during the year.

For your company, superior product Quality and consistent performance have been the main differentiators. Towards this, your company ensures that deployment of quality management standards, process robustness and practicing the standards and norms at every stage of flow isstrictly adheredtobyall.

In order to avoid overlapping and process duplication in line with the international best practices, your company has implemented Integrated Management System (IMS). As you may be aware, your company constantly endeavors to build quality and consistency in every aspect of its business. As a result, it continues to accord high importance on training its employees on emerging technologies, makes investments on equipment and high-end machines besides application softwares such as CAD/CAM, ERP, Inspection Tools, Automation and Applications.

SAFETY, HEALTH AND ENVIRONMENT (SHE)

Your Company is ever committed towards Safety and Health of its workforce and also places equal importance on Environment management not just within the company premises but its neighborhood as well. In order to ensure this, the senior management of the company keeps vigil on maintaining high safety standards, health and environment protection by fully complying and deploying appropriate processes and underlying guidelines as per OHSAS 18001 and ISO 14001 EMS standards.

Your Company always considers its employees as the most valuable assets for the company and that the safety and health of each employee is of utmost importance and is not just a mundane necessity to ensure quality in every aspect of the business. In order to ensure this, your company continues to take various initiatives and programs such as annual health check-up plan, eye camp, physiotherapy, fitness center, blood donation camps etc., so that the employees and their families maintain good health and overall wellness. In addition, Your company continuously provides awareness training programmes and makes efforts to encourage the workforce to actively participate in relevant training programmes, workshops to perform their activities in a safe manner.

Your Company continues its commitment towards sound health and workplace safety of its employees. And for this, the company ensures following and practicing safety standards and practices by all by keeping the work places free of accidents, injuries, incidents and occupational related hazards.

You will be pleased to know that your company has again recorded Zero accident with no loss of man days in its operations during the year. Adherence to Safety, Health and Environmental practices are also ensured for its guests and visitors.

RECOGNITIONS AND AWARDS

During the year under review, Your Company received many awards and felicitations conferred by respectable organizations and apex bodies for superior achievements in different areas. These recognitions and accolades enhance the enthusiasm and optimism of the employees and is a morale booster for the Company as a whole.

Your company has received the following major awards during the year.

Quality Circle Awards Your Company's employees continued to exhibit their skills in various Quality Circle competitions as below

National Level organized by NCQC

Par Excellence" Award for Kaizen- 2 teams

Par Excellence" Award for SGA-1 team

Regional Level organized by CCQC

Golden Award" - SGA & Kaizen :3 teams

Silver Award"- Kaizen: 1 team

Environment, Health & Safety (EHS) Award

Your Company has received the "4 Star" Award from CII, Southern Region in recognition of its "Excellent

Commitment in Environment Health and Safety". Also received "Sectorial Award" under manufacturing sector and "Excellence Award" in Medium Scale category.

- Preferred Supplier Certificate

Your Company has received the "Preferred Supplier Certificate" from Bosch Group. With this recognition, your company now becomes one among three preferred suppliers in India and among twenty one worldwide. This prestigious certification enables the company to become a supplier to the Bosch Group globally for supply of precision components.

- Green Manufacturing Award

Your Company has received "Silver Medal" for Green Manufacturing from International Research Institute for Manufacturing, India (IRIM) for Environmental Care and Eco friendliness. This prestigious award focuses on assessment of four critical aspects of the organization such as Human element, Quality of input materials Operational efficiencies and Environmental friendly products

- Cufest 2014 Awards

Your Company's employees participated in Group-level Quality competitions "Cufest 2014" (Quality Festival of CUMI), and won awards for 5S, Poster, Idea King and Quality Quiz events during the year.

GOVERNANCE BOARD OF DIRECTORS

Mr. K Srinivasan, Director retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The necessary Resolution is being placed before the shareholders for approval. The Board of Directors of your company is of the opinion that his continued association with the Board will be beneficial to the company and recommends his re-election.

All the Directors of the company have confirmed that they are not disqualified from being appointed as directors in terms of Section 164 of the Companies Act, 2013. All the independent Directors have given a declaration under section 149(6) of the Companies Act 2013, confirming their independence.

MEETINGS

A calendar of Meetings is prepared and circulated in advance to the Directors.

During the year, five Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

BOARD EVALUATION

Pursuant to the provision of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Stakeholder Relationship, CSR and Nomination & Remuneration Committees. The manner in which evaluation has been carried out has been explained in the Corporate Governance Report.

REMUNERATION POLICY

The Board has framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration policy is stated in the Corporate Governance Report.

AUDITORS AND AUDITORS' REPORT

The statutory auditors of the Company, M/s Deloitte Haskins & Sells, Chartered Accountants, (FR No.008072S) Bangalore were appointed as auditors at the 32nd Annual General Meeting to hold office upto the conclusion of the 34th Annual General Meeting, subject to the ratification of the appointment by members every year. The auditors of your Company have submitted a certificate of their eligibility for reappointment under Section 139 of the Companies Act, 2013 and being eligible have expressed their willingness to continue as the auditors of the Company. Consequently, ratification of their appointment is recommended to the shareholders. As per the relevant provisions of Listing Agreement, your company has ensured that the auditors are subject to the peer review process of the Institute of Chartered Accountants of India (ICAI) and hold a valid certificate issued by the Peer review Board of the ICAI. The statutory auditors have confirmed their compliance with the relevant provisions.

The notes on accounts referred to in the Auditors' Report are self explanatory and do not call for any further comments.

SECRETARIAL AUDIT

During the year your company has appointed M/s Apeksha Nagori, practicing Company Secretary to conduct

secretarial audit under section 204 of the Companies Act 2013, for the financial year 2014-15. The secretarial auditor has submitted the Report confirming compliance with the applicable provisions of the Companies Act 2013 and other rules and regulations issued by SEBI/other regulatory authorities. The Secretarial Audit Report forms part of the Annual Report.

The explanation to the observations of the Secretarial Audit Report by the Secretarial Auditor has been furnished in the respective sections of the Corporate Governance Report.

KEY MANAGERIAL PERSONNEL

Mr. Rajesh Khanna, Chief Executive, Mr. Mukesh Kumar Hamirwasia, Chief Financial Officer and Ms. Akanksha Bijawat, Company Secretary are the Key Managerial Personnel of the Company as per section 203 of the Companies Act 2013.

CORPORATE GOVERNANCE

Your Company continues to maintain high standards of Corporate Governance in all its interactions with various stakeholders. The company strives to be a sustainable and trusted organization as sustained governance is the cornerstone in building and maintaining relationship with all its stakeholders. It has inculcated into its system the strong culture of values, ethics and integrity living with the Five Lights - The spirit of the Murugappa Group. The company's relationship with its investors is an important component of Corporate Governance. It rigorously pursues a policy of 100% compliance with all statutory requirements and has a robust review system in place. The Board fully supports and endorses Corporate Governance practices in accordance with provisions of Clause 49 of the Listing Agreement. The Report on Corporate Governance alongwith the Auditors' Certificate regarding compliance of the conditions of Corporate Governance pursuant to Clause 49 of the Listing Agreement is annexed hereto and forms part of the Annual Report. Further, as required under Clause 49(IX) of the Listing Agreement a certificate from the Chief Executive and the Chief Financial Officer of your Company is being annexed with this Report.

VIGIL MECHANISM UNDER WHISTLE BLOWER POLICY

The Company has a vigil mechanism under Whistleblower Policy to provide necessary safeguards for protection of Directors, employees from reprisals or victimization. The details of the policy is explained in the Corporate Governance Report and also posted on the website of the Company.

Extract of Annual Return

The extract of the Annual Return in form MGT 9 is annexed to and forms part of this report. (FORMAT IN ANNEXURE I)

RATIO OF REMUNERATION TO EACH DIRECTOR:

Details / Disclosures of Ratio of Remuneration to each Director to the median employee's remuneration as ANNEXURE - III

Directors Responsibility Statement

In accordance with the provisions of Section 134(3)© of the Companies Act, 2013 and on the basis of the information furnished to them by the statutory auditors and the management, your Directors confirm that:

- In the preparation of the annual accounts for the financial year ended 31st March 2015 and the Balance Sheet as at that date ("Financial Statements"), the applicable accounting standards have been followed and no material departures have been made from the same.

- The Directors have selected appropriate 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 as at the end of accounting year and of the profit of the Company for the year ended 31st March'2015.

- The Directors have taken proper and sufficient care 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.

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

- The Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

Disclosure of Statutory Particulars

- The particulars as prescribed under Section 134(3)(m) of the Companies Act,2013, read with Rules 8(3) of The Companies (Accounts) Rules 2014 are set out in Annexure A which forms part of this report.

- The information required under Section 197(12) of The Companies Act'2013 read with Rules 5(2) & (3) of The Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 and forming part of Directors report for the year ended 31st March'2015 is annexed in Annexure B.

ACKNOWLEDGEMENTS

Your Directors place on record their sincere gratitude to the continuing patronage and trust of our valued customers, bankers, investors, suppliers, business associates, shareholders, auditors and other statutory authorities who have extended their precious continued support and encouragement to your company. Your Directors sincerely appreciate the high degree of professionalism, commitment and dedication displayed by employees at all levels of the company and look forward to their continued involvement and support.

Finally, the Directors also wish to place on record their gratitude to the members of the Company for their Continued Support & Confidence.

By order of the Board For Wendt (India) Limited

Place: Chennai M M Murugappan Date: 21st April 2015 Chairman


Mar 31, 2014

The Directors are pleased to present the 32nd Annual Report together with the Audited Financial Statements for the year ended 31st March 2014. The Management Discussion & Analysis Report has been included in the Directors Report so as to avoid duplication and repetition.

ECONOMIC OVERVIEW

The slowdown in the Indian economy continued for the year 2013-14, resulting in another tough year with sluggish growth affecting domestic demand, high energy prices, weakening of the Indian Rupee, higher raw material costs, repeated increases in the interest rates and lower investments than expected. Fall in savings without corresponding reduction in aggregate investments in critical areas led to widening of current account deficit. Higher inflation rates particularly in food grains and essential items, have all added up to the successive deceleration. One of the main reasons of stalling growth has been the vicious cycle of regulatory delays, judicial intervention, risk aversion by financial institutions and corporations in high value projects. With the loss of optimism in manufacturing sector, most companies have resorted to either deferment or significant reduction in their capital expenditures. The moderation effect by the manufacturing sector has taken a toll on the overall growth in addition to having a commensurate impact on the services sector during the year which contributes to 60% of the GDP and the resultant overall contraction over previous year.

This has been reflected as a common factor of weakness and negative sentiment across automotive and auto component industry as also infrastructure due to lack of new project approvals by the lenders. The average capacity utilization by the manufacturing sector continued to be around 60-70% level specifically for Automotive, Engineering and Cutting Tool industry sectors resulting from overall lower demand.

Despite deceleration in the domestic market and paltry recovery in some of the developed nations, India''s export has shown a gradual pick up partly contributed by rupee depreciation and improving demand in USA and European markets. While industry segments such as Automobile, Auto Components, Steel, Cutting Tools, Machine Tools & ceramics are the worst affected due to heightened industrial slowdown, segments like Refractory, Engineering and Glass have demonstrated marginally better results compared to the previous year. While the continued slowdown and weak global scenario has had its impact on the Indian economy, in the domestic arena, it has spread to all the sectors resulting in a modest GDP (Gross Domestic Product) growth.

The Industrial Production numbers have continued to be below normal on account of poor performance of core sectors having recorded a meagre 1 % growth which is around the same level of last year. The fall in output in manufacturing numbers has been mainly driven by lower inflow of orders, sharp fall in investments by capital goods sector, engineering, consumer goods and allied industry segments. However, in last few months, there has been some positive improvement in business sentiment, improved confidence and expectation of a recovery in growth and decline in inflation expectation, mainly on account of intervention by RBI to check capital outflow and upcoming general elections.

COMPANY PERFORMANCE OVERVIEW

(Rs in Lacs)

31st March 2014 31st March 2013

Sales 9,449 8,895

Other Income 611 225

Profit Before Tax 1,640 1,528

Provision for Tax 350 435

Provision for Deferred Tax 103 81

Profit After Tax 1,187 1,012

Earnings per Share - Rs 59.34 50.59

RESULTS OF OPERATIONS

Despite the continued slowdown and subdued market situation, your Company has put in its best efforts to achieve a top line of Rs.9449 Lacs during the year which is 6% higher compared to the previous year. While few industry segments like Refractory, Engineering and Glass have positively contributed in the domestic market, business from other segments such as Automobile, Auto component, Cutting Tools, Steel and Ceramics had adverse impact on your company''s sales resulting in 1% lower than last year. On the other hand, the Export business despite continued volatility and slow recovery, has achieved a growth of 36% as compared to the previous year.

Your Company continues to pursue business by focusing on three clearly defined verticals such as Super abrasives, Non-Super abrasives and International Business. Your company having taken cognizance of the current slowdown as one that is temporary and believing firmly in long-term growth of the company, it continues to make suitable investments and deploy the required resources in identified areas to ensure that the long term growth of your Company is sustained.

Super abrasive Business consisting of Diamond / CBN Grinding Wheels & Tools, Precision Dressing Rolls, Hones, Segmented Products & Stationary Dressers, achieved a growth of 7% over the previous year surpassing the industry average growth. This has been possible primarily due to constant efforts by your Company on new developments in product and applications. During the year, your Company successfully introduced some of new products including Resin Bond Wheels for Rotary Tools, Vitrified CBN Wheels for Auto and Auto Component, Precision Electroplated products for Engineering, Gear and Ceramics, Brazed Diamond Products for Textile and Precision Dressing Rolls for Bearing and certain auto component applications.

During the year, Your Company has augmented the Research and Development Centre and pursued indigenous development of some of the Bonds/Matrix in an effort to gain self-sufficiency in this area following the discontinuance of technical collaboration with its parent company Wendt GmbH. As you may be aware, your Company has gained competency in developing new applications / products for various industries over the years and the R & D Centre now complements these efforts well in all future endeavors for the Company. The recognition of the R & D Centre by the Department of Science and Industrial Research (DSIR), also provides an opportunity for your company to engage in jointly carrying out research & development work with other leading research organizations and laboratories on new technology frontiers.

The Non-Superabrasive Business comprising of machines and precision components achieved a moderate growth of 4% over the previous year. Despite an extremely difficult year characterized by deferment/freeze on capex, few project orders from the customers, the performance has been a decent one. During the year, your Company has developed many new models/variants of machines and successfully executed orders on CNC Rotary Surface Grinding Machines. The Company also successfully launched TC Ring Grinding Machine for mini steel plants which has

received encouraging responses from some of the potential users. Your Company during the year has also started development of few new models of Honing Machines with vertical spindle, one of them is scheduled for launch in few months from now. These new models are expected to address to a wider range of industry applications thereby de-risking from dependence purely on automotive segment while also increasing the customer base and help in enhancing the product basket for your Company.

On the precision components area, during the year, your Company has fully completed the development of two new applications and started the commercial production in small quantities. By leveraging its knowledge and competencies in Machines and related Superabrasive Tools, your Company has also started commercial production of precision ground and honed components for one of the customers. At the same time, the Company is in the process of exploring few other opportunities in this area which would not only strengthen the precision component business but also become a new engine for future growth.

FOCUS ON CUSTOMER CENTRICITY

In order to enhance the reach and build better relationship with the customers, your Company has undertaken

implementation of Customer Relationship Management (CRM) in association with SAP which is progressing well. This comprehensive approach towards customer will help the company with seamless integration of every aspect of marketing and sales process that directly connects the customer both in domestic and export market. Besides enhancing business relationship, it would create new opportunities for long term value creation for both customers and the company based on win-win situation.

Some of the major benefits your Company expects to derive from CRM are:

- Global reach through offering value proposition and effectively addressing customer needs

- Knowledge and solution base platform through integration with company''s Knowledge Management Hub thus helping the team with quick responses to customers with accuracy and minimum effort

- Better, faster and precise customer service and gaining competitive edge over its peers l 360 degree view of customers and insightful analytics

FOCUS ON PROCESS EFFICIENCY

During the year, your Company has embarked on Lean Management System in order to enhance process efficiency. Identification and elimination of bottlenecks, smooth integration of key areas in quality, planning, scheduling, production and operations is envisaged. Optimal utilization of various workstations, equipment and machines through effective planning and proper scheduling of material movement will streamline the process flows and significantly improve efficiency. Thus the implementation of lean management by your Company would ensure elimination of non-value added activities in the process flow touching overall effective utilization of the resources through use of scientific methods and tools. With this initiative, your Company is expected to reap long term benefits in terms of process reliability, better deliveries and higher customer satisfaction. Some of the major benefits your Company expects are l Reduction in lead time for product delivery

- Reduction in rejection levels

- Better control on Work in Progress and Raw Material Planning

- Reduction in outsourcing cost

- Improved employee productivity

- Cost effective products to customers

FUTURE PROSPECTS

Your Company has aligned the Business processes with the Strategies and Objectives and constantly strives to achieve superior performances year on year by focusing on products and process Innovation on a sustainable basis. To do this, deployment of appropriate technologies and processes are paramount in areas such as indigenous Bond development, process

automation and effective utilization of machines and equipment. Your Company makes special effort to capitalize on the emerging opportunities in growing industrial segments through New Products for New Markets. Your Company continuously explores opportunities for its existing range of products for the New Industry segments.

Accordingly, the company continues to strengthen its presence in Construction, Infrastructure, Aerospace, Ceramics, Defense and Railways to ensure future growth. While doing so, its key account management and increase of share of business with large customers for existing products would be pursued as a part of Market Penetration. These pursuits would be well supported by active participation in major national and international trade shows, exhibitions, providing customer education and value added services. Riding on the good export performance for the year, presence in export market and enhancing the global foot print would be focused by the company.

The acquisition of Winterthur Technology Group (WTG) by the US multinational 3M Corporation and resultant indirect acquisition of 40% equity share holding in your Company continues to be a matter of contention while not being an issue. The matter still continues to be under the purview of The Honorable Company Law Board (CLB), Chennai and your Company expects the ownership matter to be resolved soon.

SUBSIDIARY COMPANIES

Wendt Grinding Technologies Limited, Thailand

Your Company''s 100% owned subsidiary in Thailand has yet again achieved a laudable performance amid economic downturn, heavy floods and socio-economic issues and all time low industrial activities. During the year, your Company''s subsidiary achieved a top line sales of Thai Baht 723.54 Lacs (Rs.1398 Lacs), a 15% growth over last year. The Profit Before Tax was Thai Baht 142.15 Lacs (Rs.261 Lacs) and Profit After Tax was Thai Baht 113.32 Lacs (Rs.206 Lacs), lower by 13% over last year.

The increase in topline has been possible as a result of addition of products to the existing basket as well as new markets and customers during the year.

While many of the customers utilized their capacities around 65% levels for most part of the year, your subsidiary kept its vigil and focus on exploring new business opportunities with industries like Glass, Automobile, Steel, Auto parts, Ceramics, Cement and Engineering which well compensated for the drop. Last year, your subsidiary added Ceramic products mainly for Cement industry to its portfolio as a part of product offering to address the gap from one of the group companies and has seen initial successes and encouraging responses from the customers.

The subsidiary company continued its active participation in major Industrial and Trade Exhibitions with a clear focus on brand building, networking and seizing new business opportunities. It also organized many technical seminars at customer places, organized plant tours for its key customers to showcase its capability which are expected to benefit the subsidiary in the near future.

Wendt Middle East FZE, Sharjah

The second subsidiary of your Company in Sharjah, Wendt Middle East FZE, had turned profitable in FY 12-13 after initial years of hiccups and has done even better in the FY 13-14 despite odds and market volatility. During the year, it has achieved an annual sale of AED 25.22 Lacs (Rs.416 Lacs) a growth of 27% over the previous year. You would note that earlier year it had undertaken a major restructuring and cost control initiative which have tremendously helped the subsidiary to end the year with a PBT of AED 6.61 Lacs (Rs.109.13 Lacs), a growth of 78% over the last year.

As you may be aware, the manufacturing scenarios in the entire region including the neighboring countries has been severely affected on account of continued socio-economic instability and mired by political issues resulting in contraction of average capacity utilization to below 50% level with hardly any sizable new investments announcement by the Government and Foreign player. The UAE region being primarily an economy driven by Oil, Construction and Tourism, continuous fluctuation in these sectors has resulted in sharp rise of inflation.

Amid these challenges posed by all round slowdown and adversaries, your subsidiary has strived to focus on new initiatives like increased product range, new markets and improved service levels in the region to churn out a better than expected performance during the year.

APPROPRIATIONS

Available for appropriation (Rs in Lacs)

Profit After Tax 1187

Add: Balance brought forward from previous year 2746

Total 3933

Recommended appropriations

Transfer to General Reserve 119

Dividend

-Interim Rs 10/-per share 200

-Final (Proposed dividend Rs 15/- per share of face value of Rs 10/- each) 300

Dividend Tax

-Interim 32

-Final (Proposed) 49

Balance carried forward 3233

Total 3933

CORPORATE SOCIAL RESPONSIBILITY

Your Company sincerely acknowledges the role and responsibility of a good corporate and its Corporate Social responsibility pursuits have always been based on the foundation of ethics and utmost transparency in all its business dealings and as such the contributions your company makes for economic development which are not limited to the workforce alone and their families but extends to the local communities, schools and society at large.

Thus, befitting the company''s size & operations, your Company makes contributions for various social causes like child education, old age, orphanages, healthcare, employability and environment preservation. It also places emphasis on tree plantation and afforestation not only in the premises but also adjoining areas by distributing free saplings.

The Skill Development Centre established two years back within the premises by joining hands with its parent company CUMI, has been progressing well with addition of new batch of students. As you may be aware, the objective of this initiative is to provide vocational training - a platform for continuance of formal education, employability opportunities and create highly skilled & productive workforce for the company and outside industry in future. By doing this, your Company not only ensures livelihood and gainful employment it also makes a conscious effort to bring transformation and uplift the lives of young children drawn from poor, underprivileged and back-ward classes of the society.

DIVIDEND

Your Directors are pleased to recommend a Final Dividend of Rs 15/- per equity share of face value Rs 10/- each (150%) for the year ended 31st March''2014. This is in addition to the Interim Dividend of Rs 10/- per equity share of face value of Rs 10/- each paid on 15th February 2014.

The Final Dividend, subject to approval of members at the 32nd Annual General Meeting will be paid to those shareholders whose names appear on the register of members of the company as on 24th July, 2014. If approved, the total Dividend for the financial year, including the interim dividend, amounts to Rs 25/- per equity share and will absorb Rs.581 Lacs including dividend distribution tax of Rs 81 Lacs.

The Dividend will be tax-free in the hands of the shareholders.

TRANSFER TO RESERVES

Your Company proposes to transfer Rs. 119 Lacs to the General Reserve. An amount of Rs. 3233 Lacs is proposed to be retained in the Statement of Profit & Loss.

CONSOLIDATED FINANCIAL RESULTS

As per General Circular No. 2/2011 dated 8th February 2011 issued by The Ministry of Corporate Affairs (MCA), Government of India, a general exemption was provided to Companies for attaching the Directors Report, balance sheet, profit and loss account of all subsidiary companies to its Annual Report, subject to fulfilling certain conditions as stipulated in the circular. Your Company complies with those conditions and therefore the financial statements of the subsidiaries are not attached in its Annual Report. The audited annual accounts and related information of the subsidiaries is available in our website- www.wendtindia.com.

The Consolidated Financial Statements (incorporating the operations of the Company and its two subsidiaries), in terms of Clause 32 of the Listing Agreement and prepared in accordance with Accounting Standard 21 as specified in Companies (Accounting Standards) Rules, 2006 also form part of this Annual Report. A statement of summarized financials of all subsidiaries of your company including capital, reserves, total assets, total liabilities, details of investment, turnover etc pursuant to General Circular issued by MCA forms part of this report. The key financial data for the consolidated operations are as given below:-

KEY CONSOLIDATED FINANCIAL SUMMARY

(Rs in Lacs)

31st March 2014 31st March 2013

Sales 10,890

10,059

Other Income 304 236

Profit Before Tax 1,675 1,874

Profit After Tax 1,166 1,286

Earnings per share-Rs. 58.30 64.30

QUALITY

Your Company manufactures products that embed a high level of precision and accuracy as demanded by the customers and various industry segments. While the Super Abrasives Product range consists of Diamond & CBN Grinding Wheels and Special Tools, the Non Super Abrasives includes customized range of high precision machines such as CNC Grinding, Notch Milling, TC Ring Grinding, Honing and Accessories which fulfil the international standards and CE certifications. Precision Components which is part of Non Super Abrasives require significant degree of precision and very close tolerances necessitating them to passing through the stringent quality standards and measurements through the production process. With all the Quality Management standards such as ISO 9001, ISO 14001, TS 16949, OHSAS & SA8000 in place, during the year your Company has initiated the work for obtaining Certification for EN 13236 Product Safety Standards to address product safety requirements of overseas markets.

As you may be aware, Quality being the keystone as well as a major differentiator for your Company since inception, it strives hard to ensure that final product quality is built by deployment and embracing effective quality management, process robustness, quality assurance and discipline at every stage of material flow.

Your Company has ensured that international standards and systems like Integrated Management System (IMS) focusing on quality management and environment management and TS 16949 for manufacturing precision components are deployed and followed in strict adherence throughout. It has been a constant endeavor for your Company to drive quality deeper in every aspect and in order to ensure this, your Company continues to place higher emphasis on training in latest trends besides investment in high-end equipment, machineries & application software and modern tools.

SAFETY, HEALTH AND ENVIRONMENT (SHE)

Your Company continues to place high emphasis on aspects such as Safety, Health of not only its workforce but also equal importance on Environment management of your company which is conducive and efficient too. Towards this, the top management stays ever committed for maintaining high standards for safety, health and environment management by being fully compliant to applicable statutory requirements as per OHSAS 18001 and ISO 14001 EMS standards and guidelines.

Recognizing that the employees are the most valuable assets of your Company and that the safety and health of each employee is of utmost importance, their safety and health does not become just a mundane necessity but is at par with Quality and Manufacturing by your Company. In order to ensure this, your Company continues to take initiatives and various programs such as annual health check-up plan, eye camp, physiotherapy, fitness center, blood donation camps etc., so that the employees and their families maintain good health and overall wellness.

Health and Safety being considered as one of the important performance measurements by your Company, it continuously provides awareness

training programmes and makes efforts to encourage the workforce to actively participate in relevant training programmes, workshops to perform their activities in a safe manner.

Your Company has always been committed to meet high level of health, safety and wellness standards by ensuring adherence to safety standards and practices so as to keep the work areas free of accidents, injuries, incidents and occupational related hazards for all.

You will be pleased to know that your Company has again recorded Zero accident with no loss of man days in its operations during the year. Apart from the employees, adherence to Safety, Health and Environmental practices are also ensured for its guests and visitors.

RECOGNITIONS AND AWARDS

Your Company continues to maintain its record of winning Awards, Recognitions and Accolades by demonstrating its achievements, performances and practices in various platforms at National and International levels as well. These recognitions and honors raise the motivation levels and morale of the employees and the Company as a whole. During the year your Company has received the following major awards.

- Meritorious Award for Best Presented Accounts from South Asian Federation of Accountants (SAFA).

Your Company has received the Certificate of Merit Award for Best Presented Accounts from SAFA for the year 2011-12 under Manufacturing Sector Category.

This coveted award conferred by South Asian Federation of Accountants, is an acknowledgment of the accounting practices, policies and transparency adopted by your Company which are not only amongst the best in India, but in the South Asian countries as well. The Best Presented Annual Report Award of SAFA is considered to be the most prestigious accolade for financial reporting in the region and represents SAFAs recognitions for organizations which have achieved excellence in presentation and disclosure of high quality, relevant, realistic and objectively comparable financial statements, being in line with the International Accounting Financial Reporting standards.

- Quality Circle Awards

Your Company''s employees continued to exhibit their skills in Quality Circle competitions and two teams were recognized with Excellence Awards at international level convention in the International Convention of Quality Circle, Taiwan held in Taipei during the year.

National Level organized by NCQC

- "Excellence" Award for Kaizen

- "Excellence" Award for SGA Regional Level organized by CCQC

- "Golden Award" - SGA & Kaizen:2 teams

- "Golden Award"- Kaizen: 2 teams

- Environment, Health & Safety (EHS) Award

Your Company has received the 4 Star category Award from CII, Southern Region in recognition of its "Excellent Commitment in Environment Health and Safety" in manufacturing industry category for environment, health and safety standards at the workplace.

- 5S Model Company Award

Your Company has been conferred with the Successive Model Company Award for 5S by the ABK-AOTS, a Japanese international body reputed for acknowledging innovative 5S practices and setting standards around the world.

- Cufest 2013 Awards

Your Company''s employees participated in Group-level Quality competitions Cufest 2013 (Quality Festival of CUMI), and won awards for Best Practices, 5S, Poster, Idea King, Quality Quiz events during the year.

Directors

The Directors, Mr. Shrinivas G Shirgurkar and Mr. K S Shetty, retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment. The necessary Resolution is being placed before the shareholders for approval. The Board of Directors of your Company is of the opinion that their continued association with the Board will be beneficial to the company and recommend their re-election.

All the Directors of the company have confirmed that they are not then disqualified from being appointed as Directors in terms of Section 274 (1)(g)of the Companies Act, 1956.

Auditors and Auditors'' Report

The statutory auditors of the Company, M/s Deloitte Haskins & Sells, Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. The retiring auditors of your Company have submitted a certificate of their eligibility for reappointment under Section 224 (1B) of the Companies Act, 1956 and indicated their willingness to continue. Your Directors recommend their reappointment as Statutory Auditors for the coming year. As per the relevant provisions of Listing Agreement, your Company has ensured that the auditors are subject to the peer review process of the Institute of Chartered Accountants of India (ICAI) and hold a valid certificate issued by the Peer Review Board of the ICAI. The statutory auditors have confirmed their compliance with the relevant provisions.

The notes on accounts referred to in the Auditors'' Report are self explanatory and do not call for any further comments.

COST AUDITOR

In compliance with the Central Government''s order F.No.52/26/CAB-2010 dated 6th November 2012, your Board has appointed M/s M.R. Rajshekhar & Co, Cost Accountant to carry out the audit of cost records of the company for the financial year 2013-14 . The Cost Audit Report will be filed with the Central Government within 6 months from the end of the Financial Year ended 31st March, 2014.

Fixed Deposits

Your Company has not accepted any fixed deposits during the year 2013-14 and as such, there are no outstanding fixed deposits from the public as on 31st March 2014.

CORPORATE GOVERNANCE

Your Company strives to maintain high standards of Corporate Governance in all its interactions with various stakeholders. The company continues its endeavor to be a sustainable and trusted organization as sustained governance is the cornerstone in building and maintaining relationship with all its stakeholders. It has embedded into its system the strong culture of values, ethics and integrity living with the Five Lights - The Spirit of The Murugappa Group. It rigorously pursues a policy of 100% compliance with all statutory requirements and has a robust review system in place. The Board fully supports and endorses Corporate Governance practices in accordance with provisions of Clause 49 of the Listing Agreement. The Report on Corporate Governance along with the Auditors'' Certificate regarding compliance of the conditions of Corporate Governance pursuant to Clause 49 of the Listing Agreement is annexed hereto and forms part of the Annual Report. Further, as required under Clause 49(V) of the Listing Agreement a certificate from the Chief Executive and the Chief Financial Officer of your Company is being annexed with this Report.

TRANSFER TO THE INVESTOR EDUCATION & PROTECTION FUND

Pursuant to the provision of Section 205A(5) of the Companies Act, 1956, your Company has transferred an amount of Rs. 2.36 lacs being unclaimed dividend during the year to the Investor Education and Protection Fund (IEPF) established by the Central Government.

Directors Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956 and on the basis of the information furnished to them by the statutory auditors and the management, your Directors confirm that:

- In the preparation of the annual accounts for the financial year ended 31st March 2014 and the Balance Sheet as at that date ("Financial Statements"), the applicable accounting standards have been followed and no material departures have been made from the same.

- The Directors have selected appropriate 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 as at the end of accounting year and of the profit of the Company for the year ended 31st March, 2014.

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

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

- Proper systems were in place to ensure compliance of all applicable laws to the company.

Disclosure of Statutory Particulars

- The particulars as prescribed under subsection (1) (e) of Section 217 of the Companies Act ,1956, read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules ,1988 are set out in Annexure A which forms part of this report.

- The information required under Section 217 (2A) of The Companies Act''1956 read with Companies (Particulars

of Employees) Rules,1975, and forming part of Directors report for the year ended 31st March, 2014 is annexed in Annexure B.

ACKNOWLEDGEMENTS

Your Directors sincerely appreciate the high degree of professionalism, commitment and dedication displayed by employees at all levels of the company.

The Directors sincerely convey their appreciation to investors, bankers, customers, suppliers, auditors, company''s associates and subsidiaries for their continued support during the year. Your Directors extend their sincere gratitude to all the regulatory agencies like SEBI, Stock Exchanges, Registrar of Companies and other Central and State Government authorities/ agencies, Stakeholders, Suppliers, Vendors and Sub contracting partners, Business associates for their continued support.

Finally, the Directors also wish to place on record their gratitude to the members of the Company for their continued Support & Confidence.

By order of the Board

For Wendt (India) Limited

Place: Chennai M M Murugappan

Date : 19th April 2014 Chairman


Mar 31, 2013

The Directors are pleased to present the 31st Annual Report together with the Audited Financial Statements for the year ended 31st March 2013. The Management Discussion & Analysis Report has been included in the Directors Report so as to avoid duplication and repetition.

ECONOMIC OVERVIEW

The year 2012-13 has been one of the most difficult years with the Indian economy slowing down significantly on account of lowered domestic demand, declining exports, continued high energy prices alongside successive weakening of the Indian Rupee and stalling investments. High inflation rates and spiraling prices of raw materials continued with no respite thereby adding to the deceleration. Execution of high value projects such as Mining, Steel, Coal, Power continued to be mired by regulatory and environmental issues affecting .''the growth and investments by the downstream projects. Even the bellwether service sector of the Indian economy could clock the lowest-ever growth of just 6% over the last year. The average capacity utilization by the manufacturing sector remained subdued between 60-75% level specifically for Automotive, Engineering and Cutting Tool industries sectors resulting in lowering of the capex plans. The other contributory factors include continued sovereign debt crisis in Euro Zone, successive recessionary trend in

-3r Japan and political instability in major oil producing countries fueling rise in oil prices have had their & adverse impact on the overall growth of the economy.

The export demand was also hard hit due to continued global slowdown except some of the South East Asian countries such as Thailand, Malaysia, and Indonesia. While industry segments such as Automobile, Auto Components, Cutting Tools, Machine Tools & Refractory are the worst affected due to the deepening of industrial slowdown, segments like Steel, Ceramics, Glass and Defence have demonstrated marginally better results on a comparable basis. While the slow and subdued global scenario has had its share in the growth of Indian economy, in the domestic front it has cut across all the sectors resulting in lowest GDP (Gross Domestic Product) growth in the last decade.

The Industrial Production numbers remained weak on account of poor performance of the manufacturing and mining sectors which recorded a meager 1% growth compared to 3.7% of previous year. The decline in manufacturing numbers has mainly been driven by contraction of orders and investments by capital goods, engineering, consumer goods and allied industry segments. However, the Government with its recent announcement of reforms and policy change measures has demonstrated some encouragement & rekindled the business confidence on recovery.

COMPANY PERFORMANCE OVERVIEW

(Rs in Lacs) 31st March 2013 31st March 2012

Sales 8895 10001

Other Income 225 278

Profit Before Tax 528 2552

Provision for Tax 435 759

Provision for Deferred Tax 81 64

Profit After Tax 1012 1729

Earnings per Share- Rs 50.59 86.45

RESULTS OF OPERATIONS

Despite the industry slowdown and sluggish market condition, your Company has put in its best efforts to achieve a Top line of Rs.8895 Lacs during the year which is 11 % lower than the previous year. The major contributory industry segments in the domestic business which had their adverse impact on your company''s sales of 11 % lower than last year are Automobile, Auto component, Cutting Tools, Steel, Refractory and Ceramics. The Export business was also affected by continued volatility and global slowdown with achieving a total sale of 12% lower compared to the previous year.

Your Company continued its efforts on pursuing business in three verticals namely Superabrasives, Non- Superabrasives and International Business. The current slowdown being considered temporary and in keeping with your Company''s long-term growth, would continue to commit the required investments and resources in identified growth areas.

Superabrasive Business consisting of Diamond/CBN Grinding Wheels & Tools, Precision Dressing Rolls, Hones, Segmented Products & Stationary Dressers achieved a performance level of 91% over the last year which is better than the industry average. This has been possible due to continued focus by your Company on the development of new products and new applications. During the year, your Company successfully introduced some new products including Resin Bond Wheels for Steel and Cutting Tools, Hones for Auto Component, Vitrified CBN Wheels for Paper & Textile and Auto Component, Precision Electroplated CBN Wheels for Engineering, Brazed Diamond Products for Ceramic & Glass and Precision Dressing Rolls for Aerospace and Gear Manufacturing.

During the year, the technical collaboration with its parent company Wendt GmbH got discontinued. Your Company, over the years has gained competency to have its own fully equipped Research & Development Center. You will be happy to know that your Company''s R&D Center has obtained Department of Science & Industrial Research (DSIR) recognition, Government of India. This recognition and approval would not only help your Company to carry out research & development work for itself but also provide ample opportunity to jointly work with some of the leading research institutes and laboratories on cutting-edge technologies in future.

Non-Superabrasive Business which comprises of machine tools and precision components could achieve a performance of 83% of the previous year. This lower performance is on account of capex freeze and postponement

of investment decisions by many of the targeted customers. However, during the period, your Company has developed many new models/variants of machines and successfully executed some of the new machines like CNCTC Roll Grinding Machine, CNC Surface Grinding Machine with reciprocating table and Honing Machine. Introduced three years back to the basket, the Delapena range of Honing Machines has been well accepted in the market. Recognizing the need for catering to a wider range of honing applications, your Company has started work on development of 4 new models of Wendt -Delapena Honing Machines.

On the precision components front, during the year, your Company has successfully completed the development of two variants of components for new applications. This is expected to enhance the precision component basket and de-risk from dependency on single customer. In addition, your Company continued to embark on its new initiative of producing Precision Ground and Honed Components by leveraging its competencies in Machines and related Superabrasive Tools. Process establishment, trials and component prove-out have been done. On commercial production, your Company''s position would get further strengthened in Precision Component Business while also being a new growth engine.

t FOCUS ON CUSTOMER CENTRICITY

In order to enhance the Company''s market reach and better visibility for both fm Super abrasives and Machines in the domestic market, your Company launched the I unique nationwide initiative Wendt-On-Wheels (WOW) during the year. Through this r initiative, your Company could make the customers abreast of the latest products and new launches besides demonstrating your Company''s capabilities in the field of Precision Grinding and Honing by going to the Cities and Doorsteps of the customers. In its first six ¦r months of journey covering the Western, Northern and parts of Central India, the Company - received many appreciations besides generating business opportunities. Having had a good ^T response, this initiative would now be extended to Eastern, South Central and Southern regions - of the domestic market. Your Company is confident of generating new business opportunities while developing better understanding of the customers'' exacting needs and requirements. - Your Company would be implementing Customer Relationship Management (CRM) and is working with ^^ SAP for effective implementation. With a comprehensive approach towards customer, this will enable seamless integration of every aspect of process that touches the customer - marketing, sales, customer service and field support by connecting people, process, knowledge and technology. This initiative is aimed at enhancing business relationship, creating new opportunities for engagement and generating long term value for both customer and the company based on mutual trust, openness and win-win situation. With this Wendt would be the first tooling company globally which would link the Knowledge Portal and provide real-time technological solutions in Grinding and Honing to its customers while also helping to take commercial decisions promptly.

Some of the major benefits your Company sees from the CRM Application are:

- Extend reach to customers worldwide through offering value proposition and effectively addressing their needs.

- Act as platform of Solution Knowledge Base by interfacing with Company''s Knowledge Management Portal and helping the team to respond to customers with accuracy and minimum effort

- Better and faster customer service

- Enable the Company to gain competitive edge over its peers

- Provide 360 degree view of customer, insightful analytics and reports

FUTURE PROSPECTS

With the business processes aligned with the Strategies and Objectives, your Company strives in its endeavors by focusing on product and process Innovation for delivering superior performances and sustainable growth. Adoption and deployment of appropriate technologies for indigenous Bond development, streamlining processes and introduction of automation in critical areas is the key for the future growth for your Company. The Company thrives to seize new business opportunities in new growing industrial segments which it addresses through New Products for New Markets. Secondly, it continuously explores for the existing range of products that can find applications in the New Industries and Markets. Accordingly the Company would continue to aggressively pursue business in Construction, Infrastructure, Aerospace, Ceramics, Defense, Railways and Health Care to ensure future growth in both Indian and Global scenario. Thirdly, under key account management, the existing range of products would be aggressively promoted with the existing identified key customers as a part of Market Penetration. Complementing these pursuits would be through active participation in major national and international trade shows, exhibitions, providing customer education and value added services.

The acquisition of Winterthur Technology Group (WTG) by the US Multinational 3M Corporation and resultant indirect acquisition of 40% equity share holding in your Company has been a matter of contention. The impending matter continues to be under the purview of The Honorable Company Law Board (CLB), Chennai and your Company expects the ownership matter to be resolved soon.

SUBSIDIARY COMPANIES

Wendt Grinding Technologies Limited, Thailand

Your Company''s wholly owned Subsidiary in Thailand demonstrated yet another year of commendable performance despite the turbulent economic situation and subdued industrial activities, During the year, your Company''s Subsidiary achieved a top line sales of Thai Baht63 Million (Rs.1108 Lacs), 8% growth over last year. The Profit Before Tax was Thai Baht 17.3 Million (Rs.292Lacs) and Profit After Tax was Thai Baht 13 Million (Rs.219Lacs), a growth of 23% over last year.

The improved profit level was possible as a result of various cost reduction initiatives, operational efficiency measures, enhanced product basket as well as market expansion undertaken by the Subsidiary Company during the year.

Your Company''s Subsidiary maintained leadership position in re-profiling business in Thailand and achieved highest ever re-profiles for auto industry since inception. While many of the customers in the existing industries operated between 50-60% capacity level during the year, focused approach by your Company''s Subsidiary on exploring new business opportunities with industries like Glass, Automobile, Steel, Auto parts, Wood, Furniture and Construction industry, well compensated for the drop. During the year, your Company''s Subsidiary added Industrial Ceramic Products into its basket for catering to Power and Cement Industries in Thailand. Initial responses from customers have been encouraging forthese products.

Your Company''s Subsidiary continued to participate in major Industrial Trade Exhibitions with clear focus on brand building and increasing the market reach. It also conducted Technical Seminars, Sales Meets and organized Plant Tours for its key customers to showcase its capability. Addition of new products to its existing basket helped in generating new opportunities forthe Subsidiary.

Wendt Middle East FZE, Sharjah

Your Company''s second wholly owned Subsidiary in Sharjah, Wendt Middle East FZE, has demonstrated a turnaround despite all odds. It has achieved an annual sale of AED 19.81 Lacs (Rs.293Lacs). During the year, it has undertaken major restructuring and cost control measures which helped the Subsidiary to end the year with PBT of AED 3.72 Lacs (Rs.62 Lacs) against a loss of AED 2.41 Lacs (Rs.27 Lacs) in previous year. As a part of restructuring, the Subsidiary has continued its operations by keeping the employee strength lean and efficient with greater emphasis on multi- tasking apart from maintaining strict control on fixed costs.

During the year, the manufacturing sector in the entire region has been severely impacted due to continued socio-

economic and political instability resulting in average capacity utilization of less than 50% with no new investments in sight. Moreover, UAE being a trading economy primarily driven by Oil and Construction, continued fluctuation in the oil prices has resulted in higher inflation compared to previous year.

Ff Despite the many challenges posed by the slowdown, the Subsidiary has worked on many new initiatives such as increased product range, addressing new markets and better service levels in the region. With the renewed focus the Subsidiary is expected to perform even better in coming years.

* APPROPRIATIONS

Available for appropriation (Rs in Lacs)

Profit After Tax 1012

Add: Balance brought forward from previous year 2184

Total 3196

Recommended appropriations

Transfer to General Reserve 101

Proposed dividend Rs 15/- per share of face value of Rs 10/- each (150%) 300

Dividend Tax 49

Balance carried forward 2746

Total 3196



CORPORATE SOCIAL RESPONSIBILITY

As a responsible Corporate, your Company''s Corporate Social Responsibility pursuits have always been based on the foundation of ethical behavior in all its business transactions and contributions for economic development of not only the workforce and their families but also extending to the local communities and society at large.

Your Company, befitting its size & operations, makes contributions to various social causes such as education, healthcare, employability and environment preservation. It also places emphasis on tree plantation and forestation not only in the premises but also adjoining areas by distributing free saplings.

During the year, your Company has established the Skill Development Centre - CUMI CENTRE FOR SKILL DEVELOPMENT (CCSD) by joining hands with its parent company CUMI housed within the factory premises. The objective of this initiative is to provide vocational education, training, employability and create highly skilled & productive workforce for the Company and outside industry in future. Through this, the Company not only ensures livelihood and gainful employment but makes a conscious effort to bring transformation and uplift the lives of young children drawn from poor, underprivileged and back-ward classes of the society. In addition to a monthly stipend, all other expenses such as accommodation, food, books & writing materials etc are provided free of cost to each student during the training period. Apart from this, your Company uses every opportunity to make contributions to the Old Age Homes and to the Weaker Sections of the Society.

During the year, your Company has also got SA8000 certification accredited by the TUV. This is towards social accountability which lays high emphasis on work culture, healthy practices and protection of interests of work force at large.

DIVIDEND

Despite having a tough year impacting the profits and the need to conserve cash for capital expenditure, which as a philosophy has been addressed through it''s internal accruals, the Board of Directors have recommended a dividend of Rs 15/- per equity share of face value of Rs. 10/- each (150%). The Dividend on approval at the 31 st Annual General Meeting will be paid to those shareholders whose names appear on the Register of Members of the Company as on 25th July, 2013.

The Dividend will be tax-free in the hands of the shareholders.

TRANSFERTO RESERVES

Your Company proposes to transfer Rs 101 lacs to the General Reserve. An amount of Rs 2746 lacs is proposed to be retained in the Statement of Profit & Loss.

CONSOLIDATED FINANCIAL RESULTS

The Ministry of Corporate Affairs (MCA) vide its circular no. 2/2011 dated 8th February 2011 has granted general exemption to holding companies from complying with the provisions of Section 212 (8) of the Companies Act, 1956 with regard to attaching the Balance Sheet, Profit and Loss Account and other documents of its Subsidiary

Companies provided such companies publish the Audited Consolidated Financial Statements in their Annual Report. Accordingly, the Annual Report 2012-13 of your Company does not contain the standalone financial statements of the Subsidiaries. The audited annual accounts and related information of the Subsidiaries is available in our website- www, wendtindia.com.

The Consolidated Financial Statements (incorporating the operations of the Company and its two Subsidiaries), in terms of Clause 32 of the Listing Agreement and prepared in accordance with Accounting Standard 21 as specified in Companies (Accounting Standards) Rules, 2006 also form part of this Annual Report. The key financial data for the consolidated operations are as given below:-

KEY CONSOLIDATED FINANCIAL SUMMARY

(Rs in Lacs)

31st March 2013 31st March 2012

Sales 10059 11056

Other Income 236 246

Profit Before Tax 1874 2849

Profit After Tax 1286 1946

Earnings per share-Rs 64.30 97.29

QUALITY

IIf The products manufactured by your Company have high level of precision and accuracies meeting exacting customer requirements. In, the product range includes Diamond & CBN Grinding Wheels and Special Tools. In Non-Superabrasives, it includes customized CNC W Grinding, Notch Milling, Honing Machines and Accessories meeting the international standards and CE certifications. Precision Components which form a

Fpart of Non Superabrasives require considerable degree of precision and higher tolerances thus requiring to go through stringent quality checks at every stage.

Company, Quality being the cornerstone as well as a differentiator, it ensures that through effective quality management, adequate process controls and quality assurance at each stage of operation.

Your Company has ensured that international standards and practices are adopted like Integrated Management System (IMS) focusing on Quality Management and Environment Management and TS 16949 for manufacturing precision components. As a part of driving the quality culture deeper into the organization, your Company continues to prioritize the needs for training on latest trends besides investment in standard equipment, machineries & application software.

SAFETY, HEALTH AND ENVIRONMENT (SHE)

Your Company accords top priority for Safety, Health and Environment Management System and ensures that it is efficient and effective. The top management is committed to maintaining highest standards of safety, health and environment fully complying with the applicable statutory requirements as per OHSAS 18001 and ISO 14001 EMS standards.

Your Company considers its employees as the most valuable assets and that the safety and health of each employee is of utmost importance. Employee safety and health is not just another aspect rather a necessity for your Company and treated at par with Quality and Manufacturing.

Against this backdrop, your Company is committed to meet highest level of health, safety and wellness standards by ensuring adherence to safety norms and a work environment free of accidents, incidents, injuries and occupational illness.

Health and Safety being the key performance measurements of your Company, it continuously promotes awareness programs and provides relevant training, workshops to all employees to perform their activities in a safe manner.

During the year, your Company again recorded Zero Accident and had no loss of man days in its operations. Apart from the employees, adherence of Safety, Health and Environmental Practices are also ensured for its guests and visitors.

Through various programs such as Annual Health Check-up Plan, Eye Camp, Physiotherapy, Fitness Center, Blood Donation Camps etc, your Company makes all efforts for its employees and their families to maintain sound health.

RECOGNITIONS AND AWARDS

Your Company continues to maintain its wining streak of Awards, Recognitions and bring Accolades by showcasing its performance, achievements and practices at various platforms. These recognitions and honours raise the morale and motivation levels of employees and the Company as a whole. During the year your Company has received the following major awards

- Engineering Export Promotion Council (EEPC) Award

Your Company has for the ninth consecutive year received the "Silver Shield for Star Performer" under Large Enterprise categoryfor export of Miscellaneous Engineering Goods from Engineering Export Promotion Council (EEPC), India.

- ICAI Award for Excellence in Financial Reporting

Your Company has been conferred with Plaque for Excellence in Financial Reporting by ICAI for the year 2011 - 12 under Manufacturing Sector Category for turnover less than Rs. 500 crores. This is the second consecutive year that your Company has got this recognition for Excellence in Financial Reporting,

Conferred by the apex body, The Institute of Chartered Accountants of India (ICAI), this coveted acknowledgment signifies thatthe accounting practices & policies followed byyourCompanyareamongstthe best in the industry. It also takes into cognizance the review of accounting practices adopted in the preparation of financial statements and the policies for disclosure and presentation of both financial and non-financial information in the Annual Report in

terms of philosophy of transparent disclosures, integrity and reliability.

- Significant Achievement in the Cll -EXIM Bank Award for Business Excellence

Second year in the row, your Company achieved another milestone this year by receiving the Commendation Certificate for Significant Achievement in the Cll-Exim Bank Award for Business Excellence. For Wendt (India) Ltd., it is a journey in pursuit of Business Excellence and this higher level award as compared to earlier year is a testimony of the continuous improvement in the journey towards Business Excellence.

- ECGC-D&B Award

Your Company was adjudged as the winner of "ECGC-D&B Award for Best Risk Management Practices" for 2011 -12 for exports from Export Credit Guarantee Corporation- Dun & Bradstreet.

- Quality Circle Awards

Your Company''s employees continued to exhibit their skills in Quality Circle Competitions and three of the teams were recognized with Par Excellence/ Excellence Awards. The teams had won these awards at the national level have been selected for participation at the International Level Competition to be held in Taiwan at the International Convention for Quality Circle.

National Level organized by NCQC at Kanpur

- "Par Excellence" Award for Kaizen & SGA (Small Group Activity)

- "Excellence" Award for SGA

Regional Level organized by QCFI at Bangalore

- Golden Award for Small Group Activity (SGA) and Kaizen

Cufest 2012 Awards

rYour Company''s employees participated in Group-level Quality Competitions "Cufest 2012" (Quality Festival of C U MI), and won awards for Innovation, Best Practice, 5S, Poster, Idea King & Quality Quiz events.

FINANCIAL REVIEW

Earnings

Revenues

During the year, your Company achieved total sales of Rs.8895 Lacs as compared to 2011-12 which was Rs.10001 Lacs. While the domestic sales declined by 11%, the export sales recorded a drop of 12% compared to the previous year. As briefed, this lower performance is due to depressed market conditions and continued economic recession which prevailed during the year.

Profit before Tax

Accordingly, the profit before tax is lower by 40% at Rs.1528 Lacs compared to Rs.2552 Lacs in 2011 -12.

Profit after Tax

The profit aftertax is lower by 41 %, at Rs. 1012 Lacs, compared to Rs.1729 Lacs in year 2011 -12.

Investments

Your Company''s investments as on 31-03-2013 grew from Rs.1370 Lacs to Rs.1496 Lacs. The Investment comprises of trade investment in the two wholly owned Subsidiaries viz. Wendt Grinding Technologies Ltd, Thailand & Wendt Middle East FZE, Sharjah and the balance is in Debt Schemes. The mutual funds investment portfolio increased from Rs.1016 Lacs to Rs.1142 Lacs, a growth of 12% during the year due to prudent investment policies followed by your Company.

Your Company follows the Group norms by investing the surplus generated by the business in liquid debt funds which yield sizeable returns. This ensures safety and liquidity of Company''s funds along with reasonable yield as per the prevailing market rates.

The investment in mutual funds ensures meeting the internal fund requirements for capital expenditure purpose, as your Company does not have any borrowing.

Costs

The Fixed Costs have grown by 2% compared to last year. However, due to lower topline, the Fixed Cost as percentage of sales is higher at 32%. Due to higher capital expenditure incurred during the earlier years,

depreciation has grown by 20%. However, your Company believes that this addition to fixed assets will generate additional revenue in future years. Affected by frequent power cuts, the utilities cost has gone up by 26% due to DG Set running for longer periods. Travel, transport expenses has gone up by 40% due to higher travel necessitated by the Wendt-on - Wheel (WOW) initiative.

The variable costs have increased during the year due to increase in the raw material cost and bond prices which has put pressure on the margins of the Company. Your Company has initiated price correction from both customers and key suppliers during the current year to improve its bottom line which is expected to yield results in the coming year.

Financial Position Shareholders Funds

The Shareholders Fund as on 31.03.2013 was Rs.7625 Lacs against Rs.6962 Lacs of previous year, an increase of 10%. Accordingly, the book value of the share stands at Rs.381/- as compared to Rs.348/- during the previous year, an increase of 9%.

Loan Funds

Your Company has a cash credit limit with State Bank of India to bridge the short term fund requirement and only to supplement the temporary mismatches in its cash flow. Your Company does not have any interest bearing term loan.

During current year also, the working capital limits of your Company have been rated by ICRA. ICRA has reaffirmed AA- (pronounced ICRA double A minus) rating assigned to the Rs.2.0 crore Long Term Fund facilities of your Company which signifies low credit risk and stable. The Short Term (Non Fund based) Rating has been reaffirmed as A1 (pronounced ICRA A one plus). Overall your Company''s rating continues to be stable and low credit risk.

ASSETS

FIXED ASSETS

Your Company has been prudent in it''s capex spend, during the current year in view of the continued economic slowdown. The capital expenditure during the year was contained to Rs.1087 Lacs. The major Capex Spend is on addition of New Plant & Machinery and other identified areas which are critical for the future growth of the Company.

Inventories and Sundry Debtors

The overall inventory levels as on 31st March, 2013 has been largely similar to last year at Rs.1385 Lacs. There was a reduction in the Raw Material Inventory by Rs.23 Lacs and Finished Goods Inventory by Rs.6Lacs. However, the Work- in - Progress machine inventory was higher by Rs.20 Lacs. This was due to delay in dispatch/clearance for some of the items from few customers.

The Sales have decreased by 11%; and hence the Receivables are lesser from Rs.2010 Lacs to Rs.1916 Lacs as on 31st March, 2013. The current slowdown has resulted in working capital pressure and delayed payments by the customers. Your Company adopted an aggressive Receivable Management System including close follow ups and credit control measures through the SAP System to ensure that receivables were kept under control and payments were received in time.

Foreign Exchange Hedging

Your Company continues to follow the policy of natural hedging of foreign exchange earnings and outflow and hence it does not take forward covers. The net forex gain during the year was Rs.39 Lacs.

Financial Performance with respect to Operational Performance

Your Company''s Operating Profit and Contribution has been better than the industry average on account of measures taken for improved operational efficiency and better product mix. This was aided by accurate information & customer data, newly implemented centralized drawing management system, better planning & scheduling through SAP ERP System and effective vendor management. Your Company also improved its response time & service levels and was able to supply the right product at the right time with right specifications there by providing value addition to the customer.

HUMAN RESOURCE

Nurturing and development of the Human Capital is accorded high importance by your Company. Accordingly, the HR policies and the practices of your Company are geared towards this objective. The processes for attracting, retaining and rewarding talent are well laid-down and your Company follows a transparent system to identify and reward performers.

Your Company''s Human Resource Policies are constantly reviewed and realigned based on people expectations, making it more employee-friendly thereby creating an engaged workforce which focuses on productivity. It is a constant endeavor for your Company to adopt the industry best practices and aligning them with the strategic directions, goals and objectives in terms of people processes.

In order to meet growth plans set by the Company and to fulfill the ever-changing needs and expectations of the customers, your Company continues to focus on competency building, skill enhancement and overall development so that its people are well prepared to take on the challenges.

Personnel development plans focus on how each individual''s strength can be best leveraged to deliver to his/her full potential. Your Company believes that this can be achieved through specialized training programmes and cross functional learning exposure. The Company gives very high importance to enhancing employees'' competency and skills through on the job training and external training programmes. Special attention is given to the health and safety of the employees. Training, welfare measures and individual development of employees continue to be high priority area for your Company. This in turn, translates into improved quality and operational efficiency.

Your Company lays special focus to Business Excellence and continual improvement journey (TQM) in its quest to improve the quality of its products, processes and systems. Continuous learning, job enrichment, high engagement levels, conducive work environment and a cordial industrial relationship has been the hallmark of your Company resulting in an attrition rate well below the industry average. Your Company strongly believes that higher Employee Engagement Level is prerequisite for Customer Delight.

Your Company continues to have a smooth and enabling work climate that promotes performance, customer focus and innovative thinking while adhering to the highest standards of quality, integrity and ethics. Your Company continues to enjoy the support of a committed, experienced and satisfied workforce. Compensation package offered by your Company is one of the best in industry.

The manpower strength of confirmed employees of your Company as on 31 st March, 2013 was 279. Employee relations have been smooth and cordial and the work atmosphere remained congenial during the year.

TUV''s accreditation to Wendt with SA8000 Certification is a testimony to the importance that your organization gives on health & safety, working hours, child labour as well as employee discrimination.

Directors

Mr. K Srinivasan, Director, retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The necessary Resolution is being placed before the shareholders for approval. The Board of Directors of your Company is of the opinion that his continued association with the Board will be beneficial to the Company and recommends his re-election.

All the Directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of Section 274 (1 )(g)of the Companies Act, 1956.

Auditors and Auditors'' Report

M/s Deloitte Haskins & Sells, Chartered Accountants, the Statutory Auditors of your Company are due for retirement at the ensuing Annual General Meeting and are eligible for re-appointment. Your Directors recommend their reappointment as Statutory Auditors for the coming year. The Statutory Auditors of your Company have submitted a certificate to the Company that if appointed as the Statutory Auditors for the coming year, such appointment shall be in accordance of the provisions of Section 224 (1B) of the Companies Act, 1956. Further, the Statutory Auditors have also submitted a certificate to the Company that they have subjected themselves for the peer review process of the Institute of Chartered Accountants of India.

The notes on accounts referred to in the Auditors'' Report are self explanatory and do not call for any further comments.

COST AUDITOR

In compliance with the Central Government''s order F.No.52/26/CAB-2010 dated 24th January 2012, your Board has appointed M/s M.R. Rajhshekar & Co, Cost Accountant to carry out the cost audit of two of the products of the company namely. Synthetic Coolants and Grinding Machines, Pump Vanes & Accessories for the financial year 2012-13 to which the Cost Audit Order applies. The Cost Audit Report will be filed with the Central Government as per timeline.

Fixed Deposits

Your Company has not accepted any fixed deposits during the year 2012-13 and as such, there are no outstanding fixed deposits from the public as on 31 st March, 2013.

CORPORATE GOVERNANCE

Your Company has inculcated strong culture of values, ethics and integrity living with the Five Lights - The Spirit of the Murugappa Group. The Company strives to be a sustainable and trusted organization as sustained governance is the cornerstone for building and maintaining relationships with its stakeholders. The Company''s relationship with its investors is an important component of Corporate Governance. It rigorously pursues a policy of 100% compliance with all statutory requirements and has a robust system to review them. The Board fully supports and endorses Corporate Governance Practices in accordance with provisions of Clause 49 of the Listing Agreement. The Report on Corporate Governance along with the Auditors'' Certificate regarding compliance of the conditions of Corporate Governance pursuant to Clause 49 of the Listing Agreement is annexed hereto and forms part of the Annual Report. Further, as required under Clause 49(V) of the Listing Agreement a certificate from the Chief Executive and the Chief Financial Officer of your Company is being annexed with this Report.

TRANSFER TO THE INVESTOR EDUCATIONS PROTECTION FUND

In terms of Section 205C of the Companies Act, 1956 an amount of Rs. 1.90 lacs being unclaimed dividend was transferred during the year to the Investor Education and Protection Fund established by the Central Government

Directors Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956 and on the basis of the information furnished to them by the Statutory Auditors and the Management, your Directors confirm that:

- In the preparation of the annual accounts for the financial year ended 31st March, 2013, the applicable accounting standards have been followed and no material departures have been made from the same.

- The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at the end of accounting year and of the profit of the Company for the year ended 31st March,2013.

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

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

Disclosure of Statutory Particulars

Information required under Section 217 (1) (e) and Section 217 (2A) of the Companies Act 1956 are given in Annexu re A and Band forms part of this Report.

APPRECIATION

Your Directors take this opportunity to place on record their appreciation to all employees for their hard work, spirited efforts, dedication and loyalty to the Company.

The employees have worked based on principles of honesty, integrity and fair play and this has helped your Company to survive a very difficult year. The Directors also wish to place on record their appreciation to Investors, Bankers, Customers, Suppliers, Auditors, Company''s Associates and Subsidiaries for their continued support during the year. Your Directors extend their sincere gratitude to all the regulatory agencies like SEBI, Stock Exchanges, Registrar of Companies and other Central and State Government Authorities/ Agencies, Stakeholders, Suppliers, Vendors and Sub-contracting Partners, Business Associates for their support.

Finally, the Directors also wish to place on record their special appreciation to the valued Shareholders of the

Company for their Continued Confidences Support. ,

By order of the Board

For Wendt (India) Limited

Place: Chennai M M Murugappan

Date: 18th Aoril 2013 Chairman


Mar 31, 2012

The Directors are pleased to present the 30th Annual Report together with the Audited Financial Statements for the year ended 31 st March 2012. The Management Discussion & Analysis Report, which is required to be furnished as per the requirement of Stock Exchanges, has been included in the Directors Report so as to avoid duplication and repetition.

ECONOMIC OVERVIEW

During the year, the Indian economy achieved a moderate growth reflecting a dampening of business sentiments, hit by headline inflation, high energy prices and a successive weakening of the Indian Rupee for most part of the year. High interest rates and spiraling prices of raw materials added to the woes. Regulatory issues with respect to environment clearances and land acquisitions slowing the pace of execution of high value projects and sector specific factors like coal and iron ore supply affecting the power, steel and related industries. While agriculture and services sector continued to perform well, this lower than expected growth can be attributed to weakening of industrial growth. The manufacturing sector grew by 2.7% and 0.4% during the second & third quarter respectively. Similarly, Index of Industrial Production (IIP) for first nine months recorded a growth of only 3.6% compared to 8.2% in the previous year. Other contributory factors include the fragile situation in Euro Zone and the spiraling oil prices have had adverse impact on the overall growth of the economy.

While all these factors had their influence on the tepid growth of the Indian economy, it still achieved a higher growth rate than many other emerging economies thereby providing ample evidence of financial prudence and resilience in the country's fiscal policy.

Contrary to the apprehensions, the export sector provided the silver lining by retaining its growth momentum. Industrial sectors like Automobile, Auto Components, Cutting Tools, General Engineering, Machine Tools, Ceramics, Glass and Defence demonstrated better results. While sectors like Aviation, Mining, Construction and Steel experienced lower than projected growth during the year. This anomaly contributed to India's modest GDP (Gross Domestic Product) rate.

With the IIP numbers showing an upward movement from the last quarter of the year, indicates a positive trend after a temporary slowdown. The Government is determined to continue with its fiscal measures to ensure a reversal of the economy to the growth trajectory. In fact, India has the advantage of a huge internal domestic market for goods and services which can generate demand and accelerate growth.

At the global level, we have seen steady flow of good news from the US with respect to improved employment and increased consumer spending. Japan and adjoining countries are likely to pull out of recession after being severely hit by earth quake and floods, post announcement of fiscal stimulus for reconstruction.

COMPANY PERFORMANCE OVERVIEW

( Rs in Lacs)

31st March 31st March 2012 2011

Sales 10001 8173

Other Income 278 299

Profit Before Tax 2552 2356

Provision for Tax 759 755

Provision for Deferred Tax 641 6

Profit After Tax 1729 1595

Earnings per Share-Rs. 86.45 79.76

RESULTS OF OPERATIONS

Despite a moderate economic growth, your Company during the year achieved a mile stone by crossing Top line of Rs 100 Crores translating into a growth of 22% over the previous year. Reflecting on better performance of many industrial segments which the company addresses, the domestic turnover recorded a growth of 20% over the previous year. The major contributory industry segments in the domestic business which helped your company's above growth are Automotive, Engineering, Cutting Tools and Steel. The Export sales achieved even better results by recording an impressive 35% growth during 2011-12- albeit the continued slow industrial recovery in many of the developed markets.

Your Company's continued efforts on aggressively growing the three business verticals namely Super Abrasives, Non-Super Abrasives and International Business has yielded encouraging results once again . In order that your company achieves accelerated growth year on year, it would continue to commit the required investments and resources.

Non-Superabrasive Business which comprises of machine tools and precision components registered a growth of 21%. During the year, your company has successfully built and executed some of the new machines like Notch Milling Machine with branding feature Wencut405, CNC TC Roll Grinding Machine WGM35S, CNC Surface Grinding Machine WHS310V with reciprocating table, Delapena Honing Machines and Profile Grinding & Dressing Machine with Video Vision WDM 15V.

Super Abrasive Business which comprises of Diamond/CBN grinding Wheels & Tools, precision Dressing Rolls, Hones, Segmented products & Stationary Dressers achieved a growth of 23% over the last year. This has been possible due to continued focus by your Company on the development of new products and new applications. Your Company successfully introduced many new products including Resin Bond Wheels for Rotary Tool reconditioning. Vitrified CBN Wheels for Paper & Textile and Auto Component, Precision Electroplated CBN Wheels for Engineering & Auto component applications. Brazed Diamond Products for Ceramic & Glass, Precision Dressing Rolls for Turbine and Aerospace and Vitrified Diamond Products for Lapidary industry.

In order to have better visibility and enhance the company's market reach for not only Super abrasives but also Machines in the domestic arena, your Company has launched a new nationwide initiative Wendt-On-Wheels (WOW). Through this unique initiative, your Company would make the customers abreast of the new launches, show case the latest cost competitive, value-added Products & Services in the field of Precision Grinding and Honing, by going to the Cities and Doorsteps of the customers. Your Company is confident that this initiative would open new avenues for better understanding of the customer's exacting needs and addressing the requirements.

Your Company plans to leverage its competencies in Machines and related Superabrasive Tools by embarking on precision ground and honed components. This move would further strengthen its position in the machines and precision component business besides serving as new growth engine for your Company. On the super abrasive side, its two new innovative projects namely Eco Resin Bond wheels and Vitrified Diamond Products initiated last year, are progressing well and in the final stage of validation &testing in the market.

During the year, your Company has successfully implemented OHSAS 18001 and SA8000 standards. You will be pleased to knowthat Wendt India is one of the few companies in the country to have implemented SA8000 standards which lays high emphasis on Corporate Social Responsibility and protects the interests of workforce at large.

With this, your company now has the following International Management Systems in place

- Integrated Management System (IMS)- integration of ISO 9001 for Quality Management System and ISO 14001 for Environment Management System

- ISO/TS 16949 for Manufacture of Precision Machined Components

- OHSAS 18001 focusing on Occupational Health and Safety

- SA8000 for Social Accountability focusing on health &social accountable work culture

FUTURE PROSPECTS

In line with the Mission, Vision, Strategies and Business Objectives, your Company's continued endeavor would be focusing on product and process Innovation for delivering superior performances and ensuring growth year on year. These efforts would be well supported through deployment of latest technologies and processes besides introduction of automation in critical areas. Your Company is constantly on the lookout for new opportunities in other growing industrial segments and exploring newer avenues in the existing industries it caters to. Your Company would intensively pursue business in Construction, Infrastructure, Defense, Aerospace, Ceramics, Railways and Health care for future growth. To augment this pursuit it will continue to participate in trade shows, exhibitions, customer education and other value added services.

The acquisition of Winterthur Technology Group (WTG) by the US multinational 3M Corporation and resultant indirect acquisition of 40% equity share holding in your Company has been a matter of contention. The impending matter continues to be under the purview of The Honorable Company Law Board (CLB), Chennai and your company expects the ownership matterto be resolved soon.

SUBSIDIARY COMPANIES Wendt Grinding Technologies Limited, Thailand

During the year, the devastating flood in Thailand and Tsunami coupled with political and economic turmoil severely impacted the business of your Company's wholly owned subsidiary situated there. Despite this, the subsidiary presented a commendable performance maintaining the top line at Thai Baht 65 Million (Rs.1028 Lacs). The Profit Before Tax was Thai Baht 17.1 Million (Rs.259Lacs) and Profit After Tax wasThai Baht 12 Million (Rs.178Lacs).

In order to improve its brand awareness and create increased recall, your Subsidiary Company participated in major Industrial Trade exhibitions with clear focus on brand building and increasing market reach. It also focused on industry specific product advertising, conducted technical seminars and organized sales meets.

Your Subsidiary maintained leadership position in re-profiling market segment in Thailand. However, completion of solar glass project running for 18 months coupled with floods resulted in significant drop in profiling business. To compensate the reduction in sales & profit, the subsidiary undertook a number of new initiatives aimed at expanding the product basket and ensuring profitable sustained operation. Your Subsidiary has put in place clear processes and business process improvement plans with strict cost controls. Your Subsidiary during the year enhanced understanding of market/region and focus on high contribution products.

Wendt Middle East FZE, Sharjah

Your Company's second wholly owned Subsidiary in Sharjah, Wendt Middle East FZE, achieved an annual sale of AED 2180 (000's) (Rs.283Lacs) during the year which is 1 50% higher over last year. This higher sales was despite continued economic slowdown and social unrest experienced in the region it operates. The volatility in the primary economic drivers such as Construction, Trading and Oil in the Middle East region was a dampener in our achieving the planned business. Even the re-profiling services did not gain momentum as anticipated due to slowdown which impacted the performance of the Subsidiary.

Your Subsidiary has embarked on new initiatives to consolidate and grow business. It expects to be profitable from the coming financial year.

APPROPRIATIONS

Available for appropriation (Rs in Lacs)

Profit after Tax 1729

Add: Balance brought forward from

previous year 1386

Total 3115

Recommended appropriations

Transfer to General Reserve 350

Proposed dividend Rs 25/- per share of

face value of Rs 10/- each (250 %) 500

Dividend tax 81

Balance carried forward 2184

Total 3115

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as that of local communities and society at large.

Befitting the size, your Company contributes to various social causes in the field of education, healthcare and environment preservation. Your Company places great emphasis on tree planting measures and afforestation not only in the premises but also adjoining localities. Besides, your Company has been contributing to the old age homes and to the weaker sections of the society. Your Company also celebrated the Environmental Day where employees were handed over tree saplings to plant trees in their locality.

DIVIDEND

Your Company has taken an aggressive plan for the next year including higher capital expenditure to fuel the required growth. This needs to be financed through its internal accruals and debt.

The Board of Directors have recommended a dividend of Rs.25/- per equity share of face value of Rs.10/- each (250%) and the same will be paid after the approval at the forthcoming Annual General Meeting. The dividend warrants will be posted after 20th July, 2012.

CONSOLIDATED FINANCIAL RESULTS

As per Section 212 of the Companies Act, 1956, it is required to attach the Directors' Report, Balance Sheet and Profit and Loss Account of the Subsidiaries to your Company's Annual Report. The Ministry of Corporate Affairs vide its circular No. 2/2011 dated 8th February 2011 has granted general exemption to companies from complying with the provisions of Section 212 (8) of the Companies Act, 1956 provided such companies publish the audited consolidated financial statements in the Annual Report. Accordingly, the Annual Report 2011-12 does not contain the financial statements of the Subsidiaries. The audited annual accounts and related information of the Subsidiaries is available in our website - www.wendtindia.com. The Ministry has further vide its letter dated 14th February 2011 informed the Company that approval of the Ministry is further not required.

The Consolidated Financial Statements (incorporating the operations of the Company and its two subsidiaries), in terms of Clause 32 of the Listing Agreement and prepared in accordance with Accounting Standard 21 as specified in Companies (Accounting Standards) Rules, 2006 also form part of this Annual Report. The key financial data for the consolidated operations are as given below:-

KEY CONSOLIDATED FINANCIAL SUMMARY

(Rs in Lacs)

31st March 31st March 2012 2011

Sales 11056 9129

Other Income 246 197

Profit Before Tax 2849 2551

Profit After Tax 1946 1684

Earnings per share-Rs 97.29 84.18

QUALITY

Your Company manufactures products that require high level of precision meeting exacting customer standards and tolerances. The product range includes Super Abrasive (Diamond /CBN) Grinding Wheels and Special Tools. Customized CNC Grinding / Honing Machines are manufactured to meet the international standards. Precision Components which require high degree of precision and tolerances go through stringent quality checks. Quality being one of the overriding attributes and differentiators, effective quality management, adequate process controls and quality assurance at each stage of operation are vital for final output to fulfill the customer requirement.

Recognizing this, your Company has put in place the required international standards such as Integrated Management System (IMS) focusing on quality management and environment management and TS 16949 for manufacturing precision machined components. As a part of driving the quality culture deeper into the organization, your Company continues to lay greater emphasis on training on latest trends. In order that the product quality meets the standards, your Company continues to earmark adequate investments on latest equipments, machineries etc.

SAFETY, HEALTH AND ENVIRONMENT (SHE)

The Safety, Health and Environment Management System of your Company is top driven, efficient, effective and vibrant. The top management of your Company is committed for maintaining highest standards of safety, health and environment protection and fulfills the applicable statutory requirements.

Your Company considers its employees as the most valuable assets. Your Company believes that the safety and health of its employees are of paramount importance. Apart from adherence to all safety norms to ensure that the environment is free of accidents.

incidents, injuries and occupational illness during the working hours and your Company is committed to meet high level of health, safety and wellness standards.

Health and Safety continues to be key performance indicators of Your Company and it firmly believes that safe and healthy conditions at the workplace are as necessary and as important as production and quality. Your Company provides the necessary information, promotes awareness and provides training to all employees to carry out their tasks in a safe manner.

Attesting these efforts, during the year, your Company has achieved the certification for the OHSAS 18001 focusing on Occupational Health & Safety of people

During the year, your Company again recorded Zero Accident and has not lost any man days of production. Apart from the employees, adherence of Safety, Health and Environmental practices are also ensured for its guests and visitors by maintaining the highest level of standards across the organization.

Regular training on Safety, Fire hazards mock drills are conducted to ensure safety all round the year. Specialized Standard Personnel Protection Equipments are being provided to the operating personnel for use in their respective work areas.

Employee health & physical fitness is a paramount consideration for your Company. Employees are required to undergo annual medical check-ups for timely diagnosis of their health condition. Your Company has a visiting doctor at the factory regularly to help the employees and their families to maintain sound health.

RECOGNITIONS AND AWARDS

Your Company continues to win Awards,

Recognitions and bring Accolades by showcasing its performance, achievements and practices at various platforms. These recognitions and honours raise the morale and motivation levels of employees and your Company as a whole for achieving higher results. During the year your Company has received the following major awards

- Engineering Export Promotion Council (EEPC) Award

Your Company has for the eighth consecutive year received the "Silver Shield for Star Performer" under Large Enterprise category for export of Miscellaneous Engineering Goods from Engineering Export Promotion Council (EEPC), India.

- ICAI Award for Excellence in Financial Reporting

Your Company has been conferred with Silver Shield for Excellence in Financial Reporting by

ICAI for the year 2010-11 under Manufacturing Sector Category for turnover less than Rs 500 crores.

Founded by the apex body. The Institute of Chartered Accountants of India (ICAI), this coveted acknowledgment signifies that the accounting policies followed by your Company are amongst the best in the industry. It also takes into consideration the review of accounting practices adopted in the preparation of financial statements and the policies for disclosure and presentation of financial statements and non- financial information in the Annual Report in terms of philosophy of transparent disclosures, integrity and reliability.

- Commendation Certificate for CM -EXIM Bank Award for Business Excellence

Your Company achieved another milestone by receiving the Commendation Certificate for Strong Commitment to Excel in the Cll-Exim Bank Award for Business Excellence. For Wendt India, it is a journey in pursuit of Business Excellence and this award is a testimony of its continuous journey towards Business Excellence.

- Quality Circle Awards

Your Company's employees exhibited their skills in Quality Circle competitions and were recognized at both national and regional level

National Level organized by NCQC at Hyderabad

- Distinguished Award for SGA

- Par Excellence Award for Kaizen.

Regional Level organized by QCFI at Bangalore

- Awards for Small Group Activities (SGA), Kaizen, Quality Quiz and 5S

- 5S Model Company Award from ABK-AOTS DOSOKAI

Your Company received special appreciation and highest level of recognition for practicing 5S and was conferred with 5S Model Company Award by ABK-AOTS. This recognizes the efforts your Company continues to take in Japanese Management Practices such as Total Employee Engagement, 5S, Kaizen, TPM etc for the past many years.

- Cufest 2011 Awards

Your Company's employees participated in Group- level Quality Competitions "Cufest 2011" (Quality Festival of CUMI), and won awards for Poster & Idea King & Quality Quiz events.

FINANCIAL REVIEW Earnings Revenues

During the year, the revenue recorded overall growth of 22% up from Rs.8173Lacs for the year 2010-11 to Rs.10001 Lacs. The domestic sales achieved a growth of 20 % while export sales recorded a growth of 35 % compared to the previous year.

Profit before Tax

The profit before tax is higher by 8%, up from Rs.2356 Lacs to Rs.2552 Lacs

Profit after Tax

The profit after tax is higher by 8%, up from Rs.1 595 Lacs to Rs.1729 Lacs

Investments

Your Company's investments as on 31-03-2012 have reduced from Rs.2257Lacs to Rs.1370Lacs. The Investment comprises of trade investment in the two wholly owned subsidiaries viz. Wendt Grinding Technologies Ltd, Thailand & Wendt Middle East FZE, Sharjah and the balance is in Debt schemes. During the year your Company has made a provision for diminution in the investment of Sharjah subsidiary of Rs.77 Lacs. The mutual funds investment portfolio declined from Rs.1827 Lacs to Rs1016 Lacs during the year due to higher capital expenditure spent by your Company.

Your Company follows the practice of investing surplus generated by the business in liquid debt funds which yield sizeable returns. This ensures safety and liquidity of Company's funds along with reasonable yield as per the prevailing market rates.

As we plough back the earnings, the capital expenditure need of your Company is met entirely from the mutual funds investments.

Costs

The Fixed costs have grown 34 % compared to last year. Due to higher capital expenditure during the year, depreciation has grown by 13%. Repairs and maintenance expenses (excluding building repairs) grew by 25 % on account of major repair & refurbishing work undertaken on machines for improving the process capability and required building maintenance. The sales expenses have grown by 46% on account of sales promotion activities and new initiatives such as Exhibitions, Seminar etc. The Salaries and wages including contract labour have grown by 37 % due to additional recruitment and conversion of casual workers to permanent labour and provisioning done as per the revised accounting standard AS 1 5.

The variable cost has come down due to better product mix and improved operational efficiency resulting into higher operating profit margin.

Financial Position Shareholders Funds

The shareholders fund as on 31.03.2012 was Rs.6962 Lacs against Rs.5814 Lacs of previous year, an increase of 20%. Accordingly, the book value of the share stands at Rs.348/- as compared to Rs.291/- during the previous year, an increase of 20%.

Loan Funds

Your Company continues to utilize its cash credit limit with State Bank of India to bridge the short term fund requirement and for meeting the temporary mismatches in its cash flow. Your Company does not have anyterm loan.

During current year also, the working capital limits of your Company have been rated by ICRA. ICRA has reaffirmed AA- (pronounced ICRA double A minus) rating assigned to the Rs 2.0 crore Long term Fund facilities of your Company which signifies low credit risk and stable. The short Term (Non Fund based) Rating has been reaffirmed as A1 (pronounced ICRA A one plus). Overall your Company's rating continues to be stable and low credit risk.

Assets Fixed assets

The capital expenditure during the year was Rs.1451 Lacs against Rs.628 Lacs spent in the previous year. The net fixed asset accordingly stood at Rs.4363 Lacs compared to Rs.3264 Lacs of previous year. The higher capex spent is on addition of new plant & machinery, expansion/modernization of the existing product lines and on research & development which is expected to yield results in coming years.

Inventories and Sundry Debtors

There has been an increase in overall inventory by Rs.349 Lacs compared to previous year, mainly due to increase in raw material inventory by Rs.160 Lacs and Work-in Progress machine inventory by 52Lacs. This was due to delay in despatch clearance from few customers. The raw material inventory level was strategically kept up for ensuring prompt delivery to the customers & addressing on-call supplies to key customers.

The sales have increased by 22%; and hence the Receivables have been up at Rs.514 Lacs. However, the average credit days have been maintained at last year level of 59 days. This was possible due to adoption of credit lock, more aggressive receivable management drive supported by SAP ERP system.

Foreign Exchange Hedging

Your Company follows the policy of natural hedging of foreign exchange earnings and outflow and hence it does not take forward covers. The net forex gain during the year was Rs.52 Lacs.

Financial Performance with respect to Operational Performance

Your Company's Operating profit and Contribution has recorded reasonable growth due to improved operational efficiency and better product mix. Thanks to the availability of reliable information and effective customer data. Knowledge Management such as drawings, specification, data sheet through the SAP ERP System, your Company improved its response time and service levels and was able to supply the right product at the right time with right specifications there by providing value addition to the customer.

HUMAN RESOURCE

Human Resource strategy of your Company revolves around managing talent, developing leadership and managerial competencies, managing employee performance and enhancing employee engagement. Your Company's philosophy has been to create an open and transparent culture, focused on people and their competencies for delivering superior performance. Welfare and training at all levels of our employees continue to be areas of major focus for the Company. Your Company is putting continuous efforts to employ and retain professionally qualified personnel. At present human capital at Wendt is 234 personnel who are committed towards the growth of your Company.

During the year an Employee Engagement and Satisfaction survey was conducted which revealed that there is a noticeable improvement in the satisfaction level compared to the earlier survey. Further, it has yielded many insights into our employees' expectations and has provided useful information for senior management to increase employee engagement.

During the year, we have established a fully integrated Employees Information Portal, "ESS", which acts as a multipurpose utility application for employees.

Your Company has a favourable work environment that motivates performance, customer focus and innovation while adhering to the highest standards of quality and integrity. Industrial relations were harmonious throughout the organization. Safety, welfare and training at all employee levels continues to be areas of major focus for your Company

Your Company enjoys the support of committed and well satisfied workforce. Compensation package offered by your Company is one of the best in industry. Your Company follows well-structured methods of recruitment, training, motivation and performance appraisal, attracting and retaining the best in talent. These practices enable your Company to keep the attrition rate below the industry average.

Directors

Mr. K S Shetty, Director retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The necessary Resolution is being placed before the shareholders for approval.

Auditors and Auditors' Report

M/s Deloitte Haskins & Sells, Chartered Accountants, the statutory auditors of your Company hold office, until the conclusion of the ensuing Annual General Meeting and being eligible, have offered themselves for reappointment, subject to the approval of the shareholders at the Annual General Meeting. Your Directors recommend their reappointment as Statutory Auditors forthe coming year.

The notes on accounts referred to in the Auditors' Report are self explanatory and do not call for any further comments.

Fixed Deposits

Your Company has not accepted any fixed deposits during the year 2011-12 and as such, there are no outstanding fixed deposits from the public as on 31 st March 2012.

CORPORATE GOVERNANCE

The Report on Corporate Governance along with the Auditors' Certificate regarding compliance of the conditions of Corporate Governance pursuant to Clause 49 of the Listing Agreement is annexed hereto and form part of the Annual Report. The Chief Executive and the Chief Financial Officer of the Company have submitted a certificate endorsing to the Board the correctness of the Financial Statements and other matters as required under clause 49 V of the listing agreement.

Transfer to the Investor Education & Protection Fund

In terms of Section 205C of the Companies Act, 1956 an amount of Rs. 1.21 lacs being unclaimed dividend was transferred during the year to the Investor Education and Protection Fund established by the Central Government.

Directors Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956 and on the basis of the information furnished to them by the statutory auditors and the management, your Directors state that:

- In the preparation of the annual accounts for the financial year ended 31st March 2012, the applicable accounting standards have been followed and there are no material departures.

- 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 your Company as at the end of accounting year and of the profit of your Company for the year.

- They 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 your Company and for preventing and detecting fraud and other irregularities.

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

Disclosure of Statutory Particulars

Information required under Section 217 (1) (e) and Section 217 (2A) of the Companies Act 1956 are given in Annexure Aand B and forms part of this Report.

APPRECIATION

Your Directors would like to express their sincere appreciation to investors, bankers, customers, suppliers, auditors, company's associates and subsidiaries for their continued support during the year. Your Directors extend their sincere gratitude to all the regulatory agencies like SEBI, Stock Exchanges, Registrar of Companies and other Central and State Government authorities/ agencies. Stakeholders, Suppliers, Vendors and Sub contracting partners. Business associates for their support.

Your Directors also place on record their appreciation and thanks to all employees for their dedicated services rendered at various levels, without whose contribution, could not have achieved the year's performance and are looking forward to their continued support in the future as well.

Finally, the Directors also wish to place on record their special appreciation to the valued shareholders of your Company for their support.

By order of the Board

For Wendt (India) Limited

Chennai M M Murugappan

26th April 2012 Chairman


Mar 31, 2011

The Directors have pleasure in presenting the 29th Annual Report together with the Audited Financial Statements for the year ended 31 st March 2011. The Management Discussion & Analysis Report, which is required to be furnished as per the requirement of Stock Exchanges, has been included in the Directors Report so as to avoid duplication and repetition.

COMPANY PERFORMANCE OVERVIEW

(Rs in Lacs)

31/03/2011 31/03/2010

Sales 8173 5609

Other Income 299 221

Profit before tax 2356 1455

Provision for tax 755 468

Provision for deferred tax 6 4

Profit after tax 1595 982

Earnings per share 79.76 49.12

RESULTS OF OPERATIONS

Resonating with the economical growth, your Company achieved a top line of Rs 8173 Lacs during the year which is 46% higher than the previous year. The domestic turnover recorded an appreciable growth of 54% over the previous year reflecting on better performance of many of the industrial

segments the Company operates. The major segments which contribute to your Companys growth are Automotive, Engineering, Cutting Tools and Steel that have had their positive impact on the Companys Domestic Business. The Export sales recorded a 17% growth during the year despite the slow industrial recovery in many of the developed nations including UAE which is still to experience signs of economic recovery.

In order to grow the business more aggressively as well as with increased focus, the Company had classified its businesses under three verticals- Super abrasives, Non-Super abrasives and International Business during end of 2009-10 which has now started paying rich dividends. Your Company is putting more efforts towards strengthening the Non Super abrasives business mainly comprising of machine tools and precision components. Like in past, it would continue to commit adequate investments in Plant and Machinery, Infrastructure and Human Resource.

During the year, your Company has successfully launched some of the new machines like CNC Rotary Surface Grinding with vertical spindle, CNC Guide Roll Grinder WGM35, 6-axes CNC Notch Milling Machine, Profile Grinding with Video Vision WDM 8V machine besides indigenously building Delapena Honing Machines.

Under Super abrasives, your Company continues to focus on the development of new products and new applications which would provide base for future growth. During the year, your Company has successfully introduced and tested several new products including Vitrified CBN wheels for Auto Component and Paper & Textile industry, High performance Electroplated CBN wheels for Automotive industry. Metal Bond wheels for Cutting Tools Industry, precision Dressing Rolls for Aerospace industry and Electroplated Diamond wheels for Ceramic industry.

During the year, your Company has also formally launched Innovation Management Process as one of the drivers for growth. It has initiated work on two new projects namely Low cost Resin Bond wheels and Vitrified Diamond Products besides strengthening its capability for Brazed products. Your Company is one of the few companies in India to have implemented Integrated Management Systems (IMS) by combining both Quality Management System and Environmental Management System. Your Company has achieved yet another milestone when Indias premier credit rating agency CRISIL conducted a comprehensive study commissioned by NSE and published the Independent Equity Research (IER) report about the Company - An ample evidence of your Companys commitment to strong business fundamentals and shareholder value creation.

FUTURE PROSPECTS

Aligning the management practices and policies with the Mission & Strategic Intent, the Companys three Broad Strategies continue to be:

- Continually improving product performance by use of technology & superior manufacturing. While the existing products would continue to be offered to the customers, new products and new application developments would be the focus.

- Market penetration to increase the share with existing customers.

- Developing competitive edge by improving service levels and offering value added services.

In order to achieve the objectives, your Company would strive hard to focus on Innovation for both products and processes to ensure sustained growth year on year. This would be well supported by deploying state-of-the-art technologies and process automation in critical areas as required. Harnessing the opportunities and potential in growing new industries such as Construction, Infrastructure, Defense, Aerospace, Railways and Steel would continue to be key focus for growth. Various initiatives such as trade shows, exhibitions in both domestic as well as overseas, customer training and other value added services are expected to strengthen the customer engagement levels with your Company.

The recent acquisition of Winterthur Technology Group (WTG) by the US multinational 3M Corporation and resultant acquisition of 40% equity share holding in your Company has been a matter of contention. The Company expects the ownership matter to be resolved soon. Once completed, your Company would take advantage of the opportunities that the change brings in and ensure to derive benefits from the multitude of possibilities for accomplishing its long term objectives.

SUBSIDIARY COMPANIES

Wendt Grinding Technologies Limited, Thailand

Inspite of continued political odds and subdued industrial activities, your Companys wholly owned subsidiary in Thailand presented yet another good performance. During the year the Companys top line was Thai Baht 70 mill. (Rs 1017 Lacs) which was 60% higher than last year. The Profit before tax was Thni Baht 24.4 mill (Rs 365Lacs) and Profit after tax was Thai Baht 17 mill (Rs 258 Lacs) both recorded an exceptional growth of over 100% ever the previous

year. The higher profit levels have been possible as a result of cost reduction initiatives, operational efficiency measures, enhanced product basket as well as market expansion. During the year the Subsidiary Company declared a dividend of 20% amounting to Rs.74Lacs.

In order to reinforce brand image and create increased recall, the subsidiary Company participated in major Industrial Trade exhibitions, conducted local advertising campaigns, technical seminars and prospected new market through surveys in addition to organizing plant tours for its key customers to showcase its capability. It also, added new industry specific distributors as partners and increased its product basket. As a part of business de-risking, it added solar glass panel manufacturers. The Company continues to focus on opportunities in industries such as Glass, Automobile, Steel, Auto parts, Engineering, Process, Wood, and Construction. Further, the Company is also exploring opportunities to extend re- profiling business to Vietnam, Laos and Cambodia.

Wendt Middle East FZE, Sharjah

The second wholly owned subsidiary in Sharjah, Wendt Middle East FZE, achieved a reasonable growth by closing with an annual sale of AED 916 (000s) (Rs.113Lacs) despite continued economic slowdown and recent social unrest. The loss for the year was AED 748(000s) (Rs 90Lacs) with a total accumulated loss of Rs.178Lacs. The volatility in the primary economic drivers such as Construction, Trading and Oil in the Middle East region further contributed to achieving the business lower than the plan.

However, the Company has worked on many new initiatives and strategies to minimize the impact of

continued economic slowdown by focusing on increased product range for Trading and concentrate on precision ground components. Additionally, the Company is also exploring opportunities to extend re- profiling, honing & grinding services to Iran, Egypt, Turkey and other adjoining countries. The renewed focus particularly in servicing industries like Glass Reinforced Plastic and Oil Exploration is expected to help the Company to tide over the current situation and achieve better results in the coming year.

APPROPRIATIONS

Available for appropriation (Rs in Lacs)

Profit after tax 1595.09

Add: Balance brought forward from previous year 724.35

Total 2319.44

Recommended appropriations

Transfer to general reserve 350.00

Proposed dividend Rs 25/- per share of face value of Rs 10/- each (250 %) 500.00

Dividend tax 83.04

Balance carried forward 1386.40

Total 2319.44

DIVIDEND

The Board of Directors have recommended a dividend of Rs. 25/- per equity share of face value of Rs.10/- each (250 %) and the same will be paid after the approval at the forthcoming Annual General Meeting. The dividend warrants will be posted on or after 5th August 2011.

CONSOLIDATED FINANCIAL RESULTS

The Ministry of Corporate Affairs vide its general circular no. 2/2011 dated 08/02/2011 has granted

general exemption in complying with the provisions of Section 212 (8) of the Companies Act, 1956 subject to fulfillment of certain conditions. The Ministry has further vide its letter dated 14/02/2011 informed the Company that approval of the Ministry is further not required.

A consolidated financial statement (incorporating the operations of the Company and its two subsidiaries) has been provided in the Annual Report. The key financial data for the consolidated operations are as given below:-

KEY CONSOLIDATED FINANCIAL SUMMARY

(Rs in Lacs)

31/03/2011 31/03/2010

Sales 9129 6154

Other Income 197 193

Profit before tax 2551 1520

Profit after tax 1684 998

Earnings per share-Rs 84.18 49.91

QUALITY

Your Company is into manufacture of high precision super abrasive (Diamond / CBN) grinding wheels, special tools, customized CNC Grinding / Honing machines and precision components meeting close tolerances and exacting standards. Tight process controls and Quality at each stage of operation is paramount for final output to meet up with customer requirement. Your Company constantly updates its quality programs to supply the right product at the right time. Lean management has also been introduced in certain production programs. Its manufacturing practices lay greater emphasis on training on latest trends on continual basis by creating a conducive atmosphere for learning across the

organization in addition to bench marking with the global best practices. Your Company continues to also invest on latest equipments to ensure that product quality meets the exacting Product standards.

SAFETY, HEALTH AND ENVIRONMENT (SHE)

The well crafted SHE management system of your Company is top driven and ensures effectiveness and adherence. The top management is committed to maintaining highest standards of Safety, Health and Environment protection for all applicable statutory norms and prevention of pollution requirements. Occupational health and safety continues to be an unremitting focus area for the Company. The safety policy is put in place to nurture a Zero Accident culture by adopting fail safe procedures, using best protective gears befitting the respective work areas, continuous training and enforcing compliance by vigilant Audit.

Your Company recorded zero accident during the year once again and has not lost even a single production man day on account of disability. Your Company accords high degree of importance to ensure a healthy and safe workplace for its own employees, the service providers including guests and visitors, by maintaining the highest levels of safety and occupational health standards across the organization. In order to make sure of the above, regular training on Safety, Fire hazards mock drills are conducted. Specialized Standard Personnel Protection Equipments are being provided to the operating personnel for use in their respective work areas.

General health & physical fitness of employees is of prime importance for your Company. Employees are required to undergo annual medical check-ups for timely diagnosis of their health condition. Your

Company has a qualified and competent doctor visiting the factory regularly to help the employees and their families to maintain good health condition and keep fit. Your Company also offers a mediclaim insurance policy that provides for hospitalization & major healthcare expenses to employees and their family members.

During the year, your Company has set up a fitness centre in the factory premises for its employees by equipping it with state-of-the-art fitness machines, equipments and gadgets. Employees are encouraged to use the fitness centre under the supervision of the practicing Physiotherapist.

Your Company had integrated its Quality Management System ISO 9001 and Environment Management System ISO 14001 and has been practicing Integrated Management System. Your Company is focusing on Occupational Health & Safety practices and initiatives and is now pursuing implementation of ISO 18001 and Social Accountability Standard SA 8000 during the year 2011-12. Your Company believes and follows the principles of good corporate citizenship that mandate the active contribution of companies towards ensuring employees Safety and Health and preserving Environment. Consequently, your Company has incorporated required operation systems to ensure zero accidents, Good Health & Zero Environmental impact.

RECOGNITIONS AND AWARDS

Recognition, Awards and accolades keeps the employees and the Company as a whole motivated for achieving higher results. During the year your Company has got the following awards

Engineering Export Promotion Council (EEPC) Award

This year yet again Engineering Export Promotion Council (EEPC) India conferred on us "Silver Shield for Star Performer" under Large Enterprise category for Miscellaneous Engineering Goods for the year 2008-2009. This is the seventh consecutive year that your Company is getting recognized by EEPC.

Best Manufacturing Award

Your Company has received the Best Manufacturing Award and Certificate of Recognition in the Machine Tools sector for Ranking No.1 under Top 500 SMB category for 2008-09 following a survey conducted by the Centre for Monitoring of Indian Economy (CMIE) in association with Industry 2.0 magazine for superior manufacturing performance.

Quality Circle Awards

At the National level, your Companys employee team participated in Quality Circle competition & has been awarded for SGA with "Distinguished Category" at the national convention NCQC 2010 organized by QCFI at Vishakhapatnam.

Like wise, at the Regional level, teams from your Company won many quality related awards such as Small Group Activities (SGA), Kaizen, Quality Quiz and 5S from participation in CCQC 2010 [Quality Circle Competitions] organized by QCFI, Bangalore Chapter.

CII Work Skill Competition

At the Regional level, one of the employees of the Company was ranked 2nd in the Turner Trade Competition organized by Cll and was advanced to the National Level.

CRISIL Independent Equity Research (IER) Rating

Your Company has been recognized by NSE as one of the few listed companies in India to have been practicing sound management systems and ethical norms based on strong business fundamentals. As advised by the NSE, Indias premier equity research agency CRISIL had conducted an Independent study of your Company across all facets of the business during the year. Based on the assessment, CRISIL has assigned a rating of "4/5" for Superior Fundamentals and "3/5" indicating Fair Market Valuation of shares.

Cufest 2010

Employees of the Company participated in Group- level Quality competitions "Cufest 2010" [Quality Festival of CUMI], and won awards for Quality Logo, Poster & Idea King events.

MGTC Cultural Meet

Women Employees of the Company participated in the cultural meet organized by Murugappa Group and won awards for individual talents.

In the section that follows, the information required to be given in the Management Discussion and Analysis Report have been provided

GENERAL PERFORMANCE REVIEW

During the year 2010-11, the Indian economy continued its momentum by maintaining the tempo ending with a reasonable GDP growth rate of around 8.3% in the midst of spiraling commodity prices. Despite the inflationary trend in foods, the economy was not out of the growth path. Accelerated

investments in Infrastructure, rapid rise in exports and growth in industrial out put helped the growth. Indias strong internal growth dynamics was most visible in segments like Automobile, Auto Component, General Engineering, Infrastructure & Construction and Steel. Resonating with the growth in Indian economy, the domestic business of Wendt (India) Limited grew by 54% and export achieving a growth of 17% over the last year. While the Super abrasive business grew by 26%, the Non-Super abrasive has shown an exemplary growth of 138% over the last year. The growth in the Super abrasives has come mainly from your Companys increased focus on growing industries in Domestic market such as Automotive, Cutting Tools, Engineering, Steel, Ceramics and Refractory. Continuous efforts on new product and new application development including working in close coordination with customers for import substitutions supplemented to this growth. The Non-Super abrasive business comprising of machine tools, accessories and precision components together recorded the above commendable growth. Capacity expansions and new projects in Steel sector, positive performance by Engineering, Railways and Cutting Tool industries together with sustained demand for precision components has enabled your Company to record this higher growth in the Non-Super abrasives business. While new variants & models in Machines were introduced in the market by your Company during the year, continued thrust on new product development, increased service levels and direct marketing efforts have helped to maintain its leadership position in the domestic market.

In order to increase customer base, provide prompt services and ensure sustained growth in the domestic arena, your Company created two additional regions namely Jaipur and Nashik during the year. This move will help your Company to complement its market presence and competitive edge.

While your Company continues to offer products and services to the existing industries such as Automotive, Cutting Tool, Engineering, Steel, Ferrite, Glass, Ceramics, Paper and Textile, it expanded the industry base to Railways, Aerospace, Construction, Infrastructure and Oil and Gas during the year. This is in line with your Companys underlying core objective of constantly looking for opportunities in growth sectors which is vital for the success. As a result, the comprehensive product range particularly in the Super abrasives business has become still more inclusive in terms of applications and product basket.

As you would recall, in order to bring more focus and direction to address sustained growth year-on-year, your Company had formed the Strategic Intent, followed by identification of Strategic Initiatives and deployment of Product Management approach few years back. To strengthen and support this, in the year 2009-10, your Company re-classified the businesses into three verticals namely Super abrasives, Non- Super abrasives and International Business. The above initiatives and underlying actions have complemented well and have started yielding results from this financial year 2010-11.

DIRECTORS

Mr. Shrinivas G Shirgurkar, Director retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The necessary Resolution is being placed before the shareholders for approval.

AUDITORS

M/s Deloitte Haskins & Sells, Chartered Accountants, the statutory auditors of the Company hold office, in accordance with the provisions of the Companies Act, 1956, are due for retirement at the ensuing Annual General Meeting and are eligible for reappointment, subject to the approval of the shareholders at the Annual General Meeting. Your Directors recommend their reappointment for the ensuing year.

FIXED DEPOSITS

The Company has not accepted any fixed deposits during the year 2010-11 and as such, there are no outstanding fixed deposits from the public as on 31 st March 2011.

CORPORATE GOVERNANCE

Your Company is compliant with the requirements of Clause 49 of the Listing Agreement. The Report on Corporate Governance along with a Certificate from the Auditors as stipulated under the above clause is attached to this report. The Chief Executive and the Chief Financial Officer of the Company have submitted a certificate endorsing to the Board the correctness of the financial statements and other matters as required under clause 49 V of the listing agreement.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors to the best of their knowledge and belief confirm that:

- In the preparation of the annual accounts for the financial year ended 31st March 2011, the applicable accounting standards have been followed.

- The accounting policies have been followed and applied consistently and the judgments and estimates made, are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2011 and of the profit of the Company for that period.

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies

Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. To ensure this, the Company has established internal control systems, consistent with its size and nature of operations. In weighing the assurance provided by any such system of internal controls its inherent limitations should be recognized. These systems are reviewed and updated on an ongoing basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems.

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

DISCLOSURE OF STATUTORY PARTICULARS

Information required under Section 217 (1) (e) and Section 217 (2A) of the Companies Act, 1956 are given in Annexure A and B and forms part of this Report.

APPRECIATION

The Board places on record its appreciation for the continued co-operation and support received from its esteemed customers, its Associates and Subsidiaries. The Board also places on record its appreciation for continued support and co-operation received from Government Departments, Bankers, Shareholders, Suppliers, and Employees.

By order of the Board For Wendt (India) Limited

M M Murugappan Chairman

Chennai 29th April 2011


Mar 31, 2010

The Directors have pleasure in presenting the 28th Annual report together with the Audited Financial Statements for the year ended 31st March 2010. The Management Discussion & Analysis Report, which is required to be furnished as per the requirement of Stock Exchanges, has been included in the Directors Report so as to avoid duplication and repetition.

ECONOMIC OVERVIEW

Indian economy has been witnessing a phenomenal growth since the last decade. The country is still holding its ground in the midst of the current global financial crisis. A number of leading indicators, such as increase in hiring, freight movement at major ports and encouraging data from a number of key manufacturing segments, such as steel and cement, indicate that the downturn has bottomed out and highlight the Indian economys resilience. The real turnaround came in the second quarter of 2009-10 when the economy grew by 7.9 per cent. It was also a year of reckoning for the policymakers, who had taken a calculated risk in providing substantial fiscal expansion to counter the negative fallout of the global slowdown.

The continued recession in the developed world, for the better part of 2009-10, meant a sluggish export recovery and a slowdown in financial flows into the economy. Yet, over the span of the year, the Indian economy posted a remarkable recovery, not only in terms of overall growth figures but, more importantly, in terms of certain fundamentals, which justify optimism for the Indian economy in the medium to long term.

At global level, following one of the deepest downturns in recent times, economic growth took root and extended to advanced economies in the second half of 2009. The pace and shape of recovery, however, remains uncertain.

COMPANY PERFORMANCE OVERVIEW

(Rs in Lacs)

31/03/2010 31/03/2009

Sales 5609 5136

Other Income 221 309

Profit before tax 1455 1297

Provision for current

& Fringe Benefit tax 468 405

Provision for deferred tax 4 8

Profit after tax 982 884

Earnings per share 49.12 44.21



RESULTS OF OPERATIONS

The Company achieved a top line of Rs 5609 lacs during the year which is 9% higher than the previous year. The domestic turnover recorded an appreciable growth of 29% over the previous year. During the first half, the Indian economy limped back to normalcy and reversed the trend reflecting buoyancy in second half in many of the industrial segments the Company operate. Your Company having major exposures to the Automotive and the connected Engineering and Cutting tool sector, had its positive impact on the Companys Domestic Business. The Export sales recorded 29 % negative growth during the year. Exports to many countries continues to be lower than last year as these countries are still to come out of recession. Severe cash crunch situation in UAE has led to impose embargo on supplies to control exposure.

Various initiatives taken by the Company in the previous years to grow the precision Component business started showing results. The Company is also in the process of growing this business segment further in the coming years and would continue to make necessary investment in Plant and Machinery, infrastructure and human resource, accordingly.

The Company continues to focus on new products development in line with its strategy of providing technically superior products to its customers. During the year, the Company has successfully introduced and tested several new products including Segmented wheels for refractory grinding, plated diamond wheels, PCD Notch milling tools, Steel bodies for glass

grinding wheels and Brazed Diamond multi purpose Grinding wheel. The Company also successfully launched the following machines, CNC Surface Rotary Grinding WRS 600H Machine, CNC Guide Roll Grinder WGM20, CNC Notch Milling Machine.

FUTURE PROSPECTS

The three Broad Strategies of the Company continue to be:

- Continually improving product performance by use of technology & superior manufacturing. While the existing products would continue to be offered to the customers, new products and new applications development would be the focus.

- Market penetration to increase the share with existing customers.

- Develop competitive edge by improving service levels and offering value added services.

In order to focus and channelize its resources more effectively, the Company segmented its business into three verticals namely Super Abrasives, Machines & Precision components and International Business. Further, in order to strengthen the customer engagement, your Company would bank on its knowledge base in grinding to achieve its objectives. Series of Seminars and Exhibitions planned would help in supporting the customer engagement.

The Company has recently signed the technical collaboration agreement with M/S Delapena, UK for manufacturing of Honing machines. This would enable the company to further strengthen its competitive edge by offering “Complete Honing Solutions” also along with grinding solutions. The Company will continue to focus on opportunities for its products and services in other growing industries such as Auto Component, Infrastructure & Construction, Steel, Defense & Aerospace.

SUBSIDIARY COMPANIES

Wendt Grinding Technologies Limited, Thailand

Despite turbulent economic situation, the Companys wholly owned subsidiary in Thailand continues to

perform well. During the year the Companys top line was Thai Bhat 45 miln (Rs 637 lacs) which was 4% higher than last year. The Profit before tax was Thai Bhat 12 miln (Rs 153 lacs) and Profit after tax was Thai Bhat 8 miln (Rs 103 lacs) both recorded an appreciable growth of 27% over the previous year. The higher profit has resulted on account of various cost reduction measures and operational efficiency measures put in place by the subsidiary Company. During the year the Subsidiary Company declared the first dividend of 20% amounting to Rs 71 lacs.

The Subsidiary Company, in order to build brand image and product awareness, participated in industrial exhibitions, developed local advertising materials, conducted technical seminars and sales meet. It has also, appointed new industry specific distributor as partners in progress. The Company is working with a clear focus to build business in following industries, Glass, Automobile, Steel, Auto parts, Wood, Furniture and Construction industry. Further the company is also exploring opportunities to extend re-profiling business to Malaysia, China & Vietnam. During the year, the company has upgraded "ISO9001-2008"certification with strong recommendation from "TUV NORD".

Wendt Middle East FZE

The Company started its billing in August 2009 and during the year the sales was AED 179(000s) (Rs 23 lacs). The loss before tax for the year was AED 642 (000s) (Rs 88 lacs). The total accumulated loss is Rs 96 lacs. The Global meltdown severely affected the sale. The Middle East in General and UAE in particular are reported to have been going through the most severe economic crisis in their history. The Middle East being a Trading Economy is primarily driven by oil and construction.

While oil prices have stabilized at a low of 65 USD per barrel the construction has seen a massive decline with over 60% projects either shelved or stopped half- way. The slowdown compounded with a steep increase in operation costs has resulted in many businesses closing down and many migrants forced to return back to their countries.

Even though your subsidiary started the business midway during the year, the crisis has impacted on the

companys sale and profitability. Accordingly the market development and the revenue generation from servicing activity for glass grinding and Tile Plant wheels did not happen as expected.

However the company has quickly adopted new strategies to counter the slowdown by focusing more on Trading. The focus on un-explored opportunities in Glass Re-enforced Plastic Industry and oil Industry is expected to help the company to counter the recession and recover from the present crisis.

APPROPRIATIONS

Available for appropriation
Profit after tax 982.33

Add: Balance brought forward from previous year 675.06

Total 1657.39

Recommended appropriations

Transfer to general reserve 350.00

Proposed dividend Rs 25/- per share of

face value of Rs 10/- each (250 %) 500.00

Dividend tax 83.04

Balance carried forward 724.35

Total 1657.39



DIVIDEND

The Board of Directors have recommended a dividend of Rs.25 /- per equity share of face value of Rs.10/- each (250%) and the same will be paid after the approval at the forthcoming Annual General Meeting. The dividend warrants will be posted on or after 5th August 2010.

CONSOLIDATED FINANCIAL RESULTS

The Ministry of Corporate Affairs vide its letter dated 15/03/2010 has exempted the company in complying with the provisions of section 212(1) of the Companies Act, 1956 and has directed to present in the annual report the consolidated financial statements of its subsidiaries duly audited by its statutory auditors.

A consolidated financial statement (incorporating the operations of the Company and its Subsidiaries) has been provided in the Annual Report. The Key financial data for the consolidated operations are given below:-

KEY CONSOLIDATED FINANCIAL SUMMARY

(Rs in Lacs)

31/03/2010 31/03/2009

Sales 6269 5600

Other Income 193 277

Profit before tax 1520 1381

Profit after tax 998 931

Earnings per share-Rs 49.91 46.54



QUALITY

The Companys products are high precision grinding wheels, tools, machines and precision components. These are manufactured with close tolerance under tighter process controls. Quality at each level of operation is essential to achieve the final quality to meet the customer need. The Company constantly updates its quality programs to supply the right product at the right time. Quality is embedded in the DNA of the Organization through continued training of manpower and bench marking with the global best practices with Best in class.

SAFETY, HEALTH AND ENVIRONMENT (SHE)

The SHE management system of the Company is top driven, efficient, effective and vibrant management system. Top management of company is committed for maintaining highest standard of Safety, Health and Environment protection and is also committed to meet all applicable statutory requirement and prevention of pollution.

During the year again the Company recorded zero accident and has not lost any man days of production on account of disability. The Company pays much attention and ensure safe working atmosphere and safe equipment, process and practices in the factory. Regular training on Safety, mock drills are conducted to ensure safety all round the year. Specialized Personnel Protection Equipments have been standardized and provided to operating personnel for use in their respective work areas.

Employee health is a paramount consideration for Company. Employees are required to undergo annual medical check-ups for the timely diagnosis of health problems if any. The Company has a visiting doctor at the factory to help the employees and their family to maintain good health and keep fit. The company also offers a mediclaim policy that provides for healthcare expenses and other benefits to employees and their family members.

The Company has developed Environmental Management System based on ISO 14001 at each operating facility which is further integrated with Quality, Occupational Health and Safety management System for having holistic approach towards (SHE) issues of the company. The Company believes in the principles of good corporate citizenship that mandate the active contribution of companies towards preserving the environment. Accordingly, the Company has incorporated in its operations systems to ensure zero environmental impact.

RECOGNITIONS AND AWARDS

Recognition and awards motivates the Company and its employees to achieve better results. During the year the Company has got the following awards Engineering Export Promotion Council (EEPC) AWARD

Engineering Export Promotion Council (EEPC) conferred on us "Silver Shield for Star Performer" under Large Enterprise category for Miscellaneous Engineering Goods for the year 2007-2008. This has been yet another year of your Company getting recognized by EEPC.

Quality Circle Awards

Two Small Group Activities (SGA) teams of the Company participated in CCQC 2009 [Quality Circle Competitions] organized by QCFI, Bangalore Chapter and have bagged awards in “Excellence” and "Distinguished" categories.

Cufest 2009

Participated in Group level Quality competitions Cufest 2009 [Quality Festival of CUMI], won following awards: 5S, Quality Slogan & Cartoon.

In the section that follow, the information required to be given in the Management Discussion and Analysis Report have been provided.

GENERAL PERFORMANCE REVIEW

During the year 2009-10, the Indian economy bounced back to the growth trajectory particularly after the first quarter, maintaining a healthy pace by recording an impressive growth in excess of 8%. This impressive growth was fuelled by improved productivity from a buoyant industrial sector with IIP of 10%, reflecting Indias strong internal growth dynamics in most noticeable segments like Automobile, Auto Component, Infrastructure & Construction, Steel and General Engineering. On the other hand, Indias export continued to be sluggish due to prolonged economic slow down in developed nations.

The growth in Indian economy has augured well for domestic business of Wendt India Limited. While the Super abrasive products sale for the company grew by 6%, the Non Super abrasive business comprising of precision components and machine tools together recorded a growth of 15% over the last year. This has been possible due to the continued thrust on application development, widening the product basket, new product development, superior products performance and being closer to customers through continued direct marketing efforts. This has helped your company to maintain its leadership position in the Super abrasive arena in the competitive domestic market. Wendts strong presence has been with all major industries where it operates namely Automotive, Cutting Tool, Engineering, Steel, Ferrite, Glass, Ceramics, Paper and Textile. Your companys competitive edge is derived from the most comprehensive product range in Resin, Metal, Electroplated and Vitrified bonding systems along with Diamond Dressing rolls and Honing sticks. Your Company philosophy of addressing the customers needs and expectations have been key to its success.

In line with the companys Strategic Intent “To become a Significant Global Player in offering Customized, Functionally Superior Products / Services for Grinding and Machining Hard-to- Process Material”, Wendt India is continuously searching for new business opportunities to enlarge its product canvas in the promising industry segments.

In order to take advantage of the growing economy and achieve aggressive growth in the chosen industries, your company has classified its business into two major segments - Super Abrasives comprising of all Diamond / CBN Products and Non

Super Abrasives comprising of Machine Tools and Precision Components.

During the fiscal, your company has signed technical collaboration with M/S Delapena Honing Machines, a well known company in UK, for manufacturing of Honing machines in India. This collaboration, apart from being the Segmental strengthening of the Non Super abrasive business, enables your company to become a “Total Honing Solution Provider”. To sum up, despite the high inflationary market movements, input cost pressures, a yet- to-be stabilized domestic market and continued economic slow down in overseas markets, your company has had a decent year, fuelled by a buoyant domestic market.

ECONOMIC OUTLOOK

The gloom prevailing last year has given way to optimism and confidence during the year 2010-2011. The growth optimism is resonated by around 8.3% growth expected in the coming year. There is a growing consensus world over that worst of the financial crisis is over. After having contracted in 2009, the global economy is expected to expand during 10-11. The Indian economy has displayed remarkable resilience by engineering a substantial increase in demand through fiscal measures to compensate for the decline in export. The focus has now turned towards domestic consumption and investments - the key drivers of growth in the coming year.

Demand in Domestic economy has already picked up and is expected to gather momentum in coming months. The capital goods market has shown impressive growth during the year aided by substantial growth in production in metal and metal parts and machinery & equipment.

The Industrial sector is expected to play a crucial role in driving the growth in GDP during FY11. Focus on infrastructure spending by the government and an increase in investment demand by the corporate would provide impetus to the industrial production.

The auto component industry is expected to have a healthy growth in on the back of revival in demand from domestic OEMs. However, the export sales volume is expected to remain flat during 10-11. Nevertheless, the export market could gain faster momentum due to expected marginal revival of global market and cost competitive prices of Indian manufacturers.

The Indian automobile market which grew by 22% during 09-10 with strong recovery across all segments, the exports growth was 10% aided by buoyancy in passenger car segment which constitutes almost 25% of total exports. Recovery in Commercial vehicles could be attributed to improved freight movements. Similarly, fuelled by rural demand and favorable financing environment led higher volumes in cars and two wheelers. Overall lower input costs, reduced fixed costs and improved operating profits led to sharp improvement for automobile players.

The Indian steel industry is witnessing a faster-than- expected recovery from the global financial and economic slowdown. The steel industry is expected to continue its recovery with projected growth of 6.7% during 10-11 driven by strong demand from infrastructure, railways, urban development and automotive sector despite rise in excise duty and cess on coal.

INDUSTRY STRUCTURE & DEVELOPMENTS

Being an indirect supplier, the Super abrasive tooling industrys growth is greatly dependent on the performance of sectors like automobile, auto components, engineering and their related industries in both domestic and export market. With the reversal of domestic economy from 2009-2010 second half in many segments and limping back of export from the unprecedented global economic crisis, your company has had a rather satisfying year 2009-10.

The global economic downturn and volatility has impacted the Super abrasive industry resulting in market shrinkage by over 20 % in the preceding year which is expected to return to positive in later part of the year. Taking cognizance of this, proactively, your company continued to focus on long term plans and has been working on various strategies to widen the portfolio to reduce dependency and de-risking the business on Auto industry. As a result, several newer application areas in various emerging industries and markets have been identified with industries like Aeronautical, Construction, Petroleum and Chemical, Power and Glass.

PERFORMANCE OVERVIEW

Key Financial Summary

(Rs in lacs)

Particulars 2008-09 2009-10 % change

Domestic Sales 3389 4368 29

Export Sales 1747 1241 (29)

[Total Sales 5136 5609 9

Operating Profit 1035 1289 25

[Capital Employed 4668 5035 8

[Return on net worth 21 21 -



OPPORTUNITIES & THREATS

Opportunities

While Indias growth prospects in the long term remain promising, presently the economy is still to go through full consolidation to ensure robust growth. During the last year, the overall sentiment post Sept 09 has been extremely positive. Your company would take advantage of this rebounce and the underlying opportunities by continued focus on leveraging on the wide product range, superior technology and resultant competitive advantage. With improved focus on service levels, your company expects to broaden the customer base and achieve the planned growth.

The Product Management approach adopted by your company in 08-09 has started yielding better results with more emphasis on end-to-end product management and new product development. With the addition of Delapena Honing machines to the existing machine tool umbrella is expected to provide more impetus to the Machine Tools business while taking the company to the next league of providing "Total Honing Solution Provider".

On the precision component front, the experience has been more than satisfying ever since its entry two years back with manufacture of vane components for fuel injection Industry. More thrust would be given by your company to further expand this business for manufacturing of precision components for non automotive segment.

Threats

With the Super abrasive tooling market in India being fragmented and crowded by many small unorganized players, the company faces competition from both organized as well as unorganized players. The competition especially from the unorganized players has been more towards specific products at lower price levels. The global suppliers from the developed countries primarily concentrate on high end precision applications and OEM supplier by their tooling up with machines which are imported. This in fact is an opportunity for your Company for indigenization.

The key success factors for your company continue to be quality, cost effectiveness of its products, service and its vast experience and knowledge pool. It is now augmented by your company offering training programs on grinding to its customers on chargeable basis. The response has been very promising. More of such training programs have been planned during the year 2010-11. Combination of all this in offering technology solutions to customers helps your company to maintain its leadership position and profitability.

BUSINESS OUTLOOK

The domestic market is expected to maintain uptrend with few exceptions in some industry segments. Your company is fully geared to meet the demand and delivery pressures resulting out of the buoyancy and also taking advantage of the emerging opportunities.

Continued focus on expansion of customer base and developing new application areas / industries, offering import substitution, thrust on improving operational efficiency is expected to yield positive results. This will help your company to churn out respectable profitable growth in the coming year.

The introduction of Wheel profiling machines with Video Vision system, Delapena Honing Machines, Guide Roll grinding machine for Steel Industry and several other machine accessories as well as for precision component to non automotive sector re- establishes the Companys confidence to look at Non Super abrasive Business more aggressively.

The newly set up 100% subsidiary at Sharjah, Wendt Middle East (WME) which became operational only during mid of last financial year now focuses on trading and services in the UAE and neighboring market. This would strengthen its foothold on overseas markets.

Wendt Grinding Technologies Ltd in Thailand continues to show exemplary performance despite adverse market situations due to the economic slowdown. Your company expects to spread its wings, improve the market reach in the neighbouring countries.

RISK & CONCERN

The company seeks to enhance its value through adequately mapping the risk profiles and by incorporating a robust risk mitigation mechanism for its business.

Risk management refers to the formal processes whereby risks associated with the “enterprise”, as a whole are managed.

Risk management encompasses the following sequence:

- Identification of risks and risk owners

- Evaluation of the risks as to likelihood and consequences

- Assessment of options for mitigating the risks

- Prioritizing the risk management efforts

- Development of risk management plans

- Authorization for the implementation of the risk management plans

- Implementation and review of the risk management efforts

Risk management strengthens the robustness of the business. The Company has an established risk assessment and minimization procedure. There are normal constraints of time, efficiency and cost. Some of the risks associated with the business and the related mitigation plans are discussed hereunder. The risks given below are not exhaustive and the evaluation of risk is based on managements perception.

User Industry Concentration Risk

Why considered as Risk

- Significant exposure to auto sector

- Lag in pass through of input cost changes

- Demand declining in global markets

Mitigation Plan / Counter Measure

- Widen customer base spanning non-auto industry & recession free industries like Power, Aerospace, Defense, Infrastructure etc.

- New products / applications to existing / new customers / New markets

- Leverage relationship and Engagement with customers

- Drive operational efficiencies

Competition Risk

Why considered as Risk

- Imports - Since India is the most happening place

- Unorganized players

Mitigation Plan / Counter Measure

- Focus on QCD - Consistent quality , Cost & timely delivery

- Innovate on products, process and applications

- Offer wide product range

- Value added services

INFORMATION TECHNOLOGY:

The Company runs on SAP ERP and all its core functional operations are well integrated to achieve operational efficiency. During the year, up-gradation to higher version has been completed successfully to take advantage of the new features. During the year, the Company has also implemented SAP HCM module to effectively link the Human Resource Management system with other system. The SAP HCM also enables employee to interact with HR Department on-line, there by avoiding time delay and paper movements.

In order to mitigate the risk of Hardware failure, the Company has put in place first stage data backup and

recovery systems and planning to go for a higher level / robust data back up and recovery system in the coming year.

INTERNAL CONTROL SYSTEM & ADEQUACY

The Company is having a strong internal control system to achieve highest operational control. The Internal Audit covers all the operational areas and ensure that there is no revenue leakage or resource wastage. It also ensures that the Companys policies are implemented consistently and regularly. At regular intervals all observations and potential areas for improvements are reviewed with the concerned operating personnel to address the gaps if any.

The Audit Committee reviews the significant findings of the Internal Audit observation and advise at regular intervals for further action.

FINANCIAL REVIEW

EARNINGS

Revenues

The revenue, during the year, recorded 9% growth from Rs 5136 lacs to Rs 5609 lacs. The domestic sales achieved an appreciable growth of 29% while exports sales recorded a negative growth of 29% compared to the previous year.

Profit Before Tax

The profit before tax is higher by 12% from Rs 1297 lacs to Rs 1455 lacs

Profit After Tax

The profit after tax is higher by 11% from Rs 884 lacs to Rs 982 lacs

Investments

The Companies investment as on 31-3-10 was Rs 1672 lacs compared to Rs 1200 lacs previous year .Out of this amount Rs 394 lacs (Previous year Rs 297 lacs)

is invested in two wholly owned subsidiary companies and the balance is in Mutual funds (debt schemes). During the year the Thailand Subsidiary Company has paid 20% dividend amounting to Rs 71 lacs. In the case of Wendt Middle East FZE, the accumulated loss was Rs 96 lacs as at 31-3-2010 and the paid up capital was Rs 116 lacs.

Costs

The Fixed costs have grown 11% compared to last year. The main component of fixed cost depreciation has grown 18 % due to additional machines, sales expenses has grown by 19% on account of more sales promotion activities such as exhibitions, seminar and provision for doubtful debts etc. The salaries and wages have grown 16% due to additional manpower and provisioning done as per the revised accounting standard AS 15.

The variable cost has come down due to product mix and improved operational efficiency resulting into higher operating profit margin.

FINANCIAL POSITION

Shareholder Funds

The shareholders fund as on 31.03.2010 was Rs 4803 lacs against Rs 4403 lacs of previous year. The book value of the share accordingly stands at Rs 240/- as compared to Rs 220/- during the previous year.

Loan Funds

The Company utilizes the Cash Credit limit only for meeting the temporary mismatch in the cash flow. It does not have any term loan.

Assets Fixed Assets

The capital expenditure during the year was Rs 658 lacs against Rs 752 Lacs spent in the previous year. The net fixed asset was Rs 2950 lacs compared to Rs 2611 lacs previous year.

Inventories and Sundry Debtors

The overall inventory has gone up by Rs 182 lacs compared to previous year, mainly on account of increase in Work-in-Progress machine inventory by Rs 126 lacs. This was due to delay in clearance by customers as tests / trials could not be completed in March 2010 and also for supporting the on call supplies to the customers.

Despite 9% increase in Sales, the Receivables has come down by Rs 83 lacs compared to last year due to dynamic and more aggressive receivable management drive aided by SAP ERP system.

Foreign Exchange Hedging

As the Company follows the policy of natural hedging of foreign exchange earnings and outflow it does not take forward covers. The net forex gain during the year was Rs 10 lacs.

Ratio

The return on the capital employed was 30% compared to 29% in previous year as a result of 12% increase in profit.

Financial Performance with respect to Operational Performance

The operating profit and Contribution of the Company has recorded growth during the year due to improved operational efficiency. Thanks to the availability of reliable information and effective customer data such as drawings, specification, data sheet through the SAP ERP System, the Company improved its response time and was able to supply the right product at the right time with right specifications there by enhancing the value addition to customer.

HUMAN RESOURCE

The Company maintains a congenial working atmosphere, which has been nurtured over the years though trust and transparency in all its dealing with its employees though vibrant Human Resource

policies, procedures and practices. The healthy relationship with employees enables your Company to follow flexible working systems / shop floor management, in its more than 13 production cells, to meet the varying customer needs.

The Company gives very high importance for enhancing the employees competency and skill through on the job training and external training programs. Through constant interaction with its foreign collaborators by means of visits etc, Your Companys employees have been trained on latest technology. The Marketing and Sales Field Personnel have been trained and updated with the intricacies of modern day marketing and sales, tools and techniques, while honing their Commercial aspects through specialized training programs.

Employees are encouraged to participate in external competition to enhance their skills and bench mark with the global best practices.

DIRECTORS

Mr. Kiran A Sheth, Director retires by rotation at the forthcoming Annual General Meeting has expressed his unwillingness to be re-appointed and a new director will be appointed.

AUDITORS

M/s Deloitte Haskins & Sells, Chartered Accountants, who are the statutory auditors of the Company hold office, in accordance with the provisions of the Companies Act, 1956, up to the conclusion of the forthcoming Annual General Meeting and are eligible for reappointment, subject to the approval of the shareholders at the Annual General Meeting.

FIXED DEPOSITS

The Company has not accepted any public deposits and, as such, no amount on account of principal or interest on public deposits was outstanding on the date of the Balance Sheet.

CORPORATE GOVERNANCE

The Report on Corporate Governance along with a

Certificate from the Auditors is annexed as required by the listing agreement with Stock Exchanges. The Chief Executive and the Chief Financial Officer of the Company have submitted a certificate to the Board regarding the financial statements and other matters as required under clause 49 V of the listing agreement.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors to the best of their Knowledge and belief confirm that:

- in the preparation of the Profit & Loss Account for the financial year ended 31st March 2010 and the Balance sheet as at that date ("financial statements") applicable accounting standards have been followed.

- Appropriate accounting policies have been selected and applied consistently and such judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the company as at the end of the financial year and of the profit of the company for that period.

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. To ensure this, the company has established internal control systems, consistent with its size and nature of operations. In weighing the assurance provided by any such system of internal controls its inherent limitations should be recognized. These systems are reviewed and updated on an ongoing basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems.

- The financial statements have been prepared on a going concern basis.

DISCLOSURE OF STATUTORY PARTICULARS

Information required under Section 217 (1) (e) and Section 217 (2A) of the Companies Act 1956 are given in Annexure A and B and forms part of this Report.

APPRECIATION

The Board places on record its appreciation for the continued co-operation and support received from its esteemed customers and from M/s Wendt GmbH Germany, the Companys foreign Collaborators and its Associates and Subsidiaries. The Board also places on record its appreciation for continued support and co- operation received from Government Departments, Bankers, Shareholders, Suppliers and Employees.

By order of the Board For Wendt (India) Limited

Chennai M M Murugappan

29th April 2010 Chairman

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