Directors Report of Rushabh Precision Bearings Ltd.

Mar 31, 1998

The Directors have pleasure in presenting the NINTH ANNUAL REPORT together with the Audited Statement of Accounts for the year ended 31st March, 1998.

FINANCIAL RESULTS : Year Ended Year Ended 31st March, 1998 31st March, 1997

Sales 22,78,54,867 21,55,44,688 Other Income 15,07,988 14,60,348

Total Income 22,93,62,855 21,70,05,036

Total Expenditure 22,91,37,291 21,25,17,077

Profit before providing Depreciation and interest 83,69,977 2,84,49,431

Depreciation 38,43,146 36,07,966

Interest 45,26,831 2,48,41,465

Profit before Taxation 2,25,564 44,87,959

Provision for Tax -- 10,00,000

Profit after Tax 2,25,564 34,87,959

Balance brought forward from last year 2,22,39,988 1,87,52,029

Amount available for Appropriation 2,24,65,552 2,22,39,988

OPERATIONS :

The year under report witnessed unsatisfactory for Indian Industry as a whole. The crisis in South East Asia has also affected Indian economy which resulted into overall decline in rate of growth of Industrial Production to 4.2% compared to 7.1% in last year. Consequently, there was adverse effect on automobile industry. The company's 80% of the production is absorbed on consumption by the Automobile Industry. The year under review was not particularly favourable to the company due to overall recession being witnessed by the automobile industry as a whole. The company had to reduced its prices in view of ongoing recession and depressed market conditions, which started around January, 1996. There was expectation and hope for improvement of demand in Auto industry, however the same was not fulfilled. In fact production of heavy and medium commercial vehicles dropped by 38% and Light Commercial vehicles by 24%. The car industry registered negative growth of 2% and two wheeler industry had small growth of 3%. Hence bearing industry as a while suffered severe set back, first on reduced prices and next on volume. Under the adverse circumstances, the company has managed to have turnover of Rs.22.78 lakhs compared to previous year turnover of Rs.21.55. Lakhs.

The company has envisaged a capital expenditure project of Rs. 140.00 crore for which land has been acquired at Ahmedabad to put up additional capacity to manufacture Ball and Taper Roller,

The company is taking steps to boost its market share by approaching OEM (Original Equipment Manufacturers) and also Railways, Defence Department for this bulk requirement.

DIVIDEND :-

In view of negligible profit, the Directors do not recommend any dividend for the year under Report.

DIRECTORS :-

During the year under report Mr. Sanjiv M. Gupta and Mrs. Sunayana R. Vora have resigned as Directors of the Company. The Board expresses its appreciation for valuable guidance and co-operation received by the Company from them, time to time during their tenure as Directors. Mr. Dhirajlal H. Vora and Mr. Pravin B. Kamdar, Directors of the company retire by rotation and, being eligible, offer themselves for reappointment.

FINANCE :-

The Company has approached Financial Institutions and OBC and Non Resident Indian for the placement of 60,00,000 Equity Shares of the Company on Private Placement Basis for which the necessary approval of the members was already obtained in the 8th Annual General Meeting of the Company.

The purpose of raising the resources through the above source is to finance the working capital, requirements and also to finance the capital expenditure programme of the company.

In view of depressed market condition in Ball bearing Industry the company has also approached their Bankers/Financial Institutions for reschedulement in repayment of financial facilities granted by them.

The NCD on private placement are due for Redemption on 30th November, 1998. The same has been decided to be extended for a further period of 18 months as per the terms of the issue.

In view of applications made to Banks and Financial Institutions for waiver of Interest, no interest has been provided in the accounts.

With reference to item No.11 under Notes forming part of Accounts, the company has not given effects in Revised Account of relevant year, since the matter is pending with Income Tax Authorities.

AUDITORS :-

M/s. S. M. Bhat & Co., Chartered Accounts, Mumbai retire as Statutory Auditors of the Company at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for reappointment. The members are requested to appoint Auditors for the current year and fix their remuneration. The present auditors has furnished a certificate regarding their eligibility for re appointment as Company's Auditors pursuant to Section 224 (1B) of the Companies Act, 1956.

PARTICULARS OF EMPLOYEES :

The information in accordance with the provisions under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 is not applicable as no employee of the Company, during the year under report, was drawing salary as mentioned in the said provision.

INFORMATION REGARDING CONSERVATION OF ENERGY ETC.

Information as required u/s 217(1)(e) of the Companies Act 1956 as may be applicable, is annexed hereto.

INDUSTRIAL RELATIONS :

Industrial relations at the plant of the Company at Surendranagar remain cordial. Directors wish to convey their appreciation for the contribution made by the employees at all level.

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Mar 31, 1996

Your Directors have pleasure in presenting the SEVENTH ANNUAL REPORT together with the Audited Statement of Accounts for the year ended 31st March, 1996.

FINANCIAL RESULTS:

Year ended Year ended March 31, 1996 March 31, 1995 Rupees in lakhs Rupees in lakhs

Income from Operations 1511.93 640.84 Other Income 18.27 62.57

Total Income 1530.20 703.41 Expenditure 954.85 520.20

Profit before interest and depreciation 575.35 178.21 Depreciation 46.68 36.36 Interest 180.05 52.73

Profit before Taxation 348.62 89.12 Provision for taxation 123.22 25.21 Profit after Taxation 225.40 63.91 Balance brought forward from last year 48.77 14.86

Amount available for appropriation 274.17 78.77

APPROPRIATIONS:

Tax Adjustments for prior year 10.00 Proposed dividend 70.65 30.00 Transfer to General Reserve 6.00 Surplus retained in Profit & Loss Account 187.52 48.77

OPERATIONS

Your Directors are happy to report the excellent working of the Company for the year under review. The total income during the year was Rs.1530.20 lakhs as against Rs.703.41 lakhs in the previous year registering an increase of 117.5%. The net profit is Rs.225.79 lakhs as against Rs.63.94 lakhs in the previous year thereby recording an increase of 253.29%.

DIVIDEND

Your Directors are pleased to recommend dividend @ 12% on Equity Shares subject to deduction of tax for the year ended 31st March, 1996. Out of the total share capital of Rs.900.01 lakhs, Rs. 400.01 share capital (40,00,100 Equity Shares of Rs.10/- each) were allotted on 10th January, 1996 and dividend on the said shares will be payable on pro rata basis as per terms of the issue.

DIRECTORS

Shri Pravin B. Chedda, Shri Bharat M. Shah and Shri Kamal Bhansali were appointed as Additional Directors of the Company by the Board as per the provisions of Section 260 of the Companies Act, 1956, to hold office till the ensuing Annual General Meeting of the Company. The Company has received notices from the members under Section 257 of the Companies Act, 1956 proposing their candidature for the office of Director of the Company.

Shri. Dhirajlal H. Vora, Shri. Rajesh D. Vora and Smt. Sunayana R. Vora Directors of the Company retire by rotation and, being eligible, offer themselves for re-appointment.

FINANCE

The proceeds of the Equity Issue of Rs.400 lakhs issued during the year are being utilised for which they are raised.

FIXED DEPOSIT

Your Company has not accepted any deposit from the public during the year.

AUDITORS

M/s. P.D.Sangani & Company, Chartered Accountants, Bombay retire as Auditors of the Company at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for reappointment. The members are requested to appoint Auditors for the current year and fix their remuneration.

PARTICULARS OF EMPLOYEES

The information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 is 'nil' as no employee of the Company, during the year under report, was drawing salary of more than Rs.25,000/- p.m.

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

Information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in Annexure forming part of this report.

INFORMATION UNDER CLAUSE 43 OF LISTING AGREEMENT

Information pursuant to Clause 43 of the Listing Agreement with Stock Exchanges showing comparison of the projections made in the Prospectus in respect of the Company's Public Issue of Equity Shares made in November 1995 with actual performance is given in Annexure forming part of this report.

ACKNOWLEDGEMENT

Your Directors take this opportunity to place on record their appreciation of the devoted services of the employees at all levels throughout the year. Last but not the least your Directors also wish to place on record their appreciation of the assistance and continued co-operation extended by the Banks, Government Authorities, Suppliers, Consultants etc.

ANNEXURE TO THE DIRECTOR'S REPORT

Information as per Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 and forming part of the Director's Report for the year ended March 31, 1996.

1. CONSERVATION OF ENERGY

Company has employed following conservation measures during the year.

a) Rational use of compressed air which has resulted into substantial savings in energy.

b) Improvement in efficiency of heat exchange due to prevention in scale disposition resulted in energy saving.

c) The company has purchased a generator of 120 KVA resulting substantial savings in electricity consumption.

The measures taken above has resulted in less consumption of power and energy and company is thankful to the workers and staff who has made it possible to achieve it.

Additional investments and proposals are proposed to be implemented for the reduction of consumption of energy in the forthcoming year. Company is constantly reviewing and improving upon energy conservation measures.

Total energy consumption and energy consumption per unit of production as prescribed in Form A is not applicable for the company as it is not covered under the list of specified industry.

2. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATIONS

The company attaches significant importance to the quality of the products manufactured. It should be noted that the technology development and assimilation is an ongoing process. It is essential that due to customers ever increasing demand and continuously changing world standards, there is a need for a continuous access to new developments and innovations which the company is for the moment looking forward.

3. FOREIGN EXCHANGE EARNINGS AND OUTGOINGS

The information on foreign exchange earnings and outgoings is contained in Notes to Accounts in Item No:8 (V & VI) of the Annual Report.

4. INFORMATION UNDER LISTING AGREEMENTS WITH STOCK EXCHANGES.

The Company has raised Rs. 400.01 lakhs by way of public issue of 40,00,100 Equity Shares of Rs. 10 each as per prospectus dated 6th October 1995. The funds so raised are being utilised towards the objects of the Issue as mentioned in prospectus.

The comparison of Projection made in Prospectus dated 6th October, 1995 with actuals is given below:

(Rs. in Lacs) Projected Actuals Net Sales & Other income 808.26 1530.20 Net Profit before Tax 125.86 348.62 Net Profit after Tax 105.33 225.40 Dividend (%) 10% 12%