Action Construction Equipment

The Directors are pleased to present the Fourteenth Annual Report
 together with the Audited Accounts of your Company for the year ended
 31st March, 2008.
 
 Your Company has witnessed yet another successful year of operation.
 The Company has performed remarkably well this year.  Directors of the
 Company have immense pleasure in informing that the Company, this year,
 has entered into new ventures. Your Company, in this year, started
 manufacturing Tractors and hope that its sales would pick up in the
 coming years. Your Company is also in the process of upgrading to new
 ORACLE APPS ERP. The Company also sucessfully introduced in the market
 its new product offering like, concrete pumps, piling rigs, crawler
 cranes and truck mounted cranes.
 
 FINANCIAL RESULTS
 
 Financial Results of the Company for the year under review alongwith
 the figures for previous year are as follows:
 
                                                            (Rs.in lac)
 Particulars                                      2007-08      2006-07
 
 Gross Sales                                        42856        26583
 Other Income                                        1064          379
 Total Income                                       43920        26962
 Profit before Depreciation and Tax                  4886         2939
 Less:
 Depreciation                                         319          129
 Provision for Taxation                               939          817
 Net Profit after Tax                                3628         1993
 Profit brought forward                               568          206
 Profit available for Appropriation                  4196         2199
 Appropriations:
 Interim Dividend                                     360
 Dividend on Equity Shares                            359          539
 Corporate Tax on Dividend                            122           92
 Amount transferred to General Reserve               2000         1000
 Profit carried to Balance Sheet                     1355          568
 
 Note: Previous years figures have been regrouped wherever necessary.
 
 FINANCIAL PERFORMANCE
 
 Your Company has recorded a significant growth in performance.  Total
 Income grew to Rs. 42856 lac from Rs. 26583 lac, registering a
 impressive growth of 61%. The Companys net profit after tax has
 increased from Rs. 1993 lac to Rs. 3628 lac, an increase of 82% from
 the last year.
 
 DIVIDEND
 
 The Board of Directors of the Company had earlier approved payment of
 an interim dividend @ Rs. 2 per equity share of Rs. 10 each, for the
 year 2007-08, which has been paid to the members of the Company.
 
 Directors are now privileged to recommend, subject to your approval,
 payment of final dividend of 40 paisa per equity share of Rs. 21- each
 for the year 2007-08. With this, the total dividend payment for the
 fiscal 2007-08 stands at 40% of the paid up equity capital, an increase
 of 33% over the previous year.
 
 CORPOPATE PLAN
 
 During the last few years, the kinetics of construction equipment
 business have been influenced by several change factors such as
 burgeoning demand-supply gap, increase in number of competitors, rapid
 growth of infrastructure companies, inflation and other factors. Thus,
 a need was felt to re-visit the long term corporate strategy.
 
 Your Company has formulated a long term corporate strategy plan, which
 is in line with the corporate vision and mission statement.  The
 Corporate plan aims at creating a robust and growth-oriented portfolio
 that would maximize return to the stakeholders.
 
 Broadly, the revised Corporate Strategy of your Company has identified
 the following key growth drivers:-
 
 - Protecting and strengthening, the business of Hydraulic cranes, which
 is a major revenue generator.
 
 - Increasing the production and acquiring expertise in other forms of
 construction equipment.
 
 - To produce every type of construction equipment so as to become
 complete solution provider for any infrastructure company.
 
 - Increase in marketing and production of tractors making it a key
 revenue generator for the company in the years to come.
 
 - Exploring foreign markets for the products of the Company.
 
 CHANGE IN SHARE CAPITAL
 
 During the year, your Company sub-divided its share from face value of
 Rs. 10/- per share to Rs. 21- per share. As a result number of Shares
 increased from 1,79,77,000 Equity Shares of Rs. 10/- each to
 8,98,85,000 Equity shares of Rs. 21- each.
 
 LISTING
 
 The shares of your Company are listed on National Stock Exchange of
 India Limited and Bombay Stock Exchange.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 Your Company has a wholly owned overseas subsidiary (WOS) Company at
 Cyprus viz M/s FRESTED LIMITED, and through it, your Company has
 acquired 73.90% equity stake in a Romanian Company viz. SC FORMA SA,
 Romania in the Financial year 2006-07. Further, in the financial year
 2007-08, your Company has further acquired 144,781 of SC FORMA SA,
 Romania through FRESTED LIMITED, making total No. of shares held by the
 Company to 89,5% of the total Equity Shares of the SC FORMA SA,
 Romania. Both these companies are Subsidiary Companies of the Company.
 Therefore, in compliance of the Listing Agreement with the Stock
 Exchanges and Accounting Standard issued by The Institute of Chartered
 Accountants of India, your Company has consolidated the Accounts
 incorporating the Accounts of both Subsidiary Companies. The audited
 Consolidated Financial Statements together with Auditors Report
 thereon, form part of the Annual Report.
 
 RETURN ON NETWORTH
 
 On the overall valuations of your Company, the Net Worth has gone up to
 Rs. 13688 lac as on 31st March, 2008, generating a Return on Net Worth
 (RONW) of 27%, and Return on Capital Employed (ROCE) of 25%, both of
 which indicate healthy return in the business.
 
 MARKETING AND SCALING UP OVERSEAS BUSINESS
 
 The Indian economy is in a take off phase and has developed necessary
 strengths to achieve the target of being a developed nation by the year
 2020.
 
 In April 2007, your Company participated in the worlds biggest
 exhibition for construction equipment - BAUMA 2007 in Munich- Germany,
 which was visited by more than 500,000 delegates from all over the
 world. Your Company has become the first Company in India, to showcase
 all its equipment in this exhibition. Your Company got a tremendous
 response from potential customers and int- ernational dealers.
 
 The Company plans to expand its overseas markets. It is looking at
 Middle East, Asia, Africa and Eastern Europe for its products.
 
 With a view to enhance shareholder value, your Company continues to
 focus on expanding its customer base through cost reduction, increased
 efficiency and technology upgradation.
 
 Your Companys confidence in building a positive future for itself
 stems from the continued and dedicated focus of its management team to
 maximise customer satisfaction, growth in revenue, increased market
 penetration and addition to the product portfolio.  With a large well
 spread network of 5 Regional Offices and 60 Sales and Services Centers
 and dedicated Spare Parts Division alongwith a range of products in its
 basket, your Company is well equipped to provide the best products and
 parts, support and services to its increasing number of customers. In
 this year, your company has introduced new products like piling rigs,
 crawler cranes and concrete pumps and for next year, company is
 planning to introduce Road making equipment and to make further
 addition to its concrete equipment range
 
 Your Company is looking for expansion in foreign countries also.  Your
 Company through its representatives is regularly making visits to
 foreign countries for any good possibility of acquisitions and joint
 ventures. Beside Cyprus and Romania, where the Company has already
 formed its subsidiaries, your Company is also looking at other viable
 and conducive locations.
 
 On the domestic front, your Company is one of the major Equipment
 suppliers. Your Company supplies equipment to very big groups such as
 Reliance, L & T, Simplex, Essar, NCC, IVRCL, Punj Lloyd, BHEL, Gammon
 etc., who have, through regular use of the companies products formed a
 great faith on the Companys products. Your company intends to become
 a one stop shop for all infrastructure construction related equipment
 in the next 3 years.
 
 SUBSIDIARY COMPANIES
 
 As mentioned earlier, your Company has incorporated a wholly owned
 overseas subsidiary (WOS) Company at Cyprus viz M/s FRESTED LIMITED,
 and through it, your Company has acquired 89.5% equity stake in a
 Romanian Company viz. SC FORMA SA, Romania, which has become fellow
 subsidiary of your Company.
 
 Ministry of Company Affairs, Government of India, vide its letter No.
 47/309/2008 CL-III dated May 22, 2008 has exempted the Company from
 attaching the Annual Report and other particulars of its subsidiary
 companies along with the Annual Report of the Company u/s 212 of the
 Companies Act, 1956, therefore, the said Reports of the subsidiary
 companies viz. (1) FRESTED Limited, Cyprus, (2) SC FORMA SA, Romania
 are not attached herewith. However, a statement giving certain
 information as required vide exemption letter No. 47/309/2008 CL-III
 dated May 22, 2008 is placed along with the Consolidated Accounts.
 
 The Annual Accounts of the subsidiary companies and the related
 detailed information will be made available to the members of the
 holding and subsidiary Company seeking such information at any point of
 time. The Annual Accounts of the subsidiary companies will also be kept
 for inspection by any investor at its Registered Office.
 
 QUALITY CERTIFICATION
 
 Your Company has got CE Certification for most of its manufactured
 products. After getting this Certification, products of your Company
 are well accepted in the International Market. Your Company is already
 ISO 9001 certified Company by CVI (Conformity Verification
 International), which is internationally recognized for the production,
 quality control and other qualities. This ensures that its standards of
 design, development, procurement, manufacturing, testing, installation
 and product support meet the most stringent norms.  The ISO
 Certification gives international recognisation and helps the Company,
 to boost its export turnover.
 
 AWARDS & ACCOLADES
 
 During the year under review, your Company has once again been
 conferred upon with CONSTRUCTION WORLD NICMAR AWARD (2007), as the
 fastest growing construction equipment company, second year in
 succession
 
 HUMAN RESOURCES & INDUSTRIAL
 
 RELATIONS FRONT
 
 The Industrial scenario during the year 2007-08 remained harmonious and
 cordial. There was no strike or lock out during the year and as such no
 man-days were lost. As on March 31, 2008, there were 393 employees on
 the roll of the Company.
 
 ENVIORNMENT. HEALTH AND SAFETY FOR CORPORATE SUSTAINABILITY
 
 Your Companys commitment and responsibility towards the environment
 stems from its vision, which enjoins upon your Company to sustain
 business growth with deep commitment to the environment. The safety and
 health of its employees are embedded in the core organizational values
 of the Company. The policy, inter- alia, aims to ensure safety of
 public, employees, plant and equipment, ensure compliance with all
 statutory rules and regulations, impart training to its employees,
 carry out safety audits of its facilities, conduct regular medical
 check up of its employees and promote eco-friendly activities.
 
 CORPORATE SOCIAL RESPONSIBILITY
 
 Your Company is committed to the belief that it exists not just to run
 business and generate profits, but also to fulfill its duties as a
 responsible corporate citizen. At ACE, we define Corporate Social
 Responsibility as continuing commitment for operating the core
 business in a socially responsible way, complemented by investment in
 communities to produce an overall positive impact on the society.  As
 a caring citizen, we paint various vibrant hues on the canvas of life,
 each colour in the palette coming alive with the bold brush strokes of
 hope, harmony and happiness. The focus areas of your Companys CSR
 activities are: Environment Protection, Infrastructure, Drinking
 water/Sanitation and Health /Medical facilities.
 
 Your Company regularly conducts Yoga training program for its
 employees. Your Company Is particularly cautious of the health of its
 employees and aims at providing good basic facilities and hygienic
 conditions to work for its employees.
 
 Your Company believes that a cleaner environment maintained today by
 the Company would be a precious gift to the coming generation.  Your
 Company believes in growing trees in the premises of the Company as
 well as in nearby localities, thus maintaining a balance between
 environment and corporate growth.
 
 Your Company is on its way and would be soon be involved in social
 cause such as child education, green environment and others which
 effects and is very relevant to the society.
 
 Your Company besides having an aim to generate profit, do understand
 its responsibilities as a good corporate citizen and always strives for
 ways through which it can do any good for the society.
 
 DIRECTORS
 
 Shri Subhash Chander Verma and Maj. General Dr. K.C. Agarwal Directors
 are liable to retire by rotation in ensuing Annual General Meeting and
 being eligible offer themselves for re-appointment.  Your Directors
 recommend for their re-appointment. None of the Directors of your
 Company is disqualified as per provisions of Section 274(1 )(g) of the
 Companies Act, 1956.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 The Management Discussion and Analysis of the financial condition and
 result of operations separately forms part of this report.
 
 AUDITORS OBSERVATION
 
 Observations of the Auditors when read together with the relevant notes
 on accounts and accounting policies are self-explanatory and do not
 require any further comments.
 
 CORPORATE GOVERNANCE
 
 Pursuant to Clause 49 of the Listing Agreement with the Stock
 Exchanges, Corporate Governance and Auditors Certificate regarding
 compliance of conditions of Corporate Governance forms part of the
 Annual Report.
 
 AUDITORS
 
 The Auditors of the Company, M/s. Rajan Chhabra & Co., Chartered
 Accountants, will retire at the ensuing Annual General Meeting of the
 Company. They are eligible for re-appointment and have furnished a
 certificate to this effect that the proposed appointment, if made, will
 be in accordance with Section 224 (1B) of the Companies Act, 1956.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the provisions of Section 217 (2AA), your Directors hereby
 confirm -
 
 i) That in the preparation of the annual accounts, the applicable
 Accounting Standards have been followed alongwith proper explanation
 relating to material departures.
 
 ii) That the directors had selected such accounting policies and
 applied them consistently and made judgments and estimates that are
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company at the end of the financial year and of the
 profit or loss of the Company for that period.
 
 iii) That the directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities.
 
 iv) That the directors had prepared the annual accounts on a going
 concern basis.
 
 INSURANCE
 
 The assets of your Company are adequately insured against the losses by
 fire and other risks as considered necessary by the management.
 
 DEPOSITS
 
 Your Company has not accepted any public deposit within the meaning of
 the provisions of section 58A of the Companies Act, 1956.
 
 PARTICULARS ON CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION AND
 FOREIGN EXCHANGE EARNING AND OUTGO
 
 The information relating to the conservation of Energy, Technology
 Absorption and Foreign Exchange Earning & Outgo required under Section
 217 (1)(e) of the Companies Act, 1956, read with the Companies
 (Disclosure of Particulars in the Report of the Board of Directors)
 Rules, 1988 are given in Annexure A and forms part of this report.
 
 PARTICULARS OF EMPLOYEES UNDER SECTION SI7(SR) OF THE COMPANIES ACT.
 I3S6.
 
 The particulars of employees u/s 217(2A) of the Companies Act, 1956,
 read with Companies (Particulars of Employee) Rules, 1975 are given in
 Annexure B and forms part of this report.
 
 INTEB-SE RELATIONSHIP BETWEEN
 
 DIRECTORS
 
 As per latest amendment made in Clause 49 of the Listing Agreement,
 your Company has to report Inter-se relationship between the Directors
 of the Company in the Annual Report of the Company. The following are
 the details of Inter-se relationship between the Directors:-
 
 Shri Vijay Agarwal, Chairman and Managing Director is husband of Smt
 Mona Agarwal, Whole-time Director and Father of Shri, Sorab Agarwal,
 Whole-time Director of the Company.
 
 All other Directors of the Company, act in there Independent capacities
 and do not have any inter-se relationship between themselves.
 
 ACKNOWLEDGEMENT
 
 The Board of Directors wish to place on record their sincere
 appreciation for the valuable services and dedicated efforts of the
 employees of the Company, who have ensured the accomplishment of good
 results and achievement of the Company. The Board also wishes to thank
 Government of India, various State Governments and the Companys Banker
 for all the help and encouragement they extended to the Company. Your
 Directors deeply acknowledge the continued trust and confidence that
 the Shareholders, Customers, the Dealers and the Suppliers have placed
 in your Company.
 
    For and on behalf of the Board of Action Construction Equipment Ltd
 
 Place : Ballabhgarh                        Vijay Agarwal
 Dated: 19th May, 2008                    Chairman & Managing Director