Dear Shareholders,
 
 India today is the second largest two wheeler market in the world and
 the industry is experiencing strong growth.  A growing economy, large
 population with an increasing disposable income in urban and rural
 sectors has led to sustained growth of the two wheeler industry in
 India.  Though the scooter industry as a whole has shown a decline, the
 increasing preference of the consumers for ungeared modern scooters has
 enabled the sale of Kinetic scooters to growth by 20%.  Your Company has
 the unique advantage of financing the buyers of Kinetic brand of two
 wheelers across the country.
 
 With the increase in sales of Kinetic brand vehicles, your Company
 felt that the merger of all the finance companies in the Kinetic Group
 into one umbrella corporate entity would help in pooling of resources
 and synergies to further exploit the existing and emerging
 opportunities. Thus the most far reaching change in your Company has
 been the amalgamation of the two other finance companies of the Kinetic
 Group into your Company.  With this amalgamation, your Company would be
 able to reap the benefits of operations of scale and provide
 synergistic linkages besides economies in costs by combining the
 business functions and operations.  Your Company also gets a nationwide
 reach and greater opportunities for growth and would be able to serve
 its clients from about 350 locations with a combined manpower of
 around 600 people and 40 of its own offices.  An infrastructure and
 network of this dimension is unmatched in the NBFC industry today.  The
 combined reach and marketing muscle of the amalgamated company would be
 harnessed to further capture market share by offering more and more
 better services to the customers.
 
 During the period under review, your Company has increased
 substantially the number of vehicles financed by extending easy credit
 facilities to consumers in its area of operations through its vast
 network of dealers.  Accessibility, favourable terms, prompt service
 etc have been some of the factors which have helped in establishing the
 credibility of your Company as one of the leading two wheeler finance
 company.
 
 Kinetic Engineering Limited and Kinetic Motor Company Limited plan to
 launch new generation vehicles employing the latest available
 technologies. With this growth, your Company will be ready with
 innovation and attractive schemes to help the customer buy his dream
 vehicles, the Kinetic vehicle.  The past performance of your Company
 has been good and the future looks brighter and your Company looks set
 to reach great heights.