Your Directors have pleasure in presenting the 19th Annual Report
 together with the Audited Accounts of the Company for the financial
 year ended 31st March, 2002.
 
 1. FINANCIAL RESULTS
 
                                                             Rs. in Lacs
 Particulars                                        2001-02      2000-01
 
 Sale of Products and other Income                   29,572      117,745
 
 EBIDT (Earnings before Interest Depreciation &
 Tax)                                              (10,125)       13,353
 
 Interest                                            13,221       13,004
 
 Provision for Depreciation                           9,173       19,998
 
 Previous year adjustment                                 -          (7)
 
 (loss) after tax for the year                     (32,519)     (19,642)
 
 Balance brought forward from the
 previous years                                    (39,053)     (19,411)
 
 Balance carried forward                           (71,572)     (39,053)
 
 2. OPERATIONS
 
 The year under review was very difficult year for the Company. During
 the year Company produced 7668 cars and sold 8231 cars with the total
 turnover of Rs. 29,572 Lacs. Loss for the year was Rs. 32,519 Lacs The
 Company is presently observing non-production schedule.
 
 General Motors Company, USA, while finalising the takeover Agreement
 with Daewoo, Korea, has not included the Company in its buying list,
 though it has agreed to reserve the right of first refusal. To ensure
 the continuous flow of the Spare Parts and Services, your company has
 entered into an agreement, with newly formed GM Daewoo Auto &
 Technology Co. Korea on 02/10/02, which is yet to be approved by the
 Board.
 
 After the recall of the loan in April 2002, Financial Institutions have
 filed recovery suits against the Company. DRT, Mumbai, has appointed
 the Receiver on the assets of the Company. Further, pursuant to the
 order dated 8/8/2002 of Honble DRAT, Mumbai, in the case of ICICI Ltd.
 v/s DMIL & others, DRT Receiver has initiated the process of sale of
 assets of the Company and a public notice initiating the bids has been
 published in newspapers 22/11/02.
 
 Director General of Foreign Trade (DGFT) has also revoked on 22/05/02
 the extension of period granted to the Company for fulfillment of the
 Export obligation Special leave petition of the Company is pending
 before the Honble Supreme Court of India and Honble Supreme Court has
 granted an ad-interim order in favour of the Company directing not to
 encash Bank Guarantees in respect of the license of more than Rs. 100
 crores.
 
 In view of minimum operational level, critical situation of the Company
 and also in view of sale of the companys assets under the direction of
 DRT-Mumbai, there appear to be no alternative for the company but to
 resort to the closure of the plant and reduction of manpower.
 
 3. DIRECTORS
 
 Mr. M. Sudhendranath, Mr. Anand Gore and Mr. Rajeev Arora have been
 nominated by ICICI Bank Ltd. w. e. f. 25.04.02, Mr. O. P. Singal, Mr.
 S. K. Gautam, Mr. K. L. Garg, Mr. K. P. S. Dagur have been nominated by
 IDBI w. e. f. 06.05.02 and Mrs. H. S. Advani and Mr. N. E. Ookabhoy
 have been nominated by Exim Bank Ltd. w. e. f. 07.05.02 as Directors
 on the Board of the Company.
 
 Mr. Y. T. Cho resigned as Managing Director & CEO w. e. f. 30.06.2002
 and from the directorship w. e. f 18.09.02, Wg. Cdr (Retd) H. D.
 Talwani, Director resigned from 01.01.02 and Mr. Vivek Khanna,
 Director, resigned w. e. f. 28.09.02 from directorship of the Company.
 The Board has placed on record its deep appreciation for the valuable
 contribution made by them. Mr. D. W. Kim has been appointed as
 Managing Director & CEO w. e. f 1.10.2002 and Mr. Y. J. Kim, Mr. M. H.
 Jung and Mr. K. Y. Song were appointed as additional directors w. e. f
 25.04.02 and being eligible, offer themselves, for reappointment.
 
 4. LISTING REQUIREMENT
 
 The Companys shares are listed at New Delhi, Mumbai, Chennai and
 Calcutta Stock Exchanges. The Company has paid the listing fees to the
 Sock Exchanges. As per Clause 32 of the Listing Agreement, Cash Flow
 Statement is appended with the annual accounts of the Company.
 
 5. FIXED DEPOSITS
 
 The Company has neither invited nor accepted any fixed deposit during
 the year within the meaning of Section 58A of the Companies Act, 1956
 and the rules made thereunder. There were no deposits for which
 payments were claimed but not paid. In compliance of Section 205C of
 the Companies Act, 1956, the Company has deposited Rs. 7.28 lacs
 unclaimed maturity amount lying with the Company for more than 7 years,
 with the Investor Education and Protection Fund.
 
 6. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 A statement giving details of conservation of energy, technology
 absorption and foreign exchange earnings and outgo is given at Annexure
 `A to the Report.
 
 7. INDUSTRIAL RELATIONS
 
 During the year, industrial relations of the Company continued to be
 cordial. With a view to reduce the cost, the Company has also entered
 into an agreement with Workers Union for the purpose of informal lay
 off during non-production days. The Agreement would be valid uptill
 January 2003. As per said Agreement, workers will sacrifice 39% of
 their remuneration for the non working days and will be paid the full
 remuneration for the working days
 
 The particulars of employees as per Section 217(2A) of the Companies
 Act, 1956 read with the Companies (Particulars of Employees) Rules,
 1975, are forming part of the Directors Report for the year ended 31st
 March, 2002, and annexed as Annexure `B of the report.
 
 8. DIRECTORS RESPONSIBILITY
 
 Pursuant to Section 217 (2AA) of the Companies (Amendment) Act, 2000,
 the Directors confirm that:
 
 1) In the preparation of the annual accounts, the applicable accounting
 standards have been followed along with proper explanations relating to
 material departures.
 
 2) Accounting policies have consistently been applied and disclosed
 alongwith the material departures and adjustments and estimation have
 been made with rational and prudence, 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 loss of the Company for the year under review which is
 subject to contingency as explained in the addendum to the Directors
 Report attached as annexure - C with this report.
 
 3) 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. However, worn
 out & depleted LCV - Machinery & Equipment which was lying for many
 years, was partialy disposed off by the Company under the Management
 Sanction. As the same was not taken up with Fl(s) and the Board of
 Directors, it is placed before this AGM for Shareholders approvals.
 
 4) The Directors have arranged preparation of the accounts for the
 financial year 31st March, 2002, on the going concern basis.
 
 9. AUDITORS & THEIR REPORT
 
 Your Board of Directors recommend the re-appointment of M/s V. Malik &
 Associates, Chartered Accountants, who have expressed their willingness
 and eligibility, as Statutory Auditors at the ensuing Annual General
 Meeting.
 
 M/s. K. L. Jaisingh & Co., Cost Accountants, have been appointed as
 Cost Auditors of the Company for the year 2002-03.
 
 The Auditors observations are suitably replied and explained in the
 addendum to the Directors Report, annexed as Annexure `C.
 
 10. CORPORATE GOVERNANCE
 
 Report on status of the compliance with the Corporate Governance under
 the Listing Agreement with the Stock Exchanges is enclosed as Annexure
 `D
 
 11. ACKNOWLEDGEMENT
 
 During this crucial time, your Directors wish to place on record their
 sincere appreciation for the support and co-operation received from the
 Central Government, State Government of U. P., District Administration,
 Customers, Shareholders, Bankers, Financial Institutions and Vendors of
 the Company.
 
 The Directors also thank the employees at all levels for their
 co-operation, dedication and sincere efforts.
 
 ANNEXURE TO THE DIRECTORS REPORT
 
 Information in accordance with the Companies (Disclosure of Particulars
 in the Report of Board of Directors) Rules, 1988, and forming part of
 the Directors Report for the year ended March 31st, 2002.
 
 A. ENERGY CONSERVATION
 
 Energy Saving Activities were taken up on continuous basis all through
 the year. Following activities were completed during this period.
 
 a) Power supply source changed from Power Plant Diesel Generator to Car
 Plant Diesel Generator set resulting in an expected cost saving of
 approx. Rs. 30 to Rs. 35 lacs p. m.
 
 b) Twin lights of all offices and other areas reduced to single light.
 
 c) One out of four street lights have been activated, only emergency
 lights made operational during non production hours.
 
 d) Operation of airconditioner have been monitored and controlled to
 reduce energy cost.
 
 e) Close Energy Audit has been conducted to curb any excess energy unit
 and cost.
 
 B. TECHNOLOGY ABSORPTION RESEARCH & DEVELOPMENT
 
 1. SPECIFIC AREAS IN WHICH R&D ACTIVITY WAS CARRIED OUT
 
 * Development of Matiz-LPG variant with the Italian kit to provide
 alternate fuel option to customer. Testing of car on Indian roads and
 at ARAI, Pune have been completed. Final CMVR certificate is awaited.
 
 * Development of Matiz CNG has been undertaken during the period.
 
 * Continuous value engineering and increased localization to improve
 cost effectiveness.
 
 a) Awards and recognitions
 
 * DMIL R&D is re-recognized by Department of Science & Technology under
 Ministry of Industry for its in-house R&D activities.
 
 * Rectification of the quality systems laid by DMIL for continuously
 meeting customer and product requirements by external agency TUV
 Suddeutschland is under process.
 
 b) Activities to ensure meeting vehicle regulations released by
 Ministry of Surface Transport, for example
 
 * Development of rear seat belt is under testing with ARAI Pune.
 
 * Development of new warning triangle and spare headlamp bulbs.
 
 * Development of auto dipper, however this regulation was dropped by
 Ministry of Surface Transport.
 
 c) Development of gasoline tank of five liters capacity for Cielo -
 CNG.
 
 2. TECHNOLOGY TRANSFER, ABSORPTION, ADAPTION AND INNOVATION
 
 a) Development of Matiz-l I with more appealing changes in the Body
 enhanced braking and improvement in the emission performance.
 
 b) Regular updation of Matiz design with the support of Daewoo Motor
 Company, Korea.
 
 3. BENEFITS DERIVED AS A RESULT OF ABOVE R&D ACTIVITIES
 
 Above R&D activities have helped us in fulfilling environmental,
 technological advancement and product economies responsibilities by:
 
 a) Increased product competitiveness in the market.
 
 b) Introduction in near future of Matiz with alternate fuels.
 
 c) Timely meeting of the government regulation applicable from time to
 time.
 
 4. FUTURE PLAN OF ACTION
 
 Close coordination with supplier for development and implementation of
 high security futuristic registration plate.
 
 EXPENDITURE INCURRED ON R & D
 
 - Capital: Nil
 
 - Revenue: Rs. 27,032,398
 
 - R&D expenditure as percentage to turnover: 0.916%
 
 TECHNOLOGY TRANSFER, ABSORPTION, ADAPTATION & INNOVATION
 
 * Technical data, drawings and documentation received from Daewoo
 Motors Co. Ltd., have been provided to vendors and production for
 transfer and adaptation, on going basis.
 
 * Modification of the technology to suit the domestic and exports
 market is a continuous process.
 
 BENEFITS
 
 * Indigenisation of various components to reduce of all segments.
 
 * Modification in the Companys product to suit the need of the
 domestic and export market, with minimum cost escalation.
 
 * Faciliating development of components/system for meeting regulatory
 requirements.
 
 FOREIGN EXCHANGE EARNINGS AND OUT GO:
 
 1. Activities relating to exports, initiatives to increase exports,
 development of new export markets for products, services and export
 plans:
 
 Special emphasis has been given to export. Continuous efforts for
 exploration and development of new markets are on.
 
 2. Total foreign exchange used and earned:
 
                                                             Rs. in Lacs
 
 a. Earnings in foreign Currencies                                540.32
 
 b. Expenditures in foreign Currencies
 
 i) import of goods                                              3429.32
 
 ii) Interest, Travelling & Ors.                                  202.68
 
                                          For and on behalf of the Board
 
 New Delhi                                      M. H. JUNG     D. W. KIM
 25.11.02                                         Director      MD & CEO