Electrotherm (India)

The Directors have pleasure in presenting the 22nd Annual Report on
 the business and operations of your Company and Audited Financial
 Statement for the financial year ended as on 31st March, 2008.
 
 FINANCIAL RESULTS
 
                                                         Amount in
 YEAR ENDING MARCH   31st                               Rs. Millions
                                                  2008      2007
 
 Sales and other Income                         13321.42   7273.85
 Profit before interest, Depreciation & Tax      2139.38   1141.98
 Interest                                         785.09    350.30
 Depreciation                                     318.61    178.45
 Profit before Tax                               1035.68    613.23
 Provision for Tax                                148.01     68.40
 Profit after Tax (Before Deferred Tax)           887.67    544.83
 Provision for Deferred Tax                       265.88    112.80
 Profit after Deferred Tax                        621.79    432.03
 Prior period adjustment                            1.55      1.48
 Profit after prior period adjustment             623.34    433.51
 Surplus brought forward                          534.77    231.06
 Balance                                         1158.11    664.57
 Proposed Dividend on Equity  Shres                27.44     18.27
 (b)  Proposed Dividend on Preference Shares        7.20      7.20
 (c)  Tax on Dividend                               5.89      4.33
 (d)  Transfer to General Reserves                200.00    100.00
 Balance carried forward                          917.58    534.77
 
 Amount in
 USD Millions
 
 2008          2007
 
 333.04       181.85
  53.48        28.55
  19.63         8.76
   7.97         4.46
  25.89        15.33
   3.70         1.71
  22.19        13.62
   6.65         2.82
  15.54        10.80
   0.04         0.04
  15.58        10.84
  13.37         5.78
  28.95        16.62
   0.69         0.46
   0.18         0.18
   0.15         0.11
   5.00         2.50
  22.93        13.37
 
 DIVIDEND:
 
 In view of the Companys profitable performance, the Directors are
 pleased to recommend dividend of 25% (Rs.2.50 per share) on paid up
 equity capital and 6% on preference shares, subject to approval at the
 Annual General Meeting. The Dividend will be paid on 10,976,374 Equity
 Shares at Rs. 2.50 per share aggregating to Rs.27.44 Millions and on
 12,000,000 Redeemable Preference Shares at Rs. 0.60 per share
 aggregating to Rs.  7.20 Millions.
 
 OPERATIONS:
 
 The Indian economy is today in a strong position and at the current
 annual growth rate, as per Japans central bank, Indias economy will
 overtake Japanese economy by the year 2025 to rank third in the world
 after the United States and China in terms of purchasing power parity.
 Realization of such a growth potential is possible only with the growth
 in manufacturing sector and the corresponding support from
 infrastructure sector.  During the year, your Company has achieved a
 turnover of Rs. 13254 Millions in comparison to the turnover of Rs.7248
 Millions of previous year, showing a growth of 83%. Net profit after
 provision for taxation (Before Prior Period Adjustment) during the year
 is Rs.622 Millions as against Rs. 432 Millions during the previous
 year, showing an increase of 44%.
 
 CAPITAL PROJECTS:
 
 Your company is undertaking an aggressive capacity addition program
 besides launching new products. The company has assessed the
 requirement of finances for these initiatives. All the plant capacity
 addition programs are to be financed with a debt to equity ratio of
 60:40. In this connection the company has allotted Equity Shares as per
 SEBI Guidelines for Preferential Issues to a private equity player
 ((M/s DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH,
 Cologne, Germany) to raise Rs. 820 Millions.
 
 The company has completed its Second Phase of project at Kutch. The
 Third Phase of the project, having an outlay of Rs.5820 Millions is in
 advanced stage and is likely to be completed by June 2009. The finance
 is being tied up and except for QIP issue of Rs. 3000 Millions, all
 other funds have been received.  With this expansion, the company will
 be self sufficient in sponge iron, pig iron and power. The company
 would also have established facilities for manufacturing transformers.
 In addition, the company will become more competitive in ductile iron
 pipes and pipe line projects due to enhanced capacities of 150000 TPA
 and a full range from 100 mm dia to 400 mm dia. The company would also
 make foray into supplying structural steel for transmission line towers
 and eventually enter this segment as turnkey implementer of
 transmission projects.  This expansion will also enable the company to
 position itself better in international markets, specially in the area
 of turnkey projects.  The other products like induction heating and
 hardening equipment will also get a boost due to additional
 manufacturing infrastructure.
 
 In the electric vehicle division, the company will become self
 sufficient in all the components including motors, batteries and
 electronic controllers.
 
 EXPORTS:
 
 The thrust on exports continues and the company has completed
 prestigious projects in Turkey and Middle East.  Due to expansion in
 geographical reach, the company has been able to achieve exports of
 Rs.1490 Millions as against Rs.515 Millions in the year ending Mar
 2007. This is a 189% jump in exports in the engineering division.  In
 the coming year, the company is again targeting huge growth in the
 export front. The pending export orders are in excess of Rs.1200
 Millions and the important destinations are again Turkey, Middle East
 and our traditional markets in Pakistan, Africa and Bangladesh.
 
 QUALITY & ENVIRONMENT:
 
 Quality is the most important mantra of the company and no effort is
 spared to ensure best quality and after sales service to our customers.
 Today Electrotherms product is recognized as one of the best not only
 in India but globally. This emphasis on quality has enabled the company
 to position its product above the competitors and Electrotherm brand is
 now recognized as a symbol of quality. Electrotherm is recognized as a
 company which tailors its products according to the requirements of the
 customers instead of trying to push the products which it is
 comfortable in manufacturing. This customer focus has earned a good
 name for the company and your company has a record that none of its
 customers ever change their loyalties in favour of its competitors. In
 a short time, all the products which the company launched at its newly
 established engineering and steel works at Kutch have been recognized
 as brand leaders.
 
 DIRECTORS:
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Articles of Association of the Company, Mr. Shailesh Bhandari, Mr.
 Avinash Bhandari and Mr. Nilesh Desai, Directors of the Company, retire
 by rotation at the ensuing Annual General Meeting and being eligible
 offer themselves for re-appointments.
 
 Mr. Sunay Mathure and Mr. Ravikumar Trehan have been appointed as
 Additional Directors with effect from 30th July, 2007 and holds office
 up to the date of ensuing Annual General Meeting. Your company has
 received a notice under Section 257 of the Companies Act, 1956
 proposing their candidature as directors.  For perusal of the
 shareholders, a brief resume of each of the directors being appointed
 or re-appointed are given and forms part of the Notice. Your directors
 recommend their re-appointment.
 
 SUBSIDIARES:
 
 As required under section 212 of the Companies Act, 1956, the financial
 statement of subsidiaries of the Company i.e. Jinhua Indus Entreprises
 Ltd. and Jinhua Jahari Enterprises Ltd. are attached with the Annual
 Report.
 
 DIRECTORS RESPONSIBILITY STATEMENT:
 
 Pursuant to section 217(2AA) of the Companies Act, 1956, the Board of
 Directors of the Company hereby state and confirm that:
 
 1.  In the preparation of the annual accounts for the year 2007-08, the
 applicable accounting standards have been followed.
 
 2.  Appropriate accounting policies have been selected and applied
 consistently and have 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 financial year and of the profit of the
 company for the financial year.
 
 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 frauds and other irregularities.
 
 4.  The Annual Accounts have been prepared on a going concern basis.
 
 RESEARCH & DEVELOPMENT:
 
 Your company being primarily an engineering company, is continuously
 making efforts to explore, learn and absorb emerging technologies. The
 company continuously makes investment in tools and equipment to
 facilitate research. It is also providing training to its employees to
 facilitate development of new products appropriate for the business of
 the company.
 
 Continuous research and development is going on to enhance the
 functions of various products manufactured and sold by the company. The
 development and up gradation of equipment is carried out with a view to
 meet the rising needs of the existing customers. Proactive research is
 also being carried out to impart new features to the various products
 keeping the future needs of the customers in mind.
 
 AUDITORS REPORT:
 
 The Auditors have not made any adverse comments in their report.
 However an explanation on the contingent liabilities is being given
 here.
 
 The pending contracts for capital equipment will be executed in the
 current year and the payments to the parties will be made based on
 terms of the contract. The company has imported certain items duty free
 against export obligation. In this connection, the company has not paid
 duty of Rs.286 Million and has to execute export order of Rs.2292
 Million in next 8 years. This amounts to an annual obligation of Rs.287
 Million which is modest.  It may be noted that our exports for the year
 ending Mar 08 were equaled to Rs.1490 Million. Hence the annual
 obligation is less than 20% of the actual exports and the company does
 not envisage any difficulty in fulfilling its export obligation.
 
 HUMAN RESOURCES:
 
 Your company is a research driven organization. It believes that its
 employees are key contributors to its business success. With its prime
 focus on attracting and retaining the best talent in the industry, the
 company offers excellent working environment and competitive
 compensation packages. The company ensures a feeling of well being in
 employees through care and respect. Looking at the growth of the
 company, it has developed robust processes to evaluate and recruit
 large number of employees. In the last year the company added 808
 numbers to its strength and the recruitment process is continuing.
 
 The company believes that well trained employees are necessary for
 efficient growth of operations. Without competent employees it will not
 be possible to manage this large and complex organization which
 Electrotherm has now become.  With an endeavour to link careers to
 competencies, individual preferences and organizational needs, an
 elaborate performance management system has been established. The
 review mechanism takes care of several aspects of employees career
 such as competency development, financial rewards and recognition.
 
 PARTICULARS OF EMPLOYEES:
 
 In compliance with the provisions of Section 217(2A) of the Companies
 Act, 1956, a statement giving requisite information is annexed hereto.
 
 PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
 FOREIGN EXCHANGE EARNING AND OUTGO:
 
 The additional information required under the provision of 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 Report, is annexed hereto.
 
 CORPORATE GOVERNANCE:
 
 Pursuant to clause 49 of the Listing Agreement, a corporate governance
 report along with a Certificate from the Auditors confirming the
 compliance is annexed and forms a part of this report.
 
 MANAGEMENT DISCUSSIONS AND ANALYSIS:
 
 Pursuant to Clause 49 of the listing agreement, Management Discussions
 and Analysis Report is annexed after the Directors Report and forms a
 part of this report.
 
 AUDITORS:
 
 M/s. Mehta Lodha & Co. Chartered Accountants, Ahmedabad, the present
 Auditors of the company, retires at the forthcoming Annual General
 Meeting and has confirmed their eligibility and willingness to accept
 the office, if re- appointed.
 
 APPRECIATION:
 
 Your Directors wish to place on record their appreciation for the
 valuable co-operation and support received from the Customers and
 Suppliers, various Financial Institutions, Banks, Government
 Authorities, Auditors and Shareholders during the year under review.
 Your Directors wish to place on record their deep sense of appreciation
 for the devoted services of the Executives, Staff and Workers of the
 company for its success.
 
                                                 On behalf of the Board
 
 Date: 8th May, 2008                                     MUKESH BHANDARI
                                                          Chairman