Dear Shareholders,
 
 I write to you at a time when the overall economic environment is
 somewhat clouded by the uncertainties in its outlook. The difficulties
 faced by the advanced economies have again pulled those countries
 towards recessionary conditions. This may impact India''s progress in
 the coming months.  Already a comparative slow-down in certain key
 sectors seems to have surfaced. Inflationary tendencies in the economy
 and the measures to control it, both seem to be putting pressure on the
 economy.
 
 However, the positives continue to be our country''s strong internal
 demand fuelled by a young population, and relatively a low dependence
 on exports. India came out of the recessionary situation 3 years back
 much stronger than most other countries. I am quite certain we will
 display the same resilience even this time around.
 
 Perhaps in reflection of the overall situation, your Company faced
 challenges in its operations in the year under review. Adverse impact
 from input costs and inflationary trends in other costs have been
 putting significant pressure on margins. On the other hand, in a
 scenario where food inflation is restricting common people''s spending
 power, this impact on margins could not be recovered from the market
 fully.
 
 Batteries continued on the path of gradual recovery with a very modest
 growth - after the decline faced by the category over 3 years prior to
 last year. Flashlights actually showed a slight decline after a period
 of 3 years when it had shown robust growth. The other products - lamps
 and packet tea - had their usual contribution to the Company''s
 turnover. Overall, the Company''s turnover remained stagnant.
 
 This flat turnover with the adverse cost impacts resulted in the
 operating profits being lower than last year.
 
 However, every dark cloud has a silver lining. These operational
 challenges gave us an opportunity to look within ourselves and see what
 it was that we could do better. It provided us with an opportunity to
 question ourselves and every facet of our operations. This
 introspection and critique helped us set a path to improve ourselves.
 The current trends already indicate a superior level of operations. I
 am certain that this early indication will translate into tangible
 results in not too distant a future.
 
 As for the various functions of the Company, new initiatives were taken
 in the areas of branding and distribution. Some of our current branding
 visibility is an outcome of this work. Manufacturing and outsourcing
 groups played meaningful roles for an efficient supply chain. IT got
 significant focus to keep up with the changing business requirements.
 Finance and Accounts functions contributed in enhancing business value.
 HR continued to play a business enabling role.
 
 I wish to end this note by mentioning a few groups of people who
 provide the foundation to this Company. I would like to mention the
 Company''s employees who are continuously endeavouring to make it a more
 valuable one. I also wish to thank all our customers and vendors who
 have stood by us. Lastly, very special thanks to all shareholders for
 their faith and spirit.
 
 With warm regards
 
 B.M.Khaitan
 
 Chairman