The Directors' are pleased to present-the Eighth Annual Report and the Audited Statement of Accounts for
the year ended -March 31, 1996.
 
 FINANCIAL RESULTS
 
 The financial results for the year are as follows:
 
                                        Rs. in lakhs
                               Year ended     Year ended
                            March 31, 1996   March 31, 1995
 Gross Profit                     352.41            384.22
 Interest                        (246.66)          (249.25)
 Depreciation                     (79.38)           (91.82)
 Profit before tax                 21.59             38.49
 Provision for Taxation              NIL               NIL
 Net Profit                        21.59             38.49
 
 DIVIDENDS
 
 As the profit for the year is inadequate, the Board of Directors have not recommended payment of dividend on
Equity Shares for the year under review.
 
 OPERATIONS
 
 The year 1995-96 was very encouraging and eventful. Various policy changes for Globalising Indian Economy
brought out by the Government thrusted enormous pressure on Indian Capital Goods Industry. Whereas the Auto
Industry Sector saw spectacular increase in sales and the volumes increased vertically. This has created a
boom scenario for the
 Machine Tool Sector in which your Company is placed. The emphasis of Capital Goods procurement of Auto
Sector turned from standard machines to special machines, from single stand alone machines to line concept;
whereby the Auto Industry gets fully integrated batch production machines.
 
 Your Company has entered into this field of producing special machines to Auto Sector and have pleasure in
confirming number of orders are forthcoming from Auto Industry. The Standard Machines manufactured by the
Company such as Horizontal Surface Grinder Machine and co-ordinate
 measuring machines witnessed higher demand during the financial year. Your Company has brought out number of
new sizes of machines within the existing product group so that the market demand is met.
 
 Large scale import of Standard machines are being resorted to by Indian Consumer Companies from Taiwan. This
causes tremendous pressure on pricing of Indian Machine -Tools, as the ones imported from Taiwan are lower
priced. There is also pressure created for quick delivery of machines as equivalent Taiwanese machines are
available almost off the
 shelf. This trend has made your Company think of augumenting mother machinery and Working Capital Base to
suit and to take on International marketing and competition. Esteemed Members of the Company have already
 approved Company's capital expansion and Company raising adequate resources to take on these challenges
thrust on us due to globalisation of Indian economy; a policy which we are sure in the long run will be
beneficial to Indian Industry to become global and competitive.  -
 
 The year under review was very rough due to tight money policy announced by RBI and Banks, whereby, the cost
of money went up steeply, from the point of view of Capital goods industry.
 
 The operational cost for year under review went up due to interest factor and other inputs.  Your Company
had to realign its Working Capital Banks due to their not providing adequate Working Funds to sustain
operations at higher level planned by your esteemed Company, with Introduction of Wind Turbine
manufacturing.
 
 Non-provision of export finance also triggered lower deliveries to USA where your Company has established a
Joint Venture for marketing its products. Against an order of 50 machines valued over US$ 900,000 your
Company could not deliver even 5 machines a month on a continuous basis.
 This is again due to non-provision of adequate pre-shipment credit and also Company going in for necessary
mother machines in time to take on exports as basis of existence. 
 
 During the year, your Company has shown more emphasis on improving the quality of machines manufactured to
meet the demands of the Indian Industry as well as exports. 
 
 Your Company is planning to increase the investments in the Joint Venture Company established in USA and in
the process, convert the Company to be a Subsidiary, subject to Government approvals. This change will be
helpful to your Company to increase investments, use the same Subsidiary as springboard for increasing sales
in NAFTA area.
 
 The American demand for your Company's products is good which calls for both increasing mother machines
capability in our Madras Plant and also establish servicing and warehousing facility in the USA. Though the
Company wanted to involve its presence in the USA, there has been slips in timeframe, due to financing of
this operation.
 
 Effective steps are being taken by your Company to meet fresh challenges in India, due to.  increasing
imports of Machine Tools taking place and diversify into products that have ready market i.e. Vertical
Machining Centres and CNC Lathes in association with Taiwanese Companies.
 
 During the year under review, your Company furthered the collaboration for manufacture of Wind Turbine
Generators and have identified good market for 250 KW machines.  Since availability of finance through IREDA
was not forthcoming due to paucity of International funds, many orders could not fructify into despatches.
 
 Your Board has decided that the Company should create an Energy division to undertake setting up of Wind
Farms and other possible source of Power generation, has seen good progress and is looking up Andhra Pradesh
as a launching pad. Land and other infrastructure requirement has been
 applied for. The current priority of the Government being infrastructure creation through private
participation it would be appropriate for the Company to get into such development at the earliest.
 
 Your Company has good order book both for Exports and sales within India. The Current trend seen with
booming Auto sales both mother and ancillary industries are bound to place large emphasis on Capital goods
procurement for augumenting their volume of production.  With the addition of Wind Turbines manufacturing
your Company would establish
 very large turnover base, both with Machine Tool and Wind Energy Converter Products. 
 
 The year 1995-96 ended with your Company supplying first batch of Wind Turbine Generators of 250 KW and the
products are well received. Your Company expects large orders for Wind Turbine Generates in the coming years.
The Company, as you are aware is gearing up to meet investments required to meet such demands, particularly
for Wind Turbine Generators
 which are to be supplied on a time bound basis.
 
 GOVERNMENT POLICIES
 
 Government Import Policies announced and modified from time to time favours import of New and Second Hand
Machine Tools on one side.  Indian Machine Tool Industry itself offered opportunity to Indian User Industries
to go in for import of Machine Tools due to its high cost as well as long delivery periods quoted. This trend
will be harmful for the Indian Machine Tool Industry; but, in the long run, such competition would enable
Indian Engineering Industry to appreciate the high quality and short delivery period expected from Indian
Machine Tool Manufacturers.
 
 Then the cost of finance provided for Capital Goods Sector, particularly Machine Tool Sector, should be
reduced, to enable them compete globally. The cost of Finance provided in India is very expensive, which
ultimately pushes up the cost of our operation. Indian Machine Tool Industry can be successful in taking on
global competition, only when level playing field is created both for Technology and other
 input costs are made available at global costs. Profitability should be the goal and to achieve this, every
input must be made cost-effective. In an era of liberalisation, cost of funds and efficiency of production
 will play a vital role in determining the winnes.
 
 DIRECTORS
 
 Mr. K. Raman, Director, retires by rotation and being eligible, offers himself for re-election.
 
 AUDITORS' REPORT
 
 The notes to the accounts referred to in the Auditors' Report are self-explanatory and therefore do not call
for any further comments.
 
 AUDITORS
 
 M/s. M. Srinivasan & Associates, Auditors of the Company, retire at this Annual General Meeting and are
eligible for reappointment.
 
 CONSERVING ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 
 The information required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the Report of Board of Directors) Rules, 1988 with respect to these matters is
appended hereto and forms part of this report.
 
 STATUTORY REPORTS
 
 Particulars pursuant to Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules 1975 and Statement under Companies (Disclosure of particulars in the Report of Board of
 Directors) Rules, 1988 are given as Annexures to this Report.
 
 ACKNOWLEDGEMENTS
 
 Your Directors appreciate the continued support and assistance received from the Central Government, the
local Government and its agencies, the Foreign Collaborators, the participating Financial Institutions, Bank,
Staff and Workmen of our Company.
 
 ANNEXURES TO DIRECTOR'S REPORT
 
 FORM A
 
 Form for Disclosure of Particulars with respect to conservation of energy
 
 -----------------------------------------------------------
          NOT APPLICABLE AS PER SCHEDULE TO RULE 2
 -----------------------------------------------------------
 
 FORM B
 (See Rule 2)
 
 Form for Disclosure of particulars with respect to
 absorption
 -----------------------------------------------------------
 
 RESEARCH AND DEVELOPMENT (R & D)
 
 1. Specific areas in which R & D    : 1) Indegenisation of 
    carried out by the Company            CNC Controls System 
                                          manufacturing has 
                                          been completed 
                                          during the year
                                       2) New 3D Software 
                                          which is relatively 
                                          cheaper has been 
                                          developed in 
                                          association with an 
                                          American Company for 
                                          marketing in India. 
                                       3) The RT-1 Surface 
                                          Grinder has 
                                          undergone change for 
                                          2 axies motorization 
                                          for exports.
                                       4) New Surface Grinder 
                                          Model RT-1 (M)has 
                                          been designed, 
                                          manufactured and 
                                          launched.
 
 2. Benefits derived as a result of  : 1) CNC controller 
    the above                             manufactured in 
                                          India will R & D 
                                          result in lesser 
                                          imports and 
                                          increased 
                                          profitability 
                                       2) New All Granite CMM 
                                          manufactured by the 
                                          Company will give 
                                          edge for marketing 
                                          our Products not 
                                          only in India; but, 
                                          also for Exports.  
                                       3) CNC Controller 
                                          introduced on RT-1 
                                          Model will give the 
                                          product competitive 
                                          edge for exporting 
                                          to USA.
                                       4) New Model Surface 
                                          Grinder developed 
                                          will increase both 
                                          sales within India 
                                          and Exports. 
 3. Future Plan of Action            : R & D base will be 
                                       strengthened to 
                                       incorporate additional 
                                       items for 
                                       indigenisation.
 4. Expenditure of R & D
 
    A. Capital                          Nil
    B. Recurring                        Nil      
    C. Total                            Nil   
    D. Total R & D expenditure as a
       percentage of total Turnover     Nil
 
 TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION
 
 1. Efforts in brief made towards       All Technologies 
    technology absorption, adoption     imported through 
    and innovation                      Collaboration/ Designs 
                                        Purchase etc. have 
                                        been fully absorbed. 
                                        Through innovation 
                                        the Company has 
                                        successfully developed 
                                        PLC Controlled
                                        Horizontal Surface 
                                        Grinders and CNC 
                                        Controlled Layout 
                                        Marking and Measuring 
                                        Machine with 
                                        digitizing and 
                                        scanning capabilities.
 
 2. Benefits derived as a result of     New range of products 
    the above efforts, eg. product      have been put to 
    improvement, cost                   Indian & Overseas  
    reduction, product development,     market.
    import substitution etc.
 
 3. In case of imported technology 
    (imported during the last 5 years 
    reckoned from the beginning of the 
    financial year) following 
    information may be furnished.
 
    a) Technology imported              Manufacturing 
                                        Co-ordinate Measuring 
                                        Machine, Layout 
                                        Marking & Measuring 
                                        Machine and Horizontal 
                                        Surface Grinding 
                                        Machines and CNC 
                                        controls and 
                                        terminals.
    b) Year of import                   Three collaborations 
                                        signed and technology 
                                        imported in 1987-89 
                                        have been fully 
                                        absorbed and 
                                        production is going on 
                                        in with full 
                                        indigenization. The 
                                        last collaboration 
                                        signed in 1991-92 is 
                                        under implementation 
                                        and fullfledged 
                                        production during 
                                        1995-96. The same will 
                                        be taken up during 
                                        the financial year 
                                        1996-97.
    c) Has the technology been fully    Yes, in the case of 
       absorbed                         Co-Ordinate Measuring 
                                        Machine, Layout 
                                        Marking & Measuring 
                                        Machine and Horizontal 
                                        Surface Grinding 
                                        Machines. In the off 
                                        CNC Controls, it is 
                                        yet to be fully 
                                        absorbed. 
    d) If not fully absorbed, areas     This is applicable to 
    where this has not taken place,     CNC Controls, where 
    reasons therefore and future plan   the technology is 
    of action                           quite complicated and 
                                        needs tremendous 
                                        application and volume 
                                        production. This will 
                                        be attended to, in 
                                        the next 2 financial 
                                        years.
 
 C. FOREIGN EXCHANGE EARNINGS AND OUTGO
 
    Foreign Exchange Earnings           NIL
    Foreign Exchange Outgo              Foreign Travel - 
                                        Rs.0.-84 Lakhs.
 
 The Company has imported various, sub-assemblies and components from Collaborators and others. The Rupee
equivalent of the Foreign Exchange involved in this is Rs. 15.25 Lakhs.
 
 The total outflow of Foreign Exchange in terms of Rupee value is Rs. 16.04 Lakhs.
 
 C.I.F value of Capital Goods imported during the period is NIL.