Hindustan Motors

The Directors present their Sixty-sixth Annual Report together with
 audited accounts of the Company for the year ended March 31, 2008.
 
 Financial Results
 
 During the year under review, the Companys revenue was Rs 853 Crores
 compared to Rs 806 Crores in the last financial year. During the year
 the revenue grew by 6%.
 
 The following table gives a summary of the performance.
 
                                                      (Rupees in Crores)
                                          2007-08         2006-07
 
 Gross sales and services                  853.01           806.37
 Profit/(Loss) before Interest,
 Depreciation and Taxes                     86.99            52.75
 Interest payment                           20.03            16.73
 Depreciation                               21.15            23.23
 Profit/(Loss) before Tax                   45.81            12.79
 Provision for Tax                          14.97          (-)0.51
 Profit/Loss After Taxation                 30.84            13.30
 
 In September 2006, the Government of West Bengal had allowed the
 Company to develop 314 acres of land at Hindmotor as Integrated IT
 Township & Auto Ancillary Park. In accordance with the Order, the
 Company has transferred a part of its land admeasuring 126.90 acres by
 handing over physical possession thereof against payment to the
 developer, and profit of Rs 103.20 Crores thereon has been included in
 the Profit and Loss Account. The Company is scheduled to transfer
 further 125.591 acres land during the financial year 2008-09 against
 payment.
 
 There was a debit balance of Rs.73.16 Crores in the Profit and Loss
 Account, which was brought forward from last year. After considering
 the results of the year under review, there is a closing debit balance
 of Rs. 42.32 Crores in the Profit and Loss Account.
 
 A Cash Flow statement for the year under review is also attached to the
 enclosed Annual Accounts.
 
 Review of Operations
 
 The Company has traditionally been focused on the automobile business
 with Plants in Uttarpara & Pithampur focusing on Ambassador range of
 cars and utility vehicles respectively and the Plant in Chennai
 focusing on Mitsubishi range of products consisting of Lancer, Cedia,
 Pajero & Montero.
 
 The Companys unit at Uttarpara, in addition to the car business, has
 in recent years embarked on developing a set of auto component
 businesses namely supplying of castings, forgings and stampings to
 other manufacturers in the automobile and component industries. Steps
 have been taken to modernize the facilities in order to increase its
 output and reduce costs.
 
 These initiatives did suffer a temporary setback when the operations
 were affected due to industrial unrest in the first 40 days of the
 financial year. Normalcy was restored on 10th May, 2007 and since then
 the situation has been peaceful.
 
 During the year your Company introduced a number of new models - a new
 variant of the Ambassador air conditioned metered taxi for Kolkata
 market from the Uttarpara Plant and Cedia with Auto LPG, New Pajero &
 Montero A/T from its Chennai Car Plant. All these products have been
 received well in the market and are expected to increase the sales of
 your Company in the current financial year.
 
 The Ambassador cars continued to enjoy steady demand during the year
 from its traditional customer base such as Tourist taxi and
 Institutions etc.
 
 Sale of automobiles during the year under review consisting of
 Ambassador, Lancer, Cedia, Sports Utility Vehicle and other Utility
 Vehicles is 12714 nos.  compared to 13775 nos. during the previous
 financial year.
 
 The margins in the automobile business remained under pressure due to
 increase in input costs, specifically the sharp increase in steel
 prices and competitive pressure on selling prices of vehicles. The
 Company could minimize pressure on margins by way of cost reduction and
 value engineering measures.
 
 The Companys Remote Services Division, engaged in providing
 engineering services is confident of stepping up the sales revenue in
 the near future. A new branch of your Company has been opened in Japan
 in order to avail the business opportunities in engineering services.
 
 A detailed Management Discussion & Analysis Report (MDAR) forms part of
 this report as Annexure-1.
 
 Outlook for 2008-09
 
 Based on the expected growth rate of the economy and the passenger
 vehicle industry, sales from range of Sports Utility Vehicles,
 Passenger Cars, Components and other products should enable the Company
 to achieve higher sales volume. Dealer development activities are in
 place so as to strengthen the distribution channel commensurately. The
 initiatives at Uttarpara Plant to develop Foundry, Forge & Stamping
 Units into focused business units should benefit the Company in current
 financial year. The Company continues to focus on cost reduction
 efforts and improvements in operational efficiencies as well as value
 engineering activities. The sale of balance two lots of land at
 Hindmotor will be made during the current financial year. With these
 initiatives, the Company expects improved results in current financial
 year.
 
 Investment
 
 The Company has invested US $ 300000 as share capital in its wholly
 owned subsidiary, Hindustan Motors Limited, USA during the year under
 review.
 
 Industrial Relations
 
 Operations of the Companys Uttarpara Plant was adversely affected due
 to the labour unrest during the period March-May 2007. Consequently,
 the initiatives taken by the Company for developing the auto component
 business did suffer a temporary setback.  After resumption of work from
 10th May, 2007, normalcy has been restored and the industrial relations
 situation is cordial.
 
 During the year under review, the Company had introduced Voluntary
 Early Retirement Schemes at its Uttarpara Plant and around 600
 employees have opted for early retirement till 31st March, 2008. Human
 resources initiatives such as skill level upgradation, training,
 appropriate reward & recognition systems and productivity improvement
 are the key factors continuously being focused for development of the
 employees of the Company.
 
 Corporate Governance
 
 The Company continues to remain committed for high standards of
 corporate governance. The report on corporate governance as per the
 requirement of the listing agreement with stock exchanges forms part of
 this report as Annexure-2. The Company has complied with all the
 requirements of corporate governance. The certificate from the Auditors
 of the Company confirming compliance to the conditions of the corporate
 governance requirements is also annexed.
 
 Statutory Declaration
 
 The Company has complied with all the Accounting Standards prescribed
 by The Institute of Chartered Accountants of India. In terms of the
 requirement of Section 217 of the Companies Act, 1956, Directors
 Responsibility Statement is enclosed as Annexure-3 to this report. The
 particulars of employees to be disclosed as per the provisions of
 sub-section (2A) of the said Section are also given as Annexure-4.
 
 Additional Information relating to conservation of energy, technology
 absorption, foreign exchange earnings and outgo as required under
 sub-section (l)(e) of the said Section is also given as Annexure-5 to
 this report.
 
 There has been no material change and commitments affecting the
 financial position of the Company which have occurred between the end
 of the financial year 2007-08 and the date of this report.
 
 There has also been no change during the financial year under review in
 the nature of Companys business or in the Companys subsidiaries or in
 the nature of business carried on by them.
 
 Auditors
 
 The report by the Auditors and the remarks therein are
 self-explanatory. The Company has not made any provision in respect of
 disputed insurance claim, which is identified as doubtful in the
 accounts, as the same is subjudice and the Company is reasonably
 confident of recovering the amount. Your Directors request you to
 re-appoint auditors for another term beginning the conclusion of the
 ensuing Annual General Meeting till the conclusion of the subsequent
 Annual General Meeting and approve their remuneration as specified in
 the proposed resolution attached to the notice.
 
 Subsidiary Companies
 
 The statement pursuant to Section 212 of the Companies Act, 1956 in
 respect of the three wholly owned subsidiary companies, namely
 Hindustan Motor Finance Corporation Limited, HM Export Limited and
 Hindustan Motors Limited, USA and their latest Annual accounts are
 attached to this Annual Report.
 
 Directors
 
 At the ensuing Annual General Meeting, Shri C.K. Birla, Shri A.
 Sankaranarayanan and Shri S.C. Jain, Directors of the Company, retire
 by rotation and being eligible offer themselves for re-appointment.
 
 Appreciation
 
 Your Directors acknowledge and thank the customers, shareholders,
 dealers, vendors, state government authorities, business associates,
 banks and financial institutions for the support extended to the
 Company.  Your Directors also record their appreciation for the
 commitment and dedication of the employees of your Company.
 
 
                           For and on behalf of the Board of Directors
 
 New Delhi                                                 C. K. Birla
 8th May, 2008                                               Chairman