The Directors present their Sixty-ninth Annual Report together with
 annual accounts of the Company for the year ended March 31, 2011.
 
 Financial Results
 
 During the year under review, the Companys revenue was Rs. 850 Crores
 compared to Rs. 737 Crores in the previous financial year. The
 following table gives a summary of the performance.
 
                                                       (Rs. in Crores)
 
                                                2010-11        2009-10
 
 Gross sales and services                        850.04         736.88 
 
 Profit/(Loss) before Interest,
 Depreciation and Taxes                           40.14         (4.59)
 
 Interest Payment                                 27.16          11.04
 
 Depreciation                                     16.74          17.63
 
 Profit/(Loss) before Tax                         (3.76)       (33.26)
 
 Provision for Tax                                (4.51)         17.84
 
 Profit/(Loss) After Taxation                       0.75       (51.10)
 
 The revenue account shows a profit of Rs. 0.75 Crore after providing
 Rs. 16.74 Crores for depreciation and taking credit of Rs. 4.51 Crores
 for deferred tax net of other taxes. There was a debit balance of Rs.
 132.28 Crores in the Profit and Loss Account, which was brought forward
 from last year. After setting off the sums available from reduction of
 equity share capital by half and writing off securities premium account
 and considering the results of the year under review, there is a
 closing debit balance of Rs. 47.76 Crores in the Profit and Loss
 Account.
 
 During the year, in respect of a sale tax demand on the Company
 aggregating to Rs. 85.83 Crores, the Honble Supreme Court of India
 decided the matter in favour of the Company.
 
 During the year, the Company sold 62,18,000 equity shares of Rs. 10/-
 each (including 48,00,000 to its subsidiary) of AVTEC Limited and its
 immovable properties at Chennai and Halol, Gujarat and aggregate profit
 of Rs. 96.80 Crores thereon has been included in the Profit and Loss
 Account.  Consequent to the sale of shares held by the Company in
 
 AVTEC Limited, its holding in AVTEC Limited reduced from 49% to 24.13%.
 
 The Company subscribed to additional 45,50,000 equity shares of Rs. 10/
 each at a premium of Rs. 140/- per share of its subsidiary, HM Export
 Limited during the year aggregating to Rs. 68.25 Crores after obtaining
 approval of shareholders through postal ballot.
 
 As you are aware that the accumulated losses of the Company at the end
 of financial year 31st March, 2010 had resulted in erosion of more than
 fifty percent of its peak net worth during the immediately preceding
 four financial years and therefore the Company had to report to the
 Board for Industrial and Financial Reconstruction (BIFR) about such
 erosion of net worth under Section 23 of the Sick Industrial Companies
 (Special Provisions) Act, 1985. Your directors are pleased to inform
 that the accumulated losses of the Company at the end of financial year
 31st March, 2011 reduced to less than the fifty percent of its peak net
 worth during the immediately preceding four financial years and
 therefore the Company has ceased to be potentially sick company under
 the provisions of Section 23 of Sick Industrial Companies (Special
 Provisions) Act, 1985. An intimation in this regard shall be made to
 BIFR.
 
 Due to sale of property at Halol, Gujarat and consequent profit, the
 Lenders have made a claim of recompense of interest under Corporate
 Debt Restructuring Scheme. The Company has requested the Lenders to be
 reasonable in their claim. Pending final decision, provision has been
 made for Rs. 15 Crores on account of this which has since been paid to
 Lenders in April, 2011.
 
 A Cash Flow statement for the year under review is also attached to the
 enclosed Annual Accounts.
 
 Reduction of Share Capital and writing off Securities Premium Account
 
 As a part of capital restructuring exercise, shareholders of the
 Company approved capital reduction on 16th November, 2010 through
 postal ballot which was duly confirmed by the Honble High Court at
 Calcutta vide its Order dated 15th
 
 December, 2010 and Certificate of Registration of the said Order was
 issued by the Registrar of Companies, West Bengal on 11th January,
 2011. Pursuant to this, the Company reduced the paid up value of equity
 shares from Rs. 10/- each to Rs. 5/- each with effect from 11th
 January, 2011 resulting in reduction of the Share Capital and has set
 off the sums available from reduction in Share Capital of Rs. 80.59
 Crores and writing off the Securities Premium Account to the extent of
 Rs. 3.71 Crores against the debit balance of Profit & Loss Account as
 on 31st March, 2010. The nominal value of equity shares was also
 simultaneously reduced from Rs. 10/- each to Rs. 5/- each by amending
 the Memorandum of Association of the Company.
 
 The trading in equity shares of the Company was suspended from 27th
 January, 2011 to give effect to reduction in equity share capital of
 the Company which recommenced from 21st February, 2011.
 
 Review of Operations
 
 The Company has been focusing on automobile business and auto component
 business consisting of forgings, castings and stampings with plants at
 Uttarpara, Tiruvallur and Pithampur. In the automobile business, the
 main focus is on Ambassador, Lancer, Cedia, Sports Utility Vehicles
 namely, Pajero, Montero and Outlander and the goods carrying Mini Truck
 calledWinner.
 
 Sale of automobiles during the year under review consisting of
 Ambassador, Winner, Lancer, Cedia, Sports Utility Vehicle and other
 Utility Vehicles is 10097 compared to 11003 nos.  during the previous
 financial year. Though the overall growth of automobile industry was
 better than expected, the sale of Ambassador was affected due to slow
 down in orders from Kolkata taxi replacement market, implementation of
 BSIV emission norms in 13 major cities while the Company did not have
 any BSIV diesel engine and lower orders from government customers. The
 Sports Utility Vehicle - Outlander was well received in the market and
 the Company was able to sell 1243 nos. as against 411 nos. in the
 previous year. The support provided by the foreign collaborator by
 reducing the kit prices as well as the benefit from increased volume of
 Outlander were more than offset by adverse movement in foreign exchange
 rates affecting the profitability of vehicles sold from the Companys
 Chennai Car Plant. In addition,
 
 the Company minimized pressure on margins by way of increase in sale
 price of vehicles, aggressive cost reduction and value engineering
 measures.
 
 During the year, your Company launched a new model Lancer EVO X, a
 luxury sedan with next generation technology, Pajero meeting BSIV
 emission norms and an improved version of Montero from the Chennai Car
 Plant.  From the Uttarpara Plant, an improved version of Ambassador,
 called Ambassador Discovery with improved interiors and upgraded
 variants of Mini Truck, Winner were introduced. These new products are
 expected to generate favourable response in the market place and
 increase the sales of your Company in the current financial year.
 
 On the component business front, several new customers and orders were
 acquired and these products are under development for both castings and
 forgings business which are expected to add to the Companys component
 business in the current financial year.
 
 The Companys branch in Japan, engaged in engineering design related
 software work was closed during the year.  Your Company is taking
 steps, subject to necessary compliances and approvals, to close the
 Companys subsidiary in USA, also engaged in engineering design related
 software.
 
 A detailed Management Discussion & Analysis Report (MDAR) forms part of
 this report as Annexure-1.  
 
 Outlook for 2011-12
 
 The Indian economy is expected to grow at a higher rate during 2011-12.
 However, due to higher borrowing cost and surge in commodity prices,
 the growth in automobile industry is expected to be moderate during the
 current financial year.  The Company is preparing to launch new
 variants of Ambassador in the fast growing Commercial vehicles segment,
 during the current financial year.
 
 The Company also plans to launch a complete new generation of its
 popular Sports Utility Vehicle, Pajero called Pajero Sports, 7-seater
 Outlander, upgraded Montero, two new variants of Ambassador - one as a
 pickup and another as a commercial passenger carrier for more than 7
 passengers as well as facelift of the Winner and introduce a passenger
 carrier of Winner during the current financial year. The new variants
 of Ambassador along with recently launched new
 
 variants of Winner from Uttarpara plant; utilisation of Pithampur plant
 for manufacturing of Winner and Winner variants; and Outlander
 7-seater, Pajero Sports BU and Pajero BSIV from Chennai Car Plant are
 likely to augur well for the Company. The Company is also strengthening
 its distribution network by expanding its dealerships as well as
 opening new warehouses to ensure timely deliveries. The Company
 continues to focus on cost reduction efforts and improvements in
 operational efficiencies as well as value engineering activities to
 improve the margins. With these initiatives, the Company expects
 improved performance in the current financial year.
 
 As regards component business, those customers and products that were
 acquired during the year under review will come in the regular
 production stream in the current financial year and will add to the
 business of the Company.
 
 Industrial Relations
 
 Industrial relations generally remained cordial and satisfactory.
 
 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.
 
 The Company is taking steps to start an Industrial Training Centre in
 Hindmotor, West Bengal to help in improving the employability of the
 local youths as well as have a steady source of trained personnel to
 it, its dealer and the industry generally.
 
 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 applicable Accounting Standards
 prescribed by Companies (Accounting
 
 Standards) Rules, 2006. 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 2010-11 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.
 Steps are being taken to close the business of Companys subsidiary in
 USA subject to necessary compliances and approvals.
 
 Auditors
 
 The report by the Auditors is self-explanatory. 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.
 
 Subsidiaries
 
 The Company has sold 143 shares of Rs. 10/- each of its subsidiary HM
 Export Limited during the year under review which has changed the
 status of subsidiary from wholly owned subsidiary to subsidiary only.
 
 As per general exemption granted vide Government of India, Ministry of
 Corporate Affairs general circular no. 2/2011 dated 8th February,
 2011, the Company has not attached the annual accounts of its all the
 three subsidiaries namely Hindustan Motor Finance Corporation Limited,
 HM Export Limited and Hindustan Motors Limited, USA to this Annual
 Report. As required by the said circular, the relevant information for
 each subsidiary has been disclosed in the Consolidated financial
 statements attached to this Annual Report.
 
 The Company will make available the annual accounts of subsidiaries and
 the related information to any member of the Company who may be
 interested in obtaining the same.  The annual accounts of subsidiaries
 will also be kept for inspection by any member of the Company at the
 registered office of the Company and that of respective subsidiaries.
 The Consolidated financial statements presented by the Company include
 the financial information of its subsidiaries.
 
 The Company will pledge 45,50,000 equity shares of Rs. 10/- each held
 in its subsidiary, HM Export Limited in favour of Lenders, as
 additional security to the Lenders under the Corporate Debt
 Restructuring package.
 
 Directors
 
 At the ensuing Annual General Meeting, Shri C. K. Birla and Shri A.
 Sankaranarayanan, 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
 
                                                        C.K. Birla
                                                          Chairman
 
 New Delhi 
 16th May, 2011