The Directors are pleased to present the Twenty Sixth Annual Report
 together with Audited Accounts of the Company for the year ended 31st
 March 2011.
 
 FINANCIAL RESULTS AND APPROPRIATIONS
 
                                                      (Rs. in Lacs)
 
 Particulars                          Year Ended        Year Ended
 
                                  March 31, 2011     March 31, 2010
 
 Sales                                 43,227             32,013
 
 Job Charges                              252                261
 
 Other Income                           1,059                886
 
 Profit before finance charges,         5,275              4,723 
 depreciation and exceptional
 items
 
 Finance Charges                           10                 19
 
 Depreciation                             820                743
 
 Exceptional items                          -              2,004
 
 Profit before tax                      4,445              1,957 
 
 Provision for taxation
 
 - Current                              1,273              1,113
 
 - Deferred Tax charge/(benefit)          206              (425) 
 
 Profit after Tax                       2,966              1,269
 
 Balance of profit brought forward      7,924              7,256 
 
 Amount available for appropriation    10,890              8,525
 
 APPROPRIATIONS
 
 Dividend                                 761                406
 
 Tax on Dividend                          126                 69
 
 General Reserves                         297                127
 
 Balance carried to Balance Sheet       9,706              7,923
 
 DIVIDEND
 
 Your Directors recommend a dividend of Rs. 7.50 per equity share of Rs.
 10 each (75%) for the year ended 31st March 2011 (previous year 40%).
 The total outgo on this account (including dividend tax) will be Rs.
 887 lacs.
 
 APPROPRIATIONS
 
 It is proposed to transfer Rs. 297 lacs to General Reserve and retain
 the balance in Profit and Loss Account.
 
 DOMESTIC MARKETS AND EXPORTS
 
 Your company achieved a record sales of Rs. 43,227 lacs in 2010-11 (as
 against Rs. 32,013 lacs in 2009-10) in domestic and exports markets
 thereby realizing a growth of 35% over previous year.
 
 The overall growth was led by recovery in the generator segment and
 good volumes in the engines and water pumping set business during the
 year. This year also saw introduction of new models in the EU series of
 Generators specially made in India for the domestic market.
 
 A detailed report on operations titled Management Discussion and
 Analysis Report is annexed to the Directors Report as Annexure- A and
 forms part thereof.
 
 INDIGENISATION PROGRAMME
 
 Your Company is continuously working on cost reduction by localization
 of critical parts with the help of Honda Motor Co. Ltd., Japan.
 
 The Company has realized saving on account of localization of critical
 parts such as Switch Assembly Engine Stop, Terminal Assembly High
 Tension and Cap Assembly Noise Suppressor during the year 2010 - 2011.
 
 The Company is in the process of localization of 80 parts of Generator
 Model EU65is and is closely monitoring the development of these parts
 for production as per schedule.
 
 The Company shall continue localization of balance parts with support
 from Honda Motor Co. Ltd., Japan.
 
 ENVIRONMENT PROTECTION & SAFETY
 
 Your Company is committed towards the protection and safety of the
 environment. All employees make efforts in daily operation towards
 controlling emissions, effluents and waste disposal arising out of
 manufacturing processes, product and services as per the predefined
 norms. Environmental improvements were achieved by completing the
 following actions:
 
 - Replacement of High Speed Diesel (HSD) fired melting furnace with gas
 fired energy efficient Melting cum Holding Furnace in two Pressure Die
 Casting Machines.
 
 - Installation of Dust collecting systems in all grinding machines in
 Machine Shop, resulting in clean environment at Shop Floor.
 
 Your Company is further planning to commence power cogeneration i.e.
 gas based power generation alongwith Exhaust Fuel Gas Recovery Boiler
 for which miscellaneous civil work and gas piping has been completed.
 After commissioning the power cogeneration system, around 5% CO2
 reduction is expected to be achieved thus leading to cleaner
 environment.
 
 The products manufactured by your Company comply with the air emission
 and noise regulation norms notified by the Ministry of Environment and
 Forests (MOEF). The Confirmation of Production (COP) to the air
 emission and noise regulation is done as laid down by the MOEF.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,
 
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 The requisite information relating to Conservation of Energy,
 Technology Absorption and Foreign Exchange Earnings and Outgo required
 to be disclosed pursuant to Section 217(1)(e) of the Companies Act,
 1956 read with Companies [Disclosure of Particulars in the Report of
 Board of Directors] Rules, 1988 is set out in a separate statement
 annexed to this report as Annexure-B and forms part thereof.
 
 DIRECTORS
 
 During the year under review, Mr. Yasushi Watanabe had been
 re-appointed as Vice President & Whole Time Director of the Company
 from 01.01.2011 to 31.12.2011.
 
 Your Board recommends the appointment of Mr. Yasushi Watanabe as a
 Director and as Vice President & Whole Time Director of the Company.
 Proposal for the appointment of Mr. Yasushi Watanabe is being put up
 for your approval.
 
 Mr. Yasushi Watanabe ceased to be Director of the Company with effect
 from the close of the working hours of March 26, 2011 on being
 re-assigned by Honda Motor Co., Ltd., Japan (HM). Your Board places
 on record its deep appreciation for the services rendered by Mr.
 Yasushi Watanabe during his tenure with the Company.
 
 Mr. Seiichi Yotsumoto was appointed as Director and as Vice President &
 Whole Time Director of the Company effective April 1, 2011.
 
 Your Board recommends the appointment of Mr. Seiichi Yotsumoto as a
 Director and as Vice President & Whole Time Director of the Company.
 Proposal for the appointment of Mr. Seiichi Yotsumoto is being put up
 for your approval.
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Articles of Association of the Company, Mr. Siddharth Shriram and Mr.
 Ravi Vira Gupta, Directors of the Company retire by rotation at the
 forthcoming Annual General Meeting (AGM) and being eligible, offer
 themselves for re-appointment.
 
 Brief resume of the above Directors, nature of their expertise in
 specific functional areas and the name of the Companies in which they
 hold the Directorship and the Chairmanship/Membership of the Committees
 of the Board, as stipulated under Clause 49 of the Listing Agreement of
 the Stock Exchanges, is given in the Notice convening the Annual
 General Meeting.
 
 Necessary resolutions for the appointment / re-appointment of the
 aforesaid Directors have been included in the Notice convening the
 Annual General Meeting.
 
 As per the confirmations received, none of the Directors of the Company
 are disqualified for being appointed as Director as specified in
 Section 274(1)(g) of the Companies Act, 1956.
 
 AUDITORS
 
 The observations of Auditors in the report, read with the relevant
 Notes to Accounts are self explanatory and therefore, do not require
 further explanation.
 
 M/s. B S R & Co., Chartered Accountants, Statutory Auditors of the
 Company hold office until the conclusion of the forthcoming AGM and are
 recommended for re-appointment. The Company has received a certificate
 from them to the effect that their re-appointment, if made, would be
 within the prescribed limits specified under Section 224(1B) of the
 Companies Act, 1956.
 
 The Auditors have represented that they have been subjected to the
 Peer Review Process of The Institute of Chartered Accountants of
 India and hold a valid Certificate.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 In terms of provisions of Section 217(2AA) of the Companies Act, 1956,
 your Directors confirm as under:
 
 1.  That in the preparation of the annual accounts, the applicable
 accounting standards have been followed alongwith proper explanation
 relating to material departures;
 
 2.  That the accounting policies selected and applied are consistent
 and the judgements and estimates made 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 the financial year and of the profit of the Company for that
 period;
 
 3.  That 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 fraud and other irregularities; 4.  That the
 annual accounts have been prepared on a going concern basis.
 
 PARTICULARS OF EMPLOYEES
 
 In terms of the provisions of Section 217(2A) of the Companies Act,
 1956 read with Companies (Particulars of Employees) Rules, 1975, the
 particulars of employees are required to be furnished in statement to
 be annexed to this Report. However, as per the provisions of Section
 219(1)(b)(iv) of the said Act, the report and accounts are being sent
 to all the Shareholders excluding the aforesaid Annexure. The complete
 Annual Report including this statement shall be made available for
 inspection by any shareholder during working hours for a period of 21
 days before the date of the Annual General Meeting. Any member
 interested in obtaining the copy of the statement may write to the
 Company Secretary at the Registered Office of the Company.
 
 CORPORATE GOVERNANCE
 
 A separate section on Corporate Governance is annexed to this report as
 Annexure-C.
 
 A certificate from a Practicing Company Secretary on compliance with
 the conditions of Corporate Governance as stipulated under clause 49 of
 the Listing Agreement with Stock Exchanges is annexed as Annexure-F.
 
 CODE OF CONDUCT AND ETHICS
 
 The Board of the Company has adopted a Code of Conduct and Ethics for
 the Directors and Senior Executives of the Company. The object of the
 Code is to conduct the Companys business ethically and with
 responsibility, integrity, fairness, transparency and honesty. The Code
 sets out a broad policy for ones conduct in dealing with the Company,
 fellow Directors and Employees and with the environment in which the
 Company operates. The Code is available on the Companys Corporate
 website (www.hondasielpower.com). A declaration signed by President &
 CEO of the Company with regard to the compliance with the Code by the
 Members of the Board and Senior Executives is annexed as Annexure – D
 and forms part hereof.
 
 MANAGEMENT DISCUSSION & ANALYSIS
 
 Management Discussion and Analysis Report is annexed as Annexure- A.
 
 MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF
 THE COMPANY AFTER 31ST MARCH 2011
 
 There were no material changes and commitments affecting the financial
 position of the company after 31st March 2011.
 
 ACKNOWLEDGEMENTS
 
 Your Directors wish to thank and acknowledge with gratitude the
 co-operation, assistance and support received from the Central
 Government, State Governments of Uttar Pradesh, Uttarakhand and
 Puducherry, Companys Bankers, Shareholders, Dealers, Vendors, Indian
 and Japanese Promoters of the Company and other Business Associates in
 the Management of affairs of the Company.
 
 The Directors also wish to place on record their sincere appreciation
 of the contribution made by every employee of the Company.
 
                                            On behalf of the Board
 
 New Delhi                                       Siddharth Shriram
 
 May 19, 2011                                             Chairman