Honeywell Automation

The Directors present the TWENTY-FOURTH ANNUAL REPORT with the audited
 statements of accounts of the Company for the year ended December 31,
 2007.
 
 1.  FINANCIAL RESULTS :
 
 Particulars                         Year ended              Year ended
                               December 31, 2007       December 31, 2006
                                  (Rs. in lacs)           (Rs. in lacs)
 
 Sales & Other Income                87177                 64812
 Operating Profit                    10466                  9000
 Less : Interest                       206                   217
 Depreciation                         1414                   982
 Amortisation of                        -                     36
 Miscellaneous Expenditure
 for the year                         8846                  7765
 Provision for tax                    3107                  2214
 Deferred Tax Adjustment              (769)                 (250)
 PROFIT AFTER TAX                      6508                  5801
 Profit brought forward from the
 previous year                         7358                  3565
 Profit available for appropriations  13867                  9366
 APPROPRIATIONSeral Reserve            1000                  1000
 Proposed Dividend                      884                   884
 Tax on proposed dividend               177                   124
 BALANCE CARRIED FORWARD              11806                  7358
 
 
 2.     DIVIDEND :
 
 Final dividend @Rs.10/- per share of Rs.10/- each was recommended by
 the Board in their meeting held on January 24, 2008.
 
 3.  OPERATIONS :
 
 The Company operates in five business units and the operations details
 are provided below:
 
 3.1 Honeywell Process Solutions (HPS) :
 
 In line with Honeywells brand promise of building a world that is more
 safer & secure, more energy efficient, more innovative and productive,
 Honeywell Process Solutions has taken significant steps in 2007 to
 expand its solutions and products portfolio to address core and
 adjacent markets. These products and solutions will help improve our
 customers business performance, safety, reliability and efficiency.
 Some of these, which can significantly improve our customers
 performance are:
 
 1.  Energy Management Solution to meet complex load management
 requirements of industrial utilities.
 
 2.  Launch of new state of the art programmable automation controller
 to address fast growing metals, cement, power and chemicals market.
 
 3.  Integrated fire and gas solutions which significantly improve the
 response mechanism in case of fire or gas hazards.
 
 4.  Launch of new revolutionary one wireless solutions, which will
 reduce the cost of wires and installation time. Wireless sensors will
 also make it possible to get much more data than before which in turn
 will help to reduce cost, improve compliance and safety.
 
 5.  First of its kind corrosion monitoring solution to proactively
 avoid / reduce down time / disaster on account of corrosion
 
 6.  New product / solution launches like flow meters, wireless
 transmitters, flow provers & tank farm management system
 
 7.  Indian industry is facing major challenges in terms of skilled
 manpower availability, cyber security, efficiency improvement and
 faster project implementation cycles. Our services business has
 launched host of services to address above concerns.
 
 HPS was won prestigious Frost & Sullivan Excellence Awards for Product
 Leadership and Brand Leadership for the year 2007. These awards
 recognize Honeywells relentless drive to meet customer needs and
 product demands. This award also stands testimony to the range of
 products offered by your company, your companys technology and
 reliability of your Companys products.  HPS also won many prestigious
 orders in 2007 from its existing and new customers like Reliance
 Industries, Hindustan Zinc Ltd., Larsen & Toubro, BHEL, EID Parry,
 Hindustan Petroleum Corporation Limited, Indian Oil Corporation, Oil &
 Natural Gas Corporation, Tata Steel Limited, Haldia Petrochemicals etc.
 to mention a few.
 
 HPS Services business also grew significantly in 2007 both in terms of
 contract services to maintain our customer installation and outcome
 based services by our advanced services organisation.  With robust
 Indian economy forecasted for 2008 and significant investments in core
 sectors, we see a promising 2008 for this business.
 
 3.2 Honeywell Business Solutions (HBS) :
 
 Honeywell Building Solutions continues to grow with the market on all
 major business quantitative and qualitative parameters.  This
 performance rides on the backbone of consistent business performance of
 all our lines of business - Install, Service and Energy.
 
 The Install Business made significant progress in bagging major orders
 from major customers such as Reliance Group, TATA Group, Indian Oil
 Corporation, Delhi Metro Rail Corporation, VSNL, etc. Order booking is
 healthy and consistent ensuring sustained business performance and
 capacity management. Major macro trends of the construction industry
 bode well for continued and sustained Installed Business Performance.
 The Service Business continued to expand its site and scope presence
 across all major accounts, verticals and territories, reflecting the
 success of multiple customer contact mechanisms and SLA driven
 responses and performance.
 
 The Energy Business performed well bagging prestigious contracts such
 as Ruby Hall Clinic and delivering earlier committed reductions to it
 customers. Diverse factors such as Energy costs coupled with
 Environmental Awareness are all going a long way towards creating a
 tremendously positive environment for the energy business.
 
 Overall, the business continues to maintain business, technology and
 brand leadership and received awards from Frost & Sullivan for best
 integrated solutions provider, best security solutions provider and
 best energy services provider.
 
 3.3 Environment and Combustion Control (ECC) :
 
 ECC achieved good Revenue growth over 2006. ECC have won Building
 Management Solutions order for first Green Building Hotel Project in
 India, Claridges Hotel in Delhi along with other prestigious projects
 like GVK Mall, Sahara Hospital etc. Water Control products business
 have grown strongly in construction segment with new products like
 Balancing Valves, Motorized Butterfly valves and executed prestigious
 projects like Amritsar Mall, Bangalore Airport, Reliance Corporate
 office etc.  Combustion business had a strong growth in Food and Metal
 processing industries.
 
 This business continues to grow rapidly with growth in rising
 Construction Industry. It has a strong product portfolio to service
 this industry and with its premium brands it is poised to maintain its
 high growth momentum.
 
 3.4 Sensing & Control (ECC):
 
 S&C products business serves OEMs, Core Manufacturing segments viz.
 Automotive, Off-road Equipments, Medical, IT and Test & Measurement,
 etc by providing leading edge sensors and switches.
 
 The Business has achieved revenue growth with start-up of local
 manufacturing lines of TPS and LCD hour meters for Automotive and
 various industries. The factory has received TS16949 letter of
 conformance from DNV. It will enable us to address growth opportunities
 in automotive market segment. The integration of sales in India for new
 line of business Test & Measurement was completed.
 
 3.5 Global Engineering Services Business (GES) :
 
 This business saw good growth of engineering work in 2007. The business
 saw some challenging environment due to Rupee appreciation in 2007,
 which has impacted its profitability. We are driving all actions to
 sustain both profitability and growth of this business in 2008. These
 actions include seeking better rates from our customers, improving our
 productivity and introducing higher end services. This business is also
 implementing Honeywell Operating System (HOS). HOS would elevate the
 level of productivity and quality of these operations and make it more
 competitive moving forward.
 
 Your Company has started major operations towards product hardware
 export. Two Honeywell lines of products have already been approved for
 manufacture for global demand in 2008 and we expect this operation to
 expand in the coming years.
 
 4.  COMMUNITY DEVELOPMENT WORK :
 
 HAIL has started a Child Sponsorship Program in close co-ordination
 with Sadhana Village an NGO. We have sponsored 40 children from Kolwan
 Valley Mulshi Taluka. This sponsorship monitors the child health and
 education. The funding has been made possible by the contribution from
 employees. This is used for various CSR activities that HAIL intends to
 undertake in the current year.
 
 HAIL conducted Safety & Security Sessions for Schools in Pune - Dastur
 School, Rewachand Bhojwani, Abhinav Vidyalay, MMES Rathi School,
 Hutchings school were amongst the first batch of schools where HAIL
 organized demos and lectures (conducted by Usha Fire). These
 interactive sessions were to help the children understand the dos and
 donts of Fire safety and actions to be taken in case of an emergency.
 Road safety and security at homes, were the other topics also
 highlighted. This was an awareness programme and was well attended by
 all the school children. Keeping our children safe and alert were the
 key reasons for conducting these sessions.
 
 The Company continues its activities with community development work
 under the employee engagement program called DISHA.  Volunteers also
 visit The School for the Handicapped Children at Wanowrie. Computer
 classes are organized for these children, besides lessons in English
 speaking, Mathematics and Science.
 
 5.  DIRECTORS :
 
 During the year under review, Mr. John Ellis, nominee of Honeywell,
 resigned as Director of the Company. The Board places on record its
 sincere appreciation for the services rendered by him towards the
 success of this Company. Mr. Jack Bolick has been appointed as Director
 nominated by Honeywell and has been designated as the Chairman of the
 Company.
 
 As per the provisions of the Companies Act, 1956 and Articles of
 Association of the Company, Mr. S.L. Rao and Mr. Gerard Willis, retire
 by rotation and are eligible for reappointment. Mr. Jack Bolick retires
 at the forthcoming AGM as Additional Director and a notice in writing
 has been received for appointing him as a Director.
 
 6.  MANAGEMENT DISCUSSION & ANALYSIS/CORPORATE GOVERNANCE REPORT :
 
 As per Clause 49 of the Listing Agreement with the Stock Exchanges,
 Management Discussion and Analysis Report and Corporate Governance
 report are annexed and form part of the Directors Report.
 
 7.  CODE OF CONDUCT COMPLIANCE :
 
 As per Clause 49 of the Listing Agreement with the Stock Exchanges, the
 declaration signed by the Managing Director affirming compliance with
 the Code of Conduct by Directors and Senior Management, for the
 Financial Year 2007 is annexed and forms part of the Corporate
 Governance Report.
 
 8.  DIRECTORS RESPONSIBILITY STATEMENT :
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors,
 based on the representations received from the Operating Management,
 confirm that -
 
 a) In the preparation of the annual accounts, the applicable accounting
 standards have been followed and that there are no material departures;
 
 b) They have, in the selection of the accounting policies, consulted
 the Statutory Auditors and have applied them consistently and made
 judgements and estimates that 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;
 
 c) They have taken proper and sufficient care, to the best of their
 knowledge and ability, 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;
 
 d) They have prepared the annual accounts on a going concern basis.
 
 9.  AUDITORS :
 
 M/s. Price Waterhouse & Co., the Statutory Auditors retire at the
 forthcoming Annual General Meeting and are eligible for reappointment.
 The Company has received the certificate from the retiring auditors to
 the effect that the appointment, if made, will be in accordance with
 the limits specified in Section 224(1-B) of the Companies Act, 1956.
 
 10.  CEO/CFO CERTIFICATION :
 
 The Managing Director and the Chief Financial Officer have certified
 that:
 
 (a) We have reviewed financial statements and the cash flow statement
 for the year and that to the best of our knowledge and belief:
 
 (i) these statements do not contain any materially untrue statement or
 omit any material fact or contain statements that might be misleading;
 
 (ii) these statements together present a true and fair view of the
 Companys affairs and are in compliance with existing accounting
 standards, applicable laws and regulations.
 
 (b) There are, to the best of our knowledge and belief, no transactions
 entered into by the company during the year, which are fraudulent,
 illegal or violative of the companys code of conduct.
 
 (c) We accept responsibility for establishing and maintaining internal
 controls for financial reporting and that we have evaluated the
 effectiveness of the internal control systems of the company pertaining
 to financial reporting and we have disclosed to the auditors and the
 Audit Committee, deficiencies in the design or operation of internal
 controls, if any, of which they are aware and the steps they have taken
 or propose to take to rectify these deficiencies.
 
 (d) We have indicated to the auditors and the Audit Committee:
 
 (i) significant changes in internal control over financial reporting
 during the year;
 
 (ii) significant changes in accounting policies during the year and
 that the same have been disclosed in the notes to the financial
 statements; and
 
 (iii) instances of significant fraud of which they have become aware
 and the involvement therein, if any, of the management or an employee
 having a significant role in the Companys internal control system over
 financial reporting.
 
 (e) We affirm that we have not denied any personnel, access to the
 Audit Committee of the Company (in respect of matters involving alleged
 misconduct) and we have provided protection to whistle blowers from
 unfair termination and other unfair or prejudicial employment
 practices; and
 
 (f) We further declare that all board members and senior managerial
 personnel have affirmed compliance with the code of conduct for the
 current year.
 
 11.  OTHER INFORMATION :
 
 Information as per Section 217 (2A) of the Companies Act, 1956, read
 with the Companies (Particulars of Employees) Rules, 1975 pertaining to
 absorption of technology, foreign exchange earnings, is given as an
 Annexure to this Report and forms part of it. As per provisions of
 Section 219(1)(b)(iv) of the Act, the Directors Report and Accounts
 are being sent to the shareholders excluding the statement giving
 particulars of employees under Section 217(2A) of the Act. Any
 Shareholder interested in obtaining a copy of the statement may write
 to the Company Secretary at the Registered Office of the Company.
 
 12.  ACKNOWLEDGEMENT :
 
 The Board would like to place on record its appreciation and thanks to
 all its employees for their contribution. The Board also wishes to
 acknowledge the support it has received from its Bankers and from the
 Financial Institutions.
 
                                        For and on behalf of the Board
                                                        JACK D. BOLICK
 New Delhi, January 24, 2008                                   Chairman
 
 Registered Office :
 56 & 57, Hadapsar Industrial Estate,
 Pune 411 013.