The Members
 
 The Directors have pleasure in presenting the Thirty Fifth Annual
 Report together with audited Statement of Accounts for the eighteen
 months period ended 31st March, 2011.
 
 This report also includes Management Discussion & Analysis (MD&A) as it
 has been considered appropriate to do so, in order to avoid duplication
 & overlap between Directors'' Report and a separate MD&A.
 
 1.  Working Results
 
 (                       Rs. in crores unless otherwise stated)
 
 Particulars                        Period         Year
                                     ended        ended
                                31.03.2011   30.09.2009
                               (18 Months)  (12 Months)
 
 Gross Sales and Other 
 Income                             389.13       173.96 
 Profit before Interest,
 
 Depreciation, Exceptional 
 Items & Taxation                     0.45         4.55
 
 Interest                            44.08        25.35
 
 Cash Loss                           43.63        20.80
 
 Depreciation & 
 Amortisations                       24.65        17.49
 
 Loss before Taxation                68.28        38.29
 Provision for Taxation :
 
 - Current Tax (FBT)                     –         0.16
 
 Exceptional Items                   31.26        13.17
 
 Net Loss                            99.54        51.62
 
 Production (Nos.)                   99675        46300
 
 Sales (Nos.)                        98773        43798
 
 
 
 Directors regret their inability, in view of the losses, to recom- mend
 any dividend for the period.
 
 2.  Operations
 
 Members are aware of the difficulties and problems which the Company
 has been facing for the last few years. The restructur- ing of the
 Company could not get completed when the Company in 2005, in spite of
 best efforts, was unable to obtain, unexpect- edly, fresh working
 capital facilities of Rs 80 crores which had an adverse and cascading
 effect on the Company and it could not take various actions including
 but not limited to introduction of new range of vehicles, reduction in
 costs, lowering of breakeven point etc. The resultant situation led to
 increase in losses, ero- sion of liquidity and since the Company''s net
 worth became nega- tive, it filed reference before the Hon''ble Board
 for Industrial and Financial Reconstruction (BIFR) where it is
 registered and de- clared as a sick industrial Company under the
 provisions of the Sick Industrial Companies (Special Provisions) Act,
 1985 (SICA).
 
 Pursuant to the restart of operations in April 2007 the Company is
 working proactively for its turnaround and has submitted its revival
 scheme to BIFR. The Company has taken several mea- sures and actions
 including but not limited to those in areas of cost reduction, product
 development, brand building and exports.  The Company has emerged as
 the largest exporter of scooters in the country and also launched its
 scooters in select locations in the domestic market.
 
 The Directors are pleased to state that the new 4-stroke scooter
 developed by the Company is getting good response in the ex- port and
 domestic markets where it has been launched. The Com- pany is taking
 steps for increasing its penetration in the markets and expects,
 barring unforeseen circumstances, to be able to launch its vehicles in
 other locations in a phased way. Work in respect of other new products
 including 4-stroke, gearless scooter, motorcycles, light 3-wheeler for
 cargo application, ve- hicles powered by alternate fuel like LPG/CNG
 and or technolo- gies like fuel injection is progressing.
 
 Export and Domestic sales performance of your Company was as follows :
 
 Particulars                     Period ended      Year ended
                                   31.03.2011      30.09.2009
                                   (18 Months)     (12 Months)
                                        (Nos.)         (Nos.)
 
 Scooters - Export                      57774           26554
 
 - Domestic                             40999           17244
 
                                        98773           43798
 
 3.  Exports
 
 Exports were 57774 vehicles during the period, (annualized 38516
 vehicles) under report as against 26554 units during the previous year
 (12 Months). Company''s exports are made to many countries including
 USA, countries in the European Union, Africa, Latin America, Asia etc.
 
 4.  Directors'' Responsibility Statement
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
 confirm:
 
 a) that in the preparation of the annual accounts, the appli- cable
 accounting standards have been followed and that no material departures
 have been made from the same;
 
 b) that they have selected such accounting policies and ap- plied them
 consistently and made judgments 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 period and of the losses of the Company
 for that period;
 
 c) that they have taken proper and sufficient care for the main-
 tenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguard- ing the assets of
 the Company and for preventing and detecting fraud and other
 irregularities;
 
 d) that they have prepared the annual accounts on a going concern
 basis.
 
 5.  Corporate Governance
 
 As required under Clause 49 of the Listing Agreement, a de- tailed
 Report on Corporate Governance is enclosed. A certifi- cate from the
 Auditors of your Company regarding compliance of the conditions of
 Corporate Governance as stipulated in Clause 49 of the Listing
 Agreement is attached to Annual Report. The Chairman & Managing
 Director and Executive Director (Comml.) & Company Secretary of the
 Company have given necessary Certificate to the Board in terms of
 Clause 49 (V) of the Listing Agreement with Stock Exchange(s) for the
 financial year ended 31st March, 2011.
 
 
 7.  Directorate
 
 Mr Satinder Kumar Aggarwal and Mr Lalit Kumar Singhania re- tire by
 rotation and, being eligible, offer themselves for re-ap- pointment.
 
 Directors recommend their reappointment as Director of the Company.
 
 Mr. C P Ravindranath has been appointed as Nominee Director on the
 Board of the Company by EXIM Bank in place of Mrs.  Sangeeta Sharma
 w.e.f. 21.04.2011.
 
 8.  Personnel
 
 The workmen of the Company had resorted to an illegal strike and with a
 view to preserve life and property the Company had to declare a lockout
 on 7th March 2006. Pursuant to signing of the Tripartite Agreement
 between the Company and the regis- tered and recognized trade union –
 Lohia Machines (LML) Karmchari Sangh and Labour Department of
 Government of Uttar Padesh, the strike by workmen was withdrawn and the
 lockout was subsequently lifted and operations restarted. The Company
 had 3034 employees as on 31.03.2011. None of the employee was in
 receipt of remuneration of Rs. 60.00 Lacs or more per annum throughout
 the year or Rs. 5.00 Lacs per month for the part of year.
 
 9.  Audits & Auditors
 
 M/s. Khandelwal Jain & Co. and M/s. Parikh & Jain, Statutory Auditors
 of the Company, are retiring at the ensuing Annual General Meeting of
 the Company and, being eligible, offer themselves for re-appointment.
 
 In respect of observations made by the Auditors in their Report, your
 Directors wish to state that the respective notes to the accounts are
 self-explanatory and do not call for any further comments.
 
 Pursuant to Section 233 B of the Companies Act, 1956 and as per
 requirements of the Central Government, audit of Cost Accounts,
 relating to motor vehicles was carried out for the Financial Year
 2008-09. Subject to approval of Central Government M/s. J K Kabra &
 Co., Cost Accountants, have been re-appointed for the F.Y. 2009-11.
 
 Company has to appoint Cost Auditor within 90 days from the date of
 commencement of each Financial Year. Subject to approval of Central
 Government, M/s J K Kabra & Co., Cost Accountants have been
 re-appointed for the F.Y. 2011-12.
 
 10.  Conservation of Energy
 
 Company continued to envisage and implement energy conservation
 measures in various manufacturing operations leading to savings of
 quantitative consumption of power, fuel and oil etc. Energy
 conservation during the year (18 months) under various heads resulted
 into an estimated saving of Rs. 1.76 lacs (previous period Rs. 1.31
 lacs (12 months).
 
 11.  Pollution Control
 
 Relevant and necessary effluent treatment plants and other measures for
 control of water, air and environmental pollution are in place and
 steps have been taken to further strengthen and consolidate pollution
 control measures. ''No Objection Cer- tificates'' from the U.P. Pollution
 Control Board are obtained from time to time.
 
 12.  Technology Absorption
 
 Requisite information in prescribed form is given in Annexure-A to this
 report.
 
 13.  Foreign Exchange Earnings and Outgo
 
 Your Company earned during the period (18 months) Foreign Exchange of
 Rs 187.72 crores (previous year - Rs. 95.98 crores (12 months). Foreign
 Exchange outgo during the period (18 months) amounted to Rs. 15.48
 crores (previous year - Rs. 6.39 crores (12 months).
 
 14.  Stock Exchange Listing
 
 The Equity Shares of the Company are listed on the following Stock
 Exchanges :- 
 
 (i) U.P. Stock Exchange Ltd., Kanpur.  
 
 (ii) The Bombay Stock Exchange Limited, Mumbai.  
 
 (iii) National Stock Exchange of India Ltd., Mumbai.  
 
 The Company confirms that it has paid the annual listing fee to the
 above Stock Exchanges.
 
 15.  Depository System
 
 SEBI vide its Circular No. SMDRP/Policy/CIR-01/2000 dated 6th January,
 2000 notified that trading in Equity Shares of the Com- pany is
 permitted only in dematerialized form w.e.f. 17th Janu- ary, 2000.
 Requests received for dematerialization of shares are processed and
 confirmation is given to the respective deposito- ries i.e. National
 Securities Depository Limited (NSDL) and Cen- tral Depository Services
 (India) Limited (CDSL) within the stipu-lated time. As on 31st March,
 2011, 83.94% equity shares of the Company have been dematerialized.
 
 16.  Acknowledgement
 
 Your Directors take this opportunity to appreciate deeply the valu-
 able co-operation extended by the Central and State Govern- ment
 authorities and are extremely grateful to the Financial In- stitutions
 and Banks for their continued assistance, guidance and support. Your
 Directors are also grateful to all stake-holders, in- cluding
 Customers, Shareholders, Employees, Vendors, Deal- ers / Sub-dealers,
 and the general public for their support and confidence reposed in the
 Management.
 
                             For and on behalf of Board of Directors 
                                                     For LML Limited
                                                      
                                                    DEEPAK SINGHANIA
                                        Chairman & Managing Director
 
 Place : Gurgaon 
 Dated : 27.05.2011