Munjal Showa

The Directors have great pleasure in presenting the 23rd Annual Report
 together with the Audited Statement of Accounts for the financial year
 ended March 31,2008.
 
 FINANCIAL RESULTS AND APPROPRIATIONS
 
 The salient features of the Companys Financial Results for the year
 under review are as follows:
 
                                                     (Rs. In Lacs)
                                        Year Ended     Year Ended
                                          31.03.08       31.03.07
 
 Sales and other Income                   84371.01       81881.85
 
 Profit before Depreciation & Tax          4514.69        5271.08
 
 Depreciation                              1536.23        1307.62
 
 Profit before Tax                         2978.46        3963.46
 
 Provision for Taxation                    1046.54        1364.81
 
 Profit after Tax                          1931.92        2598.65
 
 Net Profit brought forward                1693.15        1030.34
 
 Profit available for appropriation        3625.07        3628.99
 
 Dividend (Recommended)                     799.90         799.90
 
 Dividend Tax                               135.94         135.94
 
 Transfer to General Reserve               1000.00        1000.00
 
 Surplus carried to Balance Sheet          1689.23        1693.15
 
 OPERATIONS
 
 The Company has achieved a sales turnover of Rs.84,371.01 lacs
 registering a growth of 3.04 % vis-a- vis Rs. 81881.85 lacs in the
 previous year. The profit before tax in the current year was at Rs.
 2978.46 lacs as compared to Rs. 3963.46 lacs in the previous year, down
 by 24.85 % mainly due to hike in steel & other major raw-material
 prices, fuel & interest cost and foreign exchange fluctuation due to
 high volatility in exchange rate during the year under review.
 
 FUTURE PROSPECTS
 
 Our existing customers will meet predetermined sales targets with
 minimum 10 per cent growth with the support of new models launched both
 in 2 Wheeler and 4 Wheeler segment. M/s Hero Honda Motors Limited has
 planned the launch of Passion 09, Splendor NXG, CBZ Extreme MMC and
 modified scooter models. In order to stay competitive and to capture
 market share, Hero Honda Motors Limited will continuously develop new
 models in deference to market needs and customer expectations.
 Similarly, Honda Motorcycle & Scooters India Pvt. Ltd. has planned the
 introduction of new Models  KWFA, KWFF, KWSA and KWPA respectively.
 Honda Siel Cars India Limited has also planned introduction of three
 new generation models of cars very soon. Maruti Suzuki India Limited
 has chalked out a plan to release new models of A STAR and SPLASH cars
 with altogether new generation engine and aero dynamics.
 
 The Company has pursued installation of its third plant at Haridwar,
 Uttrakhand, to cater to the needs of Hero Honda Motors Limited with
 effect from April2009 or earlier. The plant is planned to be installed
 to enjoy the concessional tax structure and incentives. In brief, all
 customers of the Company are on growth path and Company is confident to
 meet their increased demand.  The volume growth is expected to be 10%
 for 2008-09.
 
 TRANSFER TO GENERAL RESERVE
 
 The Board proposes to transfer an amount of Rs. 1000.00 lacs to General
 Reserve, having regard to the requirements of section 205 (2A) of the
 Companies Act, 1956. The balance amount of Rs. 1689.23 lacs (previous
 year Rs. 1693.15 lacs) will be retained in the Profit and Loss Account.
 
 DIVIDEND
 
 In spite of the challenging conditions and to keep up Companys policy
 of sharing the profits with its stakeholders, the Board is pleased to
 maintain and recommend a dividend of 100 % (i.e. Rs. 21- Per equity
 share of Rs. 2/- each) for the year ended March 31, 2008 amounting to
 Rs. 799.90 lacs in aggregate. Dividend will be tax free in the hands of
 shareholders, as the Company will bear the dividend distribution tax of
 Rs. 135.94 lacs. The dividend, if approved, at the Annual General
 Meeting shall be payable to the shareholders registered in the books of
 the Company and the beneficial owners whose names are furnished by the
 depositories, determined with reference to the book closure from July
 19, 2008 to August 07,2008 (both days inclusive).
 
 DIRECTORS
 
 Mr. Pankaj Munjal and Mr. Anil Kumar Vadehra, the directors of the
 Company, retire by rotation from the Board at the ensuing Annual
 General Meeting. Mr. Pankaj Munjal and Mr. Anil Kumar Vadehra being
 eligible have offered themselves for re-appointment.
 
 Mr. Mitsuhiro Nishida has been appointed additional director under
 section 260 of the Companies Act, 1956 read with Article 89 of the
 Articles of Association of the Company.
 
 Brief resumes of Mr. Pankaj Munjal, Mr. Anil Kumar Vadehra and Mr.
 Mitsuhiro Nishida have been appended to the Notice of the Annual
 General Meeting.
 
 Yourdirectors recommend their appointment at the ensuing Annual General
 Meeting.
 
 CORPORATE GOVERNANCE
 
 Report on Corporate Governance and Management Discussion and Analysis
 Report along with Certificate of the Auditors of your Company pursuant
 to clause 49 of the Listing Agreement with the Stock Exchanges, have
 been included in this Report as Annexure-A. Your Company has been
 practicing the principles of good Corporate Governance over the years.
 
 In terms of sub-clause (v) of Clause 49 of the Listing Agreement,
 Certificate of CEO/CFO, inter alia, confirming the correctness of the
 financial statements, adequacy of internal control measures and
 reporting of matters to the Audit Committee in terms of the said
 Clause, is also enclosed as a part of the Report.
 
 The Board of Directors has laid down a Code of Conduct to be followed
 by all the Directors and members of Senior Management of your Company.
 The Board of Directors supports the broad principles of Corporate
 Governance. In addition to the basic governance issues, the Board also
 lays strong emphasis on transparency, accountability and integrity.
 
 AUDITORS
 
 M/s S.R. Batliboi & Co., Chartered Accountants, Gurgaon, the Auditors
 of the Company retire at the conclusion of the forthcoming Annual
 General Meeting, and being eligible, offer themselves for re-
 appointment. The Company has received a certificate from the auditors
 to the effect that their re- appointment, if made, would be in
 accordance with Section 224(1 B) of the Companies Act, 1956. The Board
 recommends their re-appointment.
 
 AUDITORS REPORT
 
 The observations in the Auditors Report read with the Notes to accounts
 are self-explanatory and do not call for any comments.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 In compliance with Section 217(2AA) of the Companies Act, 1956, the
 Directors confirm:
 
 a) that the applicable accounting standards have been followed in the
 preparation of annual accounts and that there are no material
 departures;
 
 b) that such accounting policies have been selected and applied
 consistently and the judgments and estimates made are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Company as at 31st March 2008 and of the profit of the Company for
 the year ended on that date;
 
 c) 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; and
 
 d) that the annual accounts have been prepared on a going concern
 basis;
 
 FIXED DEPOSIT
 
 The Company has not accepted any Fixed Deposits during the year under
 Section 58Aor 58AAof the Companies Act, 1956 and the rules made
 there-under, and as such no amount on account of principal or interest
 on public deposits was outstanding on the date of the Balance Sheet.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND RESEARCH &
 DEVELOPMENT AND FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 The information pursuant to Section 217(1) (e) of the Companies Act,
 1956 read with the Companies (Disclosure of particulars in the report
 of the Board of Directors) Rules, 1988 regarding Conservation of
 Energy, Technology Absorption and R&D and Foreign Exchange earnings &
 outgo are given in Annexure-B which forms part of Directors Report.
 
 ENVIRONMENT COMPLIANCE
 
 Safety and environment performance is integral to the business
 performance of the Company and received continued focus throughout the
 year. Zero accidents is acceptable standard of safety performance.
 The accident frequency continued to be one of the lowest and reducing
 trend was maintained during the year. The Company regularly organizes
 fire fighting training for staff and workers.  The Company has received
 National Safety Award and Haryana Council Safety Award during the year.
 
 For all manufacturing facilities, which require environmental consents
 such as air, water and hazardous waste, proper authorizations from
 respective Pollution Control Boards have been obtained and are in
 compliance with the present Environmental Legislation. The Company
 initiated many programmes to improve the health and safety of employees
 by way of Internal Environment Management Programmes. These initiatives
 and the improvements are monitored and reviewed through structured
 audits and management reviews. The Company is a member of Haryana
 Environment Management Society. Government of Haryana has identified
 and notified a site in District Faridabad for use of disposal facility
 for hazardous waste. The society has also entered into an arrangement
 with SENES, a non-profit organization of Canada which has specialized
 in disposal of effluent waste and is acting in co- ordination with the
 society for bringing up this facility.
 
 The Company has started a new project for improvement in its
 performance in environment management. The project is specifically
 designed and named as Green Vendor Development Programme (GVDP). As a
 part of the project, six pillars named as Water, Energy, Waste,
 Chemical Substitution, Pollution Prevention and Legal Compliance have
 been constituted. Basic objectives of GVDPare;
 
 100 per cent compliance of legal requirements
 
 - To conserve Water and Energy through process mapping
 
 - To minimize generation of Waste including hazardous waste and
 effectuate 3R principles i.e.  Reduce, Recycle and Rinse.
 
 - To terminate hazardous chemicals with less hazardous or non-hazardous
 chemicals.
 
 - To generate pollution prevention awareness throughout the plant and
 to control & monitor all the pollution control devices to operate at
 optimum level.
 
 ISO, QS AND TS ACCREDITATION
 
 Your Companys manufacturing facilities at both the plants continue to
 maintain and uphold the prestigious ISO 9001, QS 9000, ISO 14001, TS
 16949-2002 and OHSAS 18001 certifications from reputed leading Indian
 and International Certification Institutions. These certifications help
 in continuous improvements, besides emphasis being laid on prevention
 of defects, reduction of wastes and variation in supply chain
 management.
 
 TPM
 
 The Company has taken up the journey of Total Productive Maintenance
 (TPM) with the help of JIPM Japan and CM, India. Major objectives of
 TPM are to increase Productivity, to improve Quality, to reduce Costs,
 to ensure Delivery in time, to increase Safety, to increase
 profitability, to build Moral by formation of cross functional work
 groups (PQCDSM) and to improve overall effectiveness of equipment and
 processes within their areas. The other objectives are to procure and
 install maintenance free plant and machinery; and to achieve zero
 defects, zero break down, zero losses and zero accidents.
 
 We have challenged the TPM excellence award with JIPM Japan and
 successfully cleared the TPM health checkup audit held in January 2008
 with a hope to clear TPM pre and final audit which are going to be
 conducted by JIPM in the month of June and December 2008 respectively.
 We are confident to get TPM ExcellenceAward in March2009.
 
 We are in the process of clubbing TPM with lean manufacturing system in
 the near future. Our Company has been selected by Japan Management
 Association, Japan to conduct Lean Manufacturing System (Value Stream
 Mapping) Work Shop in the month of July 2008
 
 A unique machine manufacturing division has been formed for
 manufacturing lean machines in India for the first time to cater the
 needs for our own expansion of new lines and for our plants. Besides
 this, the Company has started implementation of low cost automation
 mainly for quality up-gradation, manpower reduction, material handling
 etc. The other activities done by this division are conversion of our
 problematic machines into very simple TPM friendly and lean machines.
 
 LISTING
 
 The shares of your Company are listed at National Stock Exchange of
 India Limited and Bombay Stock Exchange Limited, and pursuant to Clause
 38 of the Listing Agreement, the Annual Listing fees for the year
 2008-2009 have been paid to them well before the due date i.e. April
 30,2008. The Company has also paid the annual custodian fees for the
 year 2008-09 in respect of Shares held in dematerialized mode to NSDL &
 CDSL
 
 PARTICULARS OF EMPLOYEES ,
 
 A statement under sub-section (2A) of Section 217 of the Companies Act,
 1956 read with Companies (Particulars of Employees) Rules, 1975 as
 amended, forming part of this Directors Report is given in Annexure-C.
 
 HUMAN RESOURCES
 
 Your Company believes that employees form the fulcrum of growth and
 differentiation for the organization. The Company recognizes that
 people are its principal assets and that its continued growth is
 dependent upon the Companys ability to attract and retain quality
 people. The total headcount increased to 2204 at the end of the year as
 compared to 2089 of the previous year. The Company encourages
 long-term, commitment to the Company by rewarding its people for the
 opportunities they create and the value generated for customers and
 shareholders. The Company conducts several training programmes to
 upgrade the skills of the work force.
 
 ACKNOWLEDGMENT
 
 Your Directors place on record their appreciation of the co-operation
 and support extended to the Company by Government of India, State
 Governments of Haryana and Uttrakhand, other local authorities,
 bankers, suppliers, customers and other stakeholders whose continued
 support has been a source of strength to the Company. The continued
 dedication and sense of commitment shown by the employees at all levels
 during the year deserve special mention.
 
 The Directors also place on record their appreciation for the valuable
 assistance and guidance extended to the Company by Showa Corporation,
 Japan and for the encouragement and assurance, which our collaborator
 has provided from time to time for the growth and development of the
 Company.  The Directors also take this opportunity to express their
 deep gratitude for the continued co-operation and support received from
 its valued shareholders.
 
                                      For and on behalf of the Board
 
 Place: New Delhi                              BRIJMOHAN LALL MUNJAL
 Dated: May 23,2008                                         Chairman