Rico Auto

The Directors have pleasure in presenting the 25th Annual Report of
 your Company, together with the Audited Accounts for the year ended
 31st March, 2008.
 
 FINANCIAL RESULTS
 
                                                       (Rs. in Crores)
                                       Current Year     Previous Year
                                         31/03/2008        31/03/2007
 
 Gross Sales and other Income                827.34            887.98
 
 Net Sales and other Income                  735.48            782.20
 
 Profit before Interest & Depreciation       101.25             94.67
 
 Less :  Interest & Financial charges         25.89             15.16
 
 Profit before Depreciation and Tax           75.36             79.51
 
 Depreciation                                 47.32             42.54
 
 Fringe Benefit Tax                            0.75              0.66
 
 Provision for Income Tax                      2.16              3.48
 
 Provision for Deferred Tax                    2.86              7.02
 
 Previous year Income Tax                      0.02             (0.03)
 
 Net Profit                                   22.25             25.84
 
 Appropriations:
 
 Interim Dividend on Equity                       -              9.42
 
 Shares @75%
 
 Dividend on Equity                            7.53                 -
 
 Shares @60%
 
 Corporate Dividend Tax                        1.27              1.32
 
 Transferred to General Reserve                2.22              2.58
 
 Balance carried to Balance Sheet             11.23             12.52
 
                                              22.25             25.84
 
 The turnover of your Company declined by 7 per cent from Rs.887.98
 crores in the previous year to Rs.827.34 crores in the year under
 report. Your Company has earned a Profit before Interest, Depreciation
 and Tax (PBIDT) of Rs.101.25 crores which represents an increase of 7
 per cent over the previous year’s PBIDT of Rs.94.67 crores.
 
 OUTLOOK FOR CURRENT YEAR
 
 The Unaudited Financial Results for the quarter ended 30th June, 2008,
 already announced, shows a turnover of Rs.215.36 crores and PBIDT of
 Rs.22.93 crores for the first quarter of the current year against a
 turnover of Rs.204.70 crores and PBIDT of Rs.22.37 crores of the
 corresponding quarter of the previous year, recorded growth both in
 turnover and PBIDT by 5.2 per cent and 2.5 per cent respectively. Your
 Directors are taking steps to improve the margin during the remaining
 part of the year.
 
 RESERVES
 
 The reserves of your Company after proposed appropriations shall stand
 at Rs.256.85 crores as against Rs.243.40 crores in the previous year.
 
 EXPORT
 
 The export turnover of your Company during the period under review was
 Rs.142.23 crores, recording a growth of 19 per cent.  The export
 turnover includes sale to Wholly Owned Subsidiaries amounting to
 Rs.102.95 crores as against Rs.68.76 crores in the previous year.
 
 During the quarter ended 30th June, 2008 of current year export
 turnover was Rs.34.59 crores as against Rs.33.01 crores in the
 corresponding quarter of the previous year. Further details as regards
 efforts of your Company on this front have been dealt with in the
 Management Discussion and Analysis section of this report.
 
 DIVIDEND
 
 Your Directors have recommended a Dividend @60 per cent i.e.  Re.0.60
 per Equity Share of Re.1/- each for the financial year 2007-08,
 amounting to Rs.8.80 crores including dividend tax of Rs.1.27 crores on
 the Equity Share Capital of Rs.12.56 crores as against the dividend of
 75 per cent i.e. Re.0.75 per Equity Share of Re.1/- each aggregating to
 Rs.10.74 crores including dividend tax of Rs.1.32 crores in the
 previous year on the same Equity Share Capital.
 
 FINANCE
 
 Your Company has been affirmed “A1+” rating by ICRA Limited for its
 Commercial Paper/Short Term Debt Programme of Rs.30.00 crores and
 “AA-(ind)” by Fitch Ratings for Long Term Debt Programme of Rs.20.00
 crores. Besides existing ratings, your Company has been affirmed “A1”
 and “LA” Ratings for Line of Credit (Basel-II) for its Short Term and
 Long Term Bank Facilities respectively by ICRA Limited. Your Company
 uses long/short term facilities from the Banks on most favourable
 terms.
 
 NEW PLANTS
 
 Your Company is undertaking continuous endeavours for expansion of its
 domestic and overseas customers by implementing new facilities. For
 establishing manufacturing facilities, your Company has started work
 for its:
 
 i) Singur Plant, situated in the TATA’s Vendor Park and expected to
 commence the production and supplies to TATA Motors for its Nano Car in
 the last quarter of this financial year 2008-09.
 
 Initially the supply of components to TATA Motors for its Nano Car
 being rolled out in the last quarter of this calendar year would take
 effect from the existing facilities available at Gurgaon Plant.
 
 ii) Haridwar Plant, to cater the needs of Hero Honda Motors Limited for
 its plant at Haridwar, Uttarakhand. This plant is expected to commence
 commercial production in the financial year 2009-10.
 
 SUBSIDIARY COMPANIES
 
 Your Company has Unlisted Wholly Owned Subsidiaries.
 
 A.  Rico Auto Industries Inc. USA
 
 This Company is engaged in the business of trading of Auto Components.
 
 The Company earned a total revenue of Rs.89.19 crores during the
 financial year ended 31st March, 2008 as against Rs.60.06 crores in the
 previous year, an increase of 48.5 per cent. The net profit of Rs.1.64
 crores as against Rs.1.31 crores in the previous year, recorded a
 growth of 25 per cent.  This Company has not declared any dividend for
 the financial year ended 31st March, 2008.
 
 This Subsidiary has achieved a turnover of Rs.24.60 crores for the
 quarter ended 30th June, 2008 as against Rs.23.10 crores in the
 corresponding quarter of the previous year, a growth of 6 percent.
 During the financial year and period under review your Company has not
 made any additional investment in this Subsidiary.
 
 The Subsidiary is expecting significant growth during the remaining
 part of the current financial year.
 
 B.  Rico Auto Industries (UK) Limited
 
 This Company is engaged in the business of trading of Auto Components.
 
 The Company earned a total revenue of Rs.9.19 crores during the
 financial year ended 31st March, 2008 as against Rs.1.81 crores in the
 previous year. The net profit of Rs.0.25 crore as aganist Rs.0.02 crore
 in the previous year, recorded an increase.  This Company has not
 declared any dividend for the financial year ended 31st March, 2008.
 
 This Subsidiary has achieved a turnover of Rs.17.06 crores for the
 quarter ended 30th June, 2008 as against Rs.0.62 crore in the
 corresponding quarter of the previous year. During the financial year
 and period under review your Company has not made any additional
 investment in this Subsidiary.
 
 The Subsidiary is expecting significant growth during the remaining
 part of the current financial year.
 
 For the purpose of purchase of Industrial Land the following three
 Subsidiaries have been formed:
 
 C.  Rasa Autocom Limited
 
 Rasa Autocom Limited was incorporated on 5th September, 2007.  Your
 Company has invested Rs.0.08 crore in the entire Equity Share capital
 of this Company and consequently it became wholly owned subsidiary
 Company.  A loan of Rs.2.07 crores has also been given to this Company
 as on 30th June, 2008.
 
 D.  Uttarakhand Automotives Limited
 
 Uttarakhand Automotives Limited was incorporated on 4th June, 2007.
 Your Company has invested Rs.0.41 crore in the entire Equity Share
 capital of this Company and consequently it became wholly owned
 subsidiary Company.  A loan of Rs.13.25 crores has also been given to
 this Company as on 30th June, 2008.
 
 E.  RAA Autocom Limited
 
 RAA Autocom Limited was incorporated on 27th May, 2008.  Your Company
 has invested Rs.0.05 crore in the entire Equity Share capital of this
 Company and consequently it became wholly owned subsidiary Company. A
 loan of Rs.1.30 crores has also been given to this Company as on 30th
 June, 2008.
 
 SUBSIDIARY & JOINT VENTURE COMPANY
 
 Rico Jinfei Wheels Limited
 
 Rico Jinfei Wheels Limited was incorporated on 16th July 2007 is in the
 process of establishing its plant at IMT Manesar, Gurgaon and is
 expected to commence the production in the last quarter of financial
 year 2008-09. Your Company has so far invested Rs.4.58 crores in the
 Equity Share capital and also Rs.3.41 crores as loan towards the
 financing of the project as on 30th June, 2008.
 
 JOINT VENTURE COMPANIES
 
 A.  FCC Rico Limited
 
 FCC Rico recorded a turnover of Rs.373.21 crores for the financial year
 ended 31st March, 2008 as against Rs.330.51 crores in the previous
 year, a growth of 13 per cent. The Board of this Company has
 recommended a dividend of 220 per cent for the year ended 31st March,
 2008 and your Company expects to receive an amount of Rs.8.69 crores by
 way of dividend on its investment.
 
 B.  Continental Rico Hydraulic Brakes India Private Limited
 
 Continental Rico Hydraulic Brakes India Private Limited was
 incorporated on 3rd January, 2008 is in the process of establishing its
 plant at Gurgaon and is expected to commence the production in the
 financial year 2009-10.  Your Company has so far invested Rs.11.00
 crores in the Equity Share capital towards the financing of the project
 as on 30th June, 2008.
 
 NEW JOINT VENTURE
 
 Your Company has entered into Joint Venture Agreement with Magna
 Powertrain Limited, an Operating Unit of Canada based Magna
 International Inc. with 50:50 equity participation to manufacture Oil
 and Water Pumps with Aluminium Housing for Automotive Engine
 Applications for Indian and European markets.  The production of this
 Joint Venture is scheduled to commence in the financial year 2009-10.
 For the purpose a Company has been incorporated on 14th March, 2008
 under the name of Magna Rico Powertrain Private Limited. Your Company
 has so far invested Rs.4.62 crores in the Equity Share capital and also
 Rs.0.23 crore as loan towards the financing of the project as on 30th
 June, 2008.
 
 Investment in the Joint Venture Project is expected to contribute
 towards growth and profitability of your Company in the coming years.
 
 FINANCIAL STATEMENTS
 
 Pursuant to the Listing Agreements, the appended Audited Consolidated
 Financial Statements of the Subsidiaries and the Joint Venture
 Companies, in accordance with Accounting Standards issued by the
 Institute of Chartered Accountants of India form a part of the Annual
 Report.
 
 The Statement required under section 212 of the Companies Act, 1956 in
 respect of the Subsidiaries of the Company is annexed to this Report
 alongwith a summary of their financial performance.  An exemption has
 been received from Ministry of Corporate Affairs, Government of India
 from annexing the accounts and other documents pertaining to the
 subsidiaries, under section 212(8) of the Companies Act, 1956.
 
 FIXED DEPOSITS
 
 During the year the Company has not accepted deposits from the public
 under section 58A of the Companies Act, 1956.
 
 MANAGEMENT DISCUSSION AND ANALYSIS REPORT (MDA)
 
 Pursuant to Clause 49 of the Listing Agreement, MDA which forms part of
 this Report is annexed.
 
 CORPORATE GOVERNANCE
 
 A separate report on Corporate Governance alongwith General
 Shareholders information as prescribed under the Listing Agreement is
 annexed as a part of this Report, alongwith the Auditors’ Certificate
 thereon.
 
 DIRECTORS’ RESPONSIBILITY STATEMENT
 
 Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors
 confirm that:
 
 i) in the preparation of the annual accounts for the financial year
 ended 31st March, 2008 the applicable accounting standards have been
 followed and there are no material departures;
 
 ii) appropriate accounting policies have been selected and applied
 consistently and have 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 as at 31st March, 2008 and of the profit for the year
 1st April, 2007 to 31st March, 2008;
 
 iii) 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
 preventing and detecting fraud and other irregularities; and
 
 iv) the annual accounts for the financial year ended 31st March, 2008
 have been prepared on a going concern basis.
 
 AUDIT COMMITTEE
 
 Your Company has an Audit Committee to meet the requirement of the
 Companies Act, 1956 as well as of Listing Agreement with the Stock
 Exchanges. The details of the Audit Committee are given under the
 Corporate Governance Report.
 
 LISTING OF EQUITY SHARES
 
 The Equity Shares of your Company are presently listed on Bombay Stock
 Exchange Limited & The National Stock Exchange of India Limited. The
 Annual Listing Fees have been paid for the financial year 2008-09.
 
 DIRECTORS
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Articles of Association of your Company, Shri Kanwal Monga and Shri
 Amarjit Chopra, Directors will retire by rotation at the forthcoming
 Annual General Meeting and being eligible, offer themselves for
 re-appointment.
 
 Brief resume relating to Directors who are being re-appointed are given
 in the Notice of the Annual General Meeting.
 
 AUDITORS
 
 M/s. Gupta Vigg & Co., Chartered Accountants, Statutory Auditors of the
 Company hold office till the conclusion of the forth coming Annual
 General Meeting and being eligible offer themselves for re-appointment.
 They have given a certificate under section 224(1B) of the Companies
 Act, 1956 to the effect that their re-appointment as Auditors of the
 Company, if made, would be in accordance with the said section. The
 Board recommends their re-appointment.
 
 The observations in the Auditors’ Report are dealt within the notes to
 accounts at appropriate places and, being self-explanatory, need no
 further comments.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 As required by the provisions of Section 217(1)(e) of the Companies
 Act, 1956 read with the Companies (Disclosure of Particulars in the
 Report of Board of Directors) Rules, 1988, the relevant information is
 given in the annexure forming part of this report.
 
 TRANSFER OF UNPAID/UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND
 PROTECTION FUND (IEPF)
 
 Pursuant to the provisions of Section 205A(5) of the Companies Act,
 1956, the declared dividends, interest on 17% Non Convertible
 Debentures and redemption amount of the said debentures which remained
 unpaid/unclaimed for a period of 7 years have been transferred by the
 Company to the IEPF established by the Central Government pursuant to
 Section 205C of the said Act.
 
 PERSONNEL
 
 In terms of the provisions of Section 217(2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975 as
 amended, the names and other particulars of the employees are set out
 in the Annexure to the Directors’ Report.  However, as per the
 provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report
 excluding the aforesaid information is being sent to all the Members of
 the Company and others entitled thereto. Member who is interested in
 obtaining such particulars may write to the Company Secretary at the
 Corporate Office of the Company.
 
 The said information is also available for inspection at the Corporate
 Office and Registered Office during working hours upto the date of the
 Annual General Meeting.
 
 During the year under report the Industrial relations with personnel
 remained cordial, at all Plants. Your Directors wish to place on record
 their appreciation of the sincere and unstinted support provided to the
 Company by its employees at all levels.
 
 ACKNOWLEDGEMENTS
 
 The Board wishes to place on record its sincere appreciation for the
 continued assistance and support extended to the Company by Financial
 Institutions, Banks and various departments of Central and State
 Governments. Your Directors acknowledge with gratitude the
 encouragement and support extended by our valued customers.
 
                             On behalf of the Board of Directors
 
 Place : Gurgaon          Prof. Vinod Kr. Bhalla    Arvind Kapur
 Dated : 30th July, 2008                Director        Managing
                                                        Director