The Board of Directors is pleased to present the performance of your
 Company for the year ended 31st March, 2011.
 
 Financial Highlights
 
                                                        Rs. in crores
 
                                                 2010-11      2009-10
 
 Gross sales and processing charges              3129.99      2453.65
 
 Less : Excise duty on sales                      163.82       108.01
 
 Net sales and processing charges                2966.17      2345.64
 
 Operating Profit before depreciation and interest350.22       265.02
 
 Less: Interest                                    60.42        28.76
 
 Depreciation                                      69.10        66.81
 
 Operating Profit before tax and Exceptional 
 Items                                            220.70       169.45
 
 Add: Profit on sale of land and building          20.60         --
 
 Less: Provision for loss on liquidation of 
 Overseas Subsidiary                                --          39.95
 
 Profit before tax                                241.30       129.50
 
 Less: Provision for taxation                      71.64        48.29
 
 Profit after tax                                 169.66        81.21
 
 Add: Surplus brought forward                     334.61       311.11
 
 Less:Final Dividend including tax on Dividend 
 for 2009-10                                        0.02          --
 
 Add: Dividend on own shares held through Trust     0.66         0.44
 
 Profit available for appropriation               504.91       392.76
 
 Less:Transfer to General Reserve                  25.00        15.00
 
 Transfer to Debenture Redemption Reserve          23.34        10.83
 
 Interim Dividend – Rs.1.50 per share of Rs.2 each 
 (Previous year Rs.Nil)                              27.84         --
 
 Tax on Interim Dividend (Net)                      3.66         --
 
 Final Dividend – Proposed @ Rs.1.50 per Equity Share
 (Previous year Rs.1.50 per share) of Rs.2 each        27.85        27.72
 
 Tax on Final Dividend                              4.52         4.60
 
 Balance carried to Balance Sheet                 392.70       334.61
 
 Review of Performance
 
 The Company performed well during the year 2010-11, crossing the Rs.3000
 crore mark in gross revenue terms, for the very first time. All the
 business segments of the Company registered a double digit growth and
 maintained their profitability despite a sustained period of high
 costs.  Strong consumer demand contributed to the robust volume growth
 in all the product lines of the Company.  The operating profit before
 depreciation and interest for the year 2010-11 at Rs.350 crores, was up
 by 32% over the previous year. Together with an extraordinary income of
 Rs.21 crores on sale of land and building, the Companys Profit before
 Tax for 2010-11 was Rs.241 crores, a growth of 109% over the previous
 year.
 
 The Bicycles division of the Company crossed Rs.1000 crores in sales for
 the first time, reporting a revenue of Rs.1121 crores in 2010-11, a
 growth of 18% over the previous year. It was only four years ago that
 the division crossed the Rs.500 crore mark in revenue – a fine example of
 how customer insight-led product development, operational excellence
 and superior service can spur faster growth.
 
 The year also marked the introduction of the first indigenous carbon
 fibre bicycle and launch of the internationally renowned ‘GT and
 ‘Mongoose brand cycles in the domestic market. These products
 complement our range of premium products and give us a position at all
 price points in the premium segment.
 
 During the year, 78 new models were introduced and these were received
 well. Sale of new models contributed 23% to the divisions revenue for
 the year.
 
 With a slew of premium products, the number of outlets selling the
 divisions products increased too. Currently, 647 outlets retail the
 Bicycle divisions entire range of products, of which 175 sell
 exclusively the divisions branded products.
 
 In the Electric Scooters segment, lesser number of vehicles was sold
 during the year owing to a contraction in demand.  Considering the
 difficult market conditions, the Company restructured the operations
 and further controlled its costs.  With the incentives announced by the
 Government of India for the development and sale of electric vehicles
 in the country and rising fuel prices, renewed consumer interest is
 being witnessed for these products. It may, however, take a longer time
 for these products to gain acceptance and establish a position for
 themselves in the market place.  The Wholly Foreign Owned Enterprise
 set up by the Company in China to source components for Electric
 scooters is expected to help the performance of this business going
 forward.
 
 Overall, the division reported a profit before interest and tax of Rs.78
 crores, representing a growth of 14% over the previous year, made
 possible by the growth in volume, better product mix, control over cost
 and keeping the funds employed in the business, low.
 
 The Engineering division of the Company too had a very good year,
 clocking a turnover of Rs.1195 crores, a growth of 34% over the previous
 year. The growth in this division over the last two years, has been
 high, riding largely on the growth of the Auto industry in the country.
 Having come out of the recession in early 2009, all segments of the
 Auto industry have grown significantly in the last two years, thanks to
 the policies of the Government of India. Being a key supplier of tubes
 to all segments of this industry, the Engineering division was able to
 register a growth of 21% in the value-added tubes segment and an
 overall growth of 20% in tubes. In the cold rolled steel strips segment
 too, the division grew 7%, despite the dominance of large integrated
 mills. The growth numbers of this division would have been higher but
 for the fact that capacities were fully taken up and some requirements
 of customers could not be met.
 
 The product range in the tubes segment is being augmented and plans are
 afoot to introduce new products.  The division will have to invest in
 new capacities to meet the growing demand in the auto sector.
 Substantial investments are expected to be made in the current
 financial year.
 
 This division reported a profit before interest and tax of Rs.113 crores,
 a growth of 32% over the previous year, contributed by better product
 mix, higher volume and a combination of internal operating efficiencies
 besides partial pass through of cost increases. The funds employed were
 also kept at around the same level as the previous year, despite the
 higher activity, yielding a higher return on the capital employed.
 
 In the Metal Formed Products division, all product lines grew at a
 higher rate, except the sections for railway wagons. The Automotive
 chains segment grew by 30%, which was higher than the growth of 26%
 registered by the two wheeler segment of the Auto industry, resulting
 in an improvement in the market share. Here again, constraints were
 faced in meeting in full the requirements of customers despite having
 increased capacity and productivity. In Industrial chains, the segment
 grew 11% in the domestic market and 60% in the export market.  This was
 enabled by the strong industrial growth and the revival of demand from
 overseas customers. In the Fine Blanked products segment, significant
 progress was achieved with the commercialisation of the new products
 developed, resulting in a growth of 138%. This has also helped de-risk
 some of the revenue streams as the user base has been expanded. With
 the launch of more products, this segment offers good potential for
 growth.
 
 Supply of car doorframes grew 17% in line with industry growth. This
 segment too achieved a landmark in that the figure of 1 Million sets of
 car doorframes sold in a year was crossed for the first time, the
 volume having doubled in just five years. Full fledged operations
 commenced at the re-located car doorframe facility at Sanand in
 Gujarat.  On the railway products, growth was marginal in the supply of
 sections for wagons. Supply of side and end walls for passenger coaches
 commenced during the year. A new facility at Uttarakhand became fully
 operational during the year.
 
 The division recorded a turnover of Rs.775 crores, a growth of 34% over
 the previous year. Profit before interest and tax grew by 26% with high
 volume growth from key product lines. The margin, however, was slightly
 impacted due to extra costs incurred to service customers on time,
 entry of a regional player in the wagons business resulting in intense
 price pressure and an inability to pass on cost increases fully. The
 return on capital employed remained healthy, despite the significant
 investments made recently in creating additional capacity and
 establishing state-of- the-art facilities.
 
 Management Discussion and Analysis
 
 The Management Discussion and Analysis Report, which forms part of this
 Annual Report, sets out an analysis of the individual businesses
 including the industry scenario, performance, financial analysis,
 investments and risk mitigation.
 
 Dividend
 
 The Board of Directors is pleased to recommend a final dividend of
 Rs.1.50 per equity share of Rs.2 each.  The Company has already paid an
 interim dividend of Rs.1.50 per share, making a total dividend of Rs.3 per
 share for the financial year 2010-11.
 
 Subsidiary Companies
 
 Cholamandalam Investment and Finance Co Ltd
 
 Cholamandalam Investment and Finance Co Ltd (CIFCL), a subsidiary of
 the Company (60.56% equity holding), has reported a consolidated gross
 income of Rs.1222 crores (previous year: Rs.956 crores) and consolidated
 profit before tax of Rs.123 crores (previous year: Rs.57 crores) in the
 financial year 2010-11. During the year under review, CIFCL refocused
 on its core businesses viz., vehicle finance, home equity and business
 finance, which enabled a strong performance. The profit for the year is
 after reckoning Rs.227 crores for the potential delinquencies in the
 personal loan segment and exceptional items in a subsidiary and Rs.21
 crores on account of additional provision on all standard assets in
 compliance with the new provisioning norms introduced by the Reserve
 Bank of India in January 2011.
 
 Cholamandalam MS General Insurance Co Ltd
 
 Cholamandalam MS General Insurance Co Ltd (CMSGICL), a joint venture
 with Mitsui Sumitomo Insurance Company Ltd, Japan, achieved a Gross
 Written Premium of Rs.968 crores during 2010-11 (previous year Rs.785
 crores), registering a growth of 23%. The General Insurance industry in
 India offers good potential for growth as penetration is low in this
 sector. However, there is intense competition amongst the players in
 this industry. The industry hence, continues to reel under the pressure
 of inadequate premium pricing seriously impacting underwriting
 profitability. While CMSGICL attained an operating profit before tax of
 Rs.38.8 crores in its eighth full year of operations, it reported a net
 loss of Rs.22.6 crores after providing for an amount of Rs.61.4 crores on
 account of the increased provisioning on Indian Motor Third Party
 Insurance Pool mandated by IRDA.  With the recent announcement by the
 Regulator for increase in the premium rates of motor third party
 liability insurance by 60-70% coupled with the establishment of a
 mechanism for an annual review of these rates, the future motor pool
 losses are expected to be contained and thereby, improve CMSGICLs
 profitability.
 
 Tubular Precision Products (Suzhou) Co Ltd
 
 Tubular Precision Products (Suzhou) Co Ltd, the Chinese subsidiary for
 manufacture of precision cold drawn welded steel tubes was not
 profitable in view of difficult market conditions and hence, it was
 decided to liquidate the company in the year 2009-10. After complying
 with the legal formalities and with the receipt of requisite clearances
 from the Chinese authorities, the subsidiary was liquidated effective
 29th March, 2011. The provision for diminution in value of the
 investment made during 2009-10 has been adequate to cover the loss on
 liquidation.
 
 Financiere C10 SAS
 
 Financiere C10 SAS, France, the holding company of Sedis SAS and S2CI,
 both in France and Sedis Co Ltd in UK achieved a consolidated turnover
 of Euro 27.9 million for the financial year 2010, a growth of 4.3% over
 the previous year.  This growth was achieved even as the European
 economy is slowly emerging from the recession. Profit before tax was
 Euro 0.5 million, an increase of 39% over the previous year.  While,
 Sedis SAS is a pioneer in the manufacture of Industrial and Engineering
 Class Chains with two manufacturing plants in France, S2CI and Sedis Co
 Ltd are distribution companies.  The brand ‘Sedis has a strong equity
 and the company has a presence in almost 100 countries through its vast
 distribution and sales network.
 
 TICI Motors (Wuxi) Co Ltd
 
 TICI Motors (Wuxi) Co Ltd is a wholly-owned subsidiary established in
 China during 2009-10 to facilitate the operation of Electric scooters
 and Bicycles business.
 
 TICI Motors (Wuxi) Co Ltd, in its first year of operations, made a loss
 of Rs.1.02 crores.
 
 The Statement pursuant to Section 212 of the Companies Act, 1956
 containing details of the Companys subsidiaries is attached.
 
 The Consolidated Financial Statements of the Company and its
 subsidiaries, prepared in accordance with the Accounting Standard (AS)
 21, form part of the Annual Report.
 
 Directors
 
 Your Directors regret to inform the sad demise of Dr. D
 Jayavarthanavelu, Director, on 11th June, 2010.  The Board places on
 record its deep sense of appreciation of the valuable contribution made
 by Dr. Jayavarthanavelu to the Companys growth during his long
 association as a Director, since July 1997.
 
 Messrs. Pradeep Mallick and S Sandilya will retire by rotation at the
 ensuing Annual General Meeting and are eligible for re-appointment.
 
 Mr. Pradeep V Bhide was appointed as an Additional Director with effect
 from 28th October, 2010. A resolution under Section 257 of the
 Companies Act, 1956 for the appointment of Mr. Pradeep V Bhide as a
 Director is being placed before the shareholders at the ensuing Annual
 General Meeting for their approval.
 
 Corporate Governance
 
 Your Company is committed to maintaining high standards of corporate
 governance. A report on corporate governance, along with a certificate
 from the Statutory Auditors on compliance with corporate governance
 norms forms part of this Annual Report.
 
 Human Resources
 
 Your Company recognises the crucial role of human resources in
 realising its corporate objectives and the need to retain and nurture
 talent. The Company is taking several initiatives to build
 organisational capability through continuous upgradation of technical,
 functional and managerial competencies. International exposure is also
 being provided to select employees, including operators, to learn
 global best practices from vendors/ associates, subsidiary companies
 etc., so that such practices can be assimilated in the Companys
 businesses.
 
 During the year, the Company continued to hire talent from premier
 engineering colleges and business schools in order to build a talent
 pipeline to facilitate sustainable future growth. The teams to manage
 the Companys long-term projects in its business verticals were also
 identified.
 
 Further, a number of leadership initiatives like ‘in class training
 programmes, one-on-one coaching, feedback sessions etc., were taken
 during the year. Some of the potential business leaders of the Company
 attended leadership development programmes organised by leading
 business institutes/schools viz., IIM-Ahmedabad and Ross Michigan
 Business School.
 
 Various programmes involving the employees and their families were
 organised during the year. Enthusiastic participation of employees was
 witnessed in programmes like Small Group Activities, Cross Functional
 Teams, Kaizens, 5s etc.
 
 The Company had 3150 permanent employees on its rolls, as on 31st
 March, 2011. Industrial relations continued to remain cordial during
 the period under review. Long-term wage settlements were reached with
 workmen in respect of the Companys factories at Avadi, Ambattur and
 Nashik.
 
 Employees Stock Option Scheme
 
 Details of the Employees Stock Option Scheme as required under the
 relevant SEBI Guidelines are annexed to this Report.
 
 Social Commitment
 
 As a corporate citizen, your Company is committed to the conduct of its
 business with a strong sense of social responsibility. Every year, the
 Company has been contributing a small portion of its profits for the
 promotion of worthy causes like education, healthcare, scientific
 research etc. This year too, a sum of Rs.3.09 crores was contributed to
 various organisations engaged in the aforesaid fields and to others.
 
 Auditors
 
 Messrs. Deloitte Haskins & Sells, Chartered Accountants and Statutory
 Auditors of the Company retire at the conclusion of the ensuing Annual
 General Meeting and being eligible, offer themselves for
 re-appointment.
 
 Mr. V Kalyanaraman and Mr. D Narayanan have been appointed as the Cost
 Auditors for auditing the cost accounting records maintained by the
 Company relating to Tubes and Cycles respectively for the financial
 year ending 31st March, 2012.
 
 The other information required to be furnished in the Directors Report
 under the provisions of Section 217 of the Companies Act, 1956 relating
 to conservation of energy, technology absorption, foreign exchange
 earnings and outgo, particulars of employees and Directors
 Responsibility Statement are annexed to and form part of this Report.
 
 The Directors thank all customers, vendors, Financial Institutions,
 Banks, State Governments and investors for their continued support to
 your Companys performance and growth. The Directors also wish to place
 on record their appreciation of the contribution made by all the
 employees of the Company resulting in the good performance during the
 year under review.
 
                                              On behalf of the Board
 
 Chennai                                             M M Murugappan
 
 2ndMay, 2011                                              Chairman