Exide Industries Ltd

TO THE SHAREHOLDERS

Your Board of Directors have pleasure in presenting the 64th Annual Report of theCompany together with Audited Accounts for the year ended 31st March, 2011.

Economic Environment

After the economic slowdown caused by the global financial crisis in 2007 the Indianeconomy, which showed signs of recovery in 2009-10, continued to gain momentum. The growthrate which plummeted to 6.8% in 2008-09, rose upto 8% in 2009-10 and is expected to be8.6% for 2010-11 as per the Advance Estimates of the Central Statistics Office (CSO). Thepositive feature of such turnaround is that this recovery has been broad-based with almostall the core sectors recording an impressive turnaround. Agriculture, which had anegligible growth in 2009-10, recorded an impressive 5.4% increase in growth.

All these positive developments were however marred to a certain extent due to highinflation, mainly driven by high cost of food items. A negative growth in agriculture in2008-09, a severe drought in 2009-10 followed by unseasonal rains during 2010-11, coupledwith inadequacies in the public distribution system resulted in shortage of food crops.Further, due to enhancement of income amongst the marginalized sections of the ruralpopulace, arising out of social security policies of the Government, there was anincreased demand for cereals and other food grains. All these factors contributed tosevere pressure on prices of food grains. Thankfully, due to better monsoons and certaininterventions made by the Government and the Reserve Bank of India, the inflation whichpeaked to 11% fell to single digit levels. The high fiscal deficit which was a source ofconcern was also eased to a certain extent through revenue generation from auction of 3Gspectrum licenses, disinvestment in PSUs etc.

Looking into the medium to long term, it is expected that this growth story wouldcontinue unabated and, in fact, would accelerate further. All key economic indicators lookfavourable which leads us to the expectation that the rate of growth will breach the 9%mark in 2011-12. However, there are certain causes for concern. The recent politicalinstability in the African countries is having a spiraling effect on the crude priceswhich is fuelling inflation and if the situation does not improve this may have an adverseeffect on the economy. Further, Japan, which has not yet shown any definite signs ofrecovery from its long slowdown may be further affected due to the recent unfortunatenatural disasters and the consequent threats of nuclear radiation. In the global scenario,though India has a large domestic demand, it is also vitally linked with the economy ofthe industrialized nations. Many of the industrialized nations are yet to show signs ofsustained recovery from the economic slowdown and any further crisis may have an adverseeffect on our economy.

Industry Structure and Development

The Domestic Battery Industry has had mixed fortunes during the year under review. Thetelecom, infrastructure and export sectors continue to be sluggish but this has beencompensated by an unexpected high growth in the automobile sector. The passenger vehiclesegment grew by over 29% whilst the commercial vehicle segment registered a growth ofnearly 27% as compared to 2009-10. Sale of two-wheelers registered a growth of 26% andautomobile exports had a growth of nearly 30% as compared to 2009-10. It is expected thatthis rate of growth would continue unabated and the total automobile market is expected togrow by double digits annually for the next 5 years.

As stated earlier, India is emerging as a small car hub in the Asia Pacific Region andmost of the leading global players have a presence in this country. Buoyed by the growthprospects, almost all automobile manufacturers in the country are expanding theircapacities and some are also setting up new facilities. These manufacturing facilitieswould not only cater to the local market but also act as a manufacturing base for exportof both passenger vehicles as well as heavy vehicles, including tractors. During theprevious year the automobile industry attracted Foreign Direct Investment worth US$ 1,191million. Trained manpower at competitive costs and stagnation in the industrializednations has induced global majors to invest in India and China. It is expected that Indiawould become one of the top 5 vehicle producing countries in the World by 2020, withdomestic consumption growing four-fold. These developments would obviously lead toincrease in the market base of the domestic battery industry.

Infrastructure continues to be a key focus area for the Government with massiveinvestments planned in the near term. 2,14,000 crores has been allocated in the UnionBudget 2011-12 for the infrastructure sector, which is 23% higher than the previous yearand this amounts to 48.5% of the Gross Budgetary support to plan expenditure. Further,plans for modernization of Railways and setting up of Nuclear Power Plants would lead toconsiderable demand for the battery industry.

Performance

Your Company is not only one of the leading manufacturers of Lead Acid Batteries inIndia and South Asia, but also is reckoned among the first five major companies in theglobal battery manufacturing industry. During the year under review, your Company recorded20% growth in net sales with an increase of 24% in profit after tax. The unprecedentedrise in demand from all segments of automotive vehicle manufacturers resulted in diversionof capacity from the after market business thereby leading to reduced profitability.Inspite of the same your Company registered an increase in profits which, apart fromothers, was due to higher availability of lead and lead alloys from the two captive leadsmelters, favourable foreign exchange rates, strict austerity measures and all round costcontrol.

Automotive Batteries

The sales of automotive batteries registered a growth of 23% as compared to theprevious year. However, your Company was unable to cater fully to the unanticipated demandby all segments of vehicle manufacturers due to capacity constraints and thereby take fulladvantage of the potential growth in the industry. In such a scenario, in line with itslong term perspective, your Company took a conscious decision to give priority to theincreased requirements of the vehicle manufacturers over the more profitable after marketsegment.

Your Company continues to remain the preferred supplier for most of the new vehicleslaunched during the year under review. These batteries have been developed by your Companythrough in-house R&D and several of these underwent rigorous tests including tests inoverseas laboratories prior to being selected for supplies. Your Company has alreadylaunched Deep Cycling Electric Bike batteries for electric bicycles and scooters and isalso in the process of developing batteries for Stop-Start Micro Hybrid Vehicles incollaboration with The Furukawa Battery Company Limited, Japan. Your Company is alsoexploring the possibility of developing and marketing Lithium-ion batteries for theElectric Vehicle Segment.

As informed in the earlier Directors Report, the marketing and distribution set up hasbeen reorganized on the hubs and spokes model and presently your Company is operating from204 locations. By the end of the current year your Company is expected to be present in250 cities and towns. Through this initiative your Company has been able to reach out tothe customers in ‘B’ Class and ‘C’ Class cities and also providebetter after sales and warranty services. The CRM initiative exidereachout.com hashelped in building a loyal customer base. Your Company has also been able to divertcustomers from the un-organised sector through its unique initiative "ProjectKisan", which primarily services the rural markets. The ‘Humsafar’ module,under which batteries are sold through motor garages, and the arrangements with severalcompanies for distribution of your Company’s products through their outlets haveresulted in reaching the products at the door step of the consumers.

As stated earlier, your Company was unable to cater to the entire market demand inspiteof running its Plants in full capacity. Consequently, your Company has invested 275 croresin the year under review and proposes to invest a further amount of 370 crores in 2011-12in capacity expansion. A new facility for production of two-wheeler batteries has alsobeen commissioned at Ahmednagar, Maharashtra.

Industrial Batteries

Sales of Industrial batteries for 2010-11 registered a growth of around 16% in terms ofvalue and 13% by volume. This has been possible in spite of severe competition and lowcost imports in the domestic market.

Overall Infrastructure business has shown a growth of 15%, mostly contributed by Solarat 68% and Traction segment at 62%. Telecom recorded a comparatively lower growth of 9%.

Power segment recorded a growth of 12% with a very healthy order booking for futuremonths. In Fast Moving Industrial Battery segment, Sales for the year ended 31.03.2011recorded a growth of around 18% in terms of value and 13% in terms of volume. While therehas been a marginal degrowth of 5% in UPS OEM segment, Trade growth during the period was18%. Measures have been initiated for further upgradation of quality and performance ofVRLA Batteries. Exports had a growth of 40% by value and 26% by volume, mostly throughexports to Australia, Germany, UK, South Africa and ASEAN Countries.

A lot of Research & Development work has been done in developing Maintenance FreeTubular Batteries for Telecom & UPS with long life. Flooded Batteries with 10year’s Warranty are being developed for Telecom and Solar Applications.

Submarine Batteries

Your Company continues to be the sole supplier for Submarine batteries to the IndianNavy and an accredited supplier to the Admiralty Shipyard, Russia.

Exports

Inspite of depressed international market conditions, exports of both the automotive aswell as industrial batteries registered a growth during the year. Exports of IndustrialBatteries reached 117 crores with a growth of 40% in value and 26% in volume, mostlythrough exports to European countries and Australia. Automotive battery exports werearound 28 crores as against around 24 crores in the previous year, recording a growth ofaround 16% in value terms. Details of activities relating to exports is given in Part IIIof the Information as per Section 217 (1)(e) of the Companies Act, 1956, which is annexedto this Report.

Technology Upgradation

Your Company is constantly upgrading its existing technology and acquiring newtechnology to meet the increasing requirements of the consumers mainly through TechnicalCollaboration/ Assistance Agreements with leading international battery manufacturingcompanies.

Your Company has on-going Agreements with Furukawa Battery Company Limited, Japan forAutomotive batteries, VRLA batteries for two wheelers and Idle Stop-Start (ISS) automotivebatteries, and with Shin-Kobe Electric Machinery Company Limited, Japan (a part of theHITACHI Group) for automotive batteries and VRLA batteries for industrial applications. Inaddition, your Company also has an Agreement with Changxing Noble Power Sourcing CompanyLimited, China for manufacture of Deep Cycling E-bike batteries for electric bicycles andscooters. In order to keep abreast with the latest developments in manufacturing processesand for introduction of hi-tech products your Company also seeks advice from severalforeign consultants and experts. The foreign collaborators also provide regular trainingas well as a platform for knowledge sharing with your Company’s technical personnel.The in-house R&D Division is continuously striving to improve the manufacturingprocesses and raw materials for better product performance in a cost effective manner.

Financial Results

*On equity share of 1.00 each

[Aggregate Dividend amounts to 150% (Previous year 100%)]

Consolidated Financial Statements

In accordance with Accounting Standard 21 –Consolidated Financial Statements formpart of the Report & Accounts. These Accounts have been prepared on the basis ofaudited financial statements received from the subsidiaries and associate companies asapproved by its respective Board of Directors.

Dividend

Your Company has paid an interim dividend at the rate of 90% (0.90 per equity share of1.00 each) on the equity shares to the shareholders, whose names appeared on the Registerof Members on 22nd October, 2010. Your Directors are now pleased to recommend a finaldividend at the rate of 60% (0.60 per equity share of 1.00 each) for the year ended 31stMarch,2011, subject to your approval at the ensuing Annual General Meeting. Consequently,the total dividend for the year ended 31st March, 2011, including the interim dividendpaid during the year, amounts to 150% (1.50 per equity share of 1.00 each).

Corporate Governance

Transparency is the cornerstone of your Company’s philosophy and all requirementsof Corporate Governance are adhered to both in letter and spirit. The Audit Committee ofthe Board meets at regular intervals as required in terms of Clause 49 of the ListingAgreement. Your Board of Directors has taken all necessary steps to ensure compliance withall statutory and listing requirements. The Directors and key management personnel of yourCompany have complied with the Code of Conduct which was put in place by the Board ofDirectors. Apart from being in compliance with all requirements of Clause 49 of theListing Agreement your Company has voluntarily adopted certain governance principles.Setting up of the Remuneration Committee of Directors and introduction of a Model Code forInsider Trading are some of the initiatives taken by your Company towards this end.

The Report on Corporate Governance as required under the Listing Agreement forms partof and is annexed to this Report. The Auditors’ Certificate on compliance withCorporate Governance requirements is also attached to this Report. Further, as requiredunder Clause 49 (V) of the Listing Agreement a certificate from the CEO and CFO is beingannexed with this Report.

Business / Operational Excellence

Providing credible value addition to stakeholders and being recognized as a responsiblecorporate citizen is the vision of your Company. Aiming towards this, your Company hasimplemented an exhaustive Total Quality Management System (TQM). Over the years it hasbeen improved upon and fine-tuned to become more effective in meeting the strategicchallenges of the business. The latest techniques of Total Productive Maintenance (TPM), 6Sigma and Lean Manufacturing now form an integral part of the TQM system – leading toBusiness Excellence. Your Company’s state-of-the-art factories manufacture productsof the highest quality that enhance customer satisfaction. Quality is designed and builtinto products by using techniques like Advanced Product Quality Planning (APQP), FailureMode and Effect Analysis (FMEA), Statistical Process Control (SPC) and Measurement SystemAnalysis (MSA).

Process Capability Index monitoring is done to ensure that products are well within thespecification limits, leading to minimal rework and scrap.

With the support of TQM as a strategic initiative, your company has crossed severalmilestones in its unending journey towards Business Excellence. In regard to the QualityManagement System (QMS), the Industrial SBU has been certified to ISO-9001:2008, while theAutomotive SBU has been certified to ISO/TS-16949:2009 international standards. Thesecertifications include all the business processes of R&D, Manufacturing, Marketing,Sales and after sales support, and Corporate functions. The Submarine SBU is alsocertified to ISO-9001:2008. The certification body is the renowned TUV-Nord, headquarteredin Germany.

Recognising the responsibility of your Company towards its partners in progress, TQMinitiatives have also been extended to cover the key suppliers. An effective system ofquality control, periodic audits, supplier rating and training has been established, withan objective of continuous improvement and for mutual benefit. In support of the corevalue of Striving for Excellence, your Company is progressively implementing the EuropeanFoundation for Quality Management (EFQM) Business Excellence Model and have won severalawards in this respect. In addition to these, in the last few years, your Company has wonseveral awards and accolades in Quality, Safety-Health-Environment, 5-S, EnergyConservation, Productivity and Quality Circles. In 2009 the Hosur plant won theprestigious Asia Manufacturing Excellence Award-Gold Category in Auto Ancilliary fromFrost & Sullivan as well as the ABK-AOTS 5-S Award 1st Prize in Large Manufacturingcategory. For the same year the Shamnagar plant has won the TQM Role Model Quality Awardfrom CII (ER). Your Company has also won awards and recognitions from its valued customerslike Toyota, Tata Motors and Bajaj Auto. Quality Circles run by workmen have been winningawards and accolades in state and national levels from Quality Circle Forum of India andthe CII for the past several years.

With the aim of improving efficiency and maximizing the utilization of plant andequipment, your Company has implemented Total Productive Maintenance (TPM) in thefactories. The best methodology as given by the Japanese Institute of Plant Maintenance(JIPM) is being followed. For outstanding efforts and results in TPM, the JIPM hasconferred the "Award for TPM Excellence" to your Haldia plant for 2008 which hasnow been awarded also to the Hosur and Chinchwad plants in 2010. Other factories are alsomaking efforts to win this coveted award in the near future.

Environment & Safety

Keeping in line with the core values of being a responsible corporate citizen, aneffective Environmental Management System (EMS) has been established by your Company. TheChinchwad, Haldia, Hosur, Shamnagar and Taloja factories are certified to ISO-14001:2004by TUV-Nord. Going much beyond mere statutory compliance, your Company aims at continuousimprovement of its environmental performance. Minimisation of waste and preservation ofnatural resources, being a part of policy, are put into effect by designing and runningoptimum processes and implementation of several environmental improvement projects. Thishas resulted in your Company receiving the prestigious TERI Corporate Environment Award in2007 and Best Innovation Award for Leadership and Excellence in Environment-Health-Safetyfrom CII (SR) in 2008.

Occupational Health and Safety issues are continuous focus points for your Company.This commitment has prompted your Company to implement OHSAS 18001:2007 standard in thefactories. The Hosur factory has already been certified and the other factories areexpected to be certified in due course.

Energy conservation also continues to be an active focus area for your Company since itis not only a major cost in the manufacturing process but, more importantly, a significantpart of your Company’s corporate social responsibilities. Your Company has takenseveral initiatives at each plant level in order to conserve energy which is in line withour policy of conservation of natural resources.

Corporate Social Responsibility

Your Company recognises the fact that, beyond the day to day conduct of its business,as a responsible corporate citizen it has to discharge its duties towards the largersociety in which it operates. The core areas identified by your Company to improve thesociety are Health Care, Basic Education, Women’s Empowerment and the Environment.

The partnership of your Company with UNICEF in the area of Child Environment Programme,that started in 2009 continued during 2010-11. The programme aims to reach out to thepoorer and marginalised sections of the society in the remote rural areas of India tocreate a greener and healthier world where children have better access to basic health andhygiene facilities. The uniqueness of the programme lies in linking this social objectiveto another environmental objective of recycling lead whereby customers are encouraged toreturn used lead acid storage batteries through your Company’s dealer network. Thereis not just a monetary incentive for the customer to do this but also a certaincontribution is committed to UNICEF for every single used battery returned thereby makingthe customer a part of the larger CSR movement.

While the UNICEF association has a pan-India appeal and reach, in Kolkata the Companycontinued to successfully partner with the reputed NGO, CINI-Asha, to provide basiceducation and for development of some of the slum children. At the factory level allfactories carried out various activities that are tailored to the unique needs of thevillages and communities in their respective vicinities. Shamnagar factory contributedtowards providing regular safe drinking water facilities and lighting up the streetsaround the households in the vicinity. In Hosur, the factory management worked with thelocal Primary Health Center to organise various health camps throughout the year. Further,in Hosur the factory management also converted temporary village roads into permanentpucca motorable roads, erected bus shelters for villagers and undertook various otherlocally meaningful and relevant developmental activities that impact the day to day livesof the neighbouring villagers. Haldia factory contributed to your Company’s overallsocial responsibility programme by boring tube wells, organising health camps in thedeeper pockets of the villages and also by contributing to various natural disaster reliefactivities. The other factories also contributed to their local community developmentprogrammes in a similar way commensurate with their scale of operations. All factoriesparticipated in the environmental improvement programmes by undertaking variousinitiatives like planting saplings, creating green belts and organising environmentalawareness camps to educate local villagers on the need to safeguard the environment.

As part of its corporate philosophy, your Company also encourages its subsidiaries toeffectively discharge its societal obligations. Towards this end, Leadage Alloys IndiaLimited, a wholly owned subsidiary, distributed uniforms and study materials to studentsof an Anganwadi school, contributed library books to a local college, constructed a busshelter and conducted medical camps in Malur, Karnataka. Several programmes were alsoinitiated for creating awareness about the environment amongst the local villagersincluding celebration of ‘Environment Day’ and also ‘World ChemicalDisaster Day’ in collaboration with the Karanataka State Pollution Control Board.Similarly, Chloride Metals Limited, another wholly owned subsidiary, donated furniture andhas taken up a project for construction of new class rooms in the Zilla Parishad PrimarySchool in Markal, Pune. The said Company has also taken several initiatives for creatingawareness about the environment amongst the local villagers including planting of trees.

Internal Controls

Your Company has proper and adequate system of internal controls. The Internal Auditteam conducts both Systems and Financial Audits which are carried out in two phases ateach factory, Branch, Regional and Corporate offices. The audit findings are reviewed bythe Audit Committee of Directors and corrective action, as deemed necessary, is taken.Your Company also has laid down procedures and authority levels with suitable checks andbalances encompassing the entire operations of the Company.

Your Company has identified various business risks and periodic reviews are conductedby the Management regarding the adequacy of mitigation procedures for the same.

Outlook

Due to the overall buoyancy the future outlook, as far as the Battery Industry isconcerned, appears to be promising. The high growth rate in both auto and auto ancillaryindustries are expected to continue for the medium term. The huge expenditure proposed inthe infrastructure sectors, including setting-up of power plants and modernization ofRailways, would also result in better prospects for your Company’s business. Increasein disposable income and the growing middle class would lead to higher demand for qualityand technologically superior products as compared to the cheaper substitutes. Stringentpollution control norms would act as a deterrent to small scale battery manufacturers inthe unorganized sector thereby yielding more market share to the organized sector. Theinternational markets are also showing signs of recovery which augurs well for the exportof your Company’s products.

Opportunities and Threats

Your Company has the advantage of having a product range covering a broad spectrum ofapplications, viz. Automotive, Infrastructure, Power, Telecom, Information Technology,Agriculture, Defence, etc. Technologically superior products coupled with a widedistribution and after sales network are the strengths of your Company. Apart from astrong presence in the existing segments, your Company is making forays into new areassuch as electric and hybrid batteries for cars and two-wheelers and in the development ofenvironment friendly storage power alternatives.

Your Company continues to invest in upgradation and expansion of its manufacturingcapacities. The in-house R&D Department has been consistently developing qualityproducts and is also striving for achieving cost efficiencies. Your Company receivesstrong support from its Foreign Technical Collaborators not only in the form of sharing ofnew technology but also by receiving assistance in upgrading manufacturing and otherprocesses which results in technologically superior products with sustainable quality.

Competition in the domestic battery industry is on the increase with not only theexisting players being more aggressive to increase their market share but also withseveral new companies making forays in this business. Though competition leads to betterquality and service, it may also result in predatory pricing thereby creating pressure onmargins.

Risks & Concerns

Lead is the major constituent of your Company’s product and the volatility in itsprice continues to be a cause for concern. This not only has a major impact on costs butalso leads to uncertainty in procurement. However, your Company seeks to mitigate thisrisk through continuous monitoring and prudent business practices. Further, due to thesustained efforts to increase the production and supplies from the captive smelters thedependence on imported Lead is gradually being reduced.

Cheap imports especially from China have been another area of concern. Unfortunately,the present anti-dumping laws do not provide protection against such imports. However,your Company has been able to counteract this threat to a considerable extent throughconsistency in quality of its products and efficient after sales service in order toretain its existing and also to attract new customers.

Subsidiary Companies

Your Company has four wholly owned Indian subsidiaries, viz. Chloride Metals Limited,Caldyne Automatics Limited, Leadage Alloys India Limited and Chloride InternationalLimited and three foreign subsidiaries, viz. Chloride Batteries S.E. Asia Pte. Ltd.,Singapore, Espex Batteries Limited, UK and Associated Battery Manufacturers (Ceylon)Limited, Sri Lanka.

Chloride Metals Limited which is a 100% subsidiary of your Company is engaged in leadsmelting and refining operations and has its plant at Markal, Pune. The said Companyachieved a net sale of 381.27 crores representing a growth of 59% over the previous yearand a profit before tax of 19.79 crores which is 31% higher than the previous year.

Caldyne Automatics Limited is a 100% subsidiary of your Company having its factory atSector V, Salt Lake City, Kolkata and is engaged in manufacture and sale of Chargers, DCPower Systems and associated equipment. During the year 2010-11, the said company achieveda turnover of 44.11 crores and a profit before tax of 2.33 crores representing an increaseof 19% and 52% respectively over the previous year. Leadage Alloys India Limited, whichbecame a 100% subsidiary during the year under review, has its plant at Kolar District,Karnataka and is engaged in lead smelting and refining activities. During the year 2010-11the said company has achieved a turnover of 744.79 crores representing an increase of over36% over the previous year and profit before tax of 32.57 crores as compared to 53.74crores in the previous year.

Chloride International Limited, a 100% subsidiary of your Company, is engaged in themarketing and sale of Non-conventional Energy Systems like Solar Home Lighting and HeatingSystem Panels, and Home UPS / Inverters etc. The net sales of the said company during2010-11 amounted to 20.39 crores which was 70% higher than that of the previous year. TheProfit Before Tax also increased from 0.37 crores to 0.46 crores.

Your Company holds 100% of the share capital in Chloride Batteries S E Asia Pte. Ltd.,Singapore. The said company is engaged in manufacture and sale of lead acid batteries andcaters to the South East Asian and Australian markets. During the year 2010-11 the companyachieved a turnover of SGD 30.62 million and Profit before Tax of SGD 1.32 millionrepresenting a degrowth of 17% and 7% respectively over the previous year.

Espex Batteries Limited, UK, in which your Company holds 51% of the share capital, isengaged in marketing and selling of lead acid batteries for industrial applications.During the year 2010-11 the company achieved a turnover of GBP 6.23 million and made aProfit Before Tax of GBP 0.2 million which were 56% and 324% higher than the previousyear.

Your Company also holds 61.5% in Associated Battery Manufacturers (Ceylon) Limited, SriLanka. The said company is engaged in the business of manufacturing and marketing of LeadAcid batteries. During the year 2010-11 the said company achieved a turnover of SLR 1958million which was higher by 26% over the previous year and Profit before Tax of SLR 208.6million representing a growth of 38% over the previous year.

The statement of Holding Company’s interest in Subsidiaries as specified in subsection (3) of section 212 of the Companies Act, 1956 is attached to the Report andAccounts of your Company. The Profit and Loss Accounts, Balance Sheet, Auditors Report andDirectors Report of the Subsidiaries are not attached to the Annual Accounts of yourCompany pursuant to general exemption granted vide General Circular no. 2/2011 dated8.2.2011 issued by the Government of India, Ministry of Corporate Affairs. However, thenecessary details about the Subsidiaries are given in the Consolidated FinancialStatements attached to the Annual Accounts. Further, any shareholder of the Company or theSubsidiary Companies may obtain copies of these documents by writing to the CompanySecretary at the Registered Office of your Company. Copies of the Annual Accounts of theSubsidiaries would also be available for inspection by any such person at the RegisteredOffice of your Company on any working day.

Human Resources

The HR policies and procedures of your Company are geared towards nurturing anddevelopment of Human Capital. Your Company has transparent processes for rewardingperformance and retaining talent. Skill Gap Analysis and other systems are also in placeto identify the training interventions required. Priority is given to succession planningand talent management. Industrial relation at all factories continued to remain cordial.

As on 31st March, 2011 your Company has 5151 employees.

Directors

At its meeting held on 27th April, 2011, your Board appointed Mr Nadeem Kazim,Executive Vice President - HR & Personnel as an Additional Director of the Company tohold office till the ensuing Annual General Meeting. Your Board also appointed Mr NadeemKazim as a Wholetime Director for a period of five years with effect from 1st May, 2011subject to your approval in the General Meeting. A notice has been received from a Memberunder Section 257 of the Companies Act, 1956 proposing the name of Mr Nadeem Kazim forappointment as a Director at the ensuing Annual General Meeting. Mr R B Raheja and MrWinston Wong, Directors, retire by rotation and being eligible offer themselves forre-appointment at the ensuing Annual General Meeting.

Mr S N Mookherjee, Director, also retires by rotation at the ensuing Annual GeneralMeeting but due to personal reasons does not wish to offer himself for re-appointment.Your Board places on record its deep appreciation for the services rendered by MrMookherjee during his long association with your Company. None of the Directors of yourCompany are disqualified for being appointed as Directors, as specified in Section 274(1)(g) of the Companies Act, 1956.

Auditors

The Auditors, M/s S R Batliboi & Co., Chartered Accountants retire at theconclusion of the ensuing Annual General Meeting and being eligible under Section 224(1B)of the Companies Act, 1956, offer themselves for re-appointment.

Information pursuant to Section 217 of the Companies Act, 1956 a. Conservationof Energy and Technology Absorption

Information pursuant to Clause (e) of SubSection (1) of Section 217 of the CompaniesAct, 1956 read with Companies [Disclosure of Particulars in the Report of Board ofDirectors] Rules, 1988 and forming a part of the Directors’ Report for the financialyear ended 31st March, 2011, are attached hereto.

b. Particulars of Employees

In accordance with the provisions of Section 217 of the Companies Act, 1956 and therules framed thereunder, the names and other particulars of employees are set out in theannexure to the Directors’ Report. In terms of the provisions of Section 219 (1) (b)(iv) of the Companies Act, 1956, the Directors’ Report is being sent to all theshareholders of the Company, excluding such annexure. Any shareholder interested inobtaining a copy of the said annexure may write to the Company Secretary at the registeredoffice of the Company.

c. Responsibility Statement

Statement under the amended Section 217(2AA) of the Companies Act, 1956, on theresponsibility of the Directors is a part of the Report.

Directors’ Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956, theBoard of Directors state:

(i) That in the preparation of the annual accounts, the applicable accounting standardshave been followed along with proper explanation relating to material departures, if any.

(ii) That the Directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the company for that period.

(iii) That the Directors have taken proper and sufficient care of the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;and

(iv) That the Directors have prepared the annual accounts on a going concern basis.

Forward-Looking Statements

This Report contains forward-looking statements that involve risks and uncertainities.When used in this Report, the words "anticipate", "believe","estimate", "expect", "intend", "will" and othersimilar expressions as they relate to the Company and/or its businesses are intended toidentify such forward-looking statements. The Company undertakes no obligation to publiclyupdate or revise any forward-looking statements, whether as a result of new information,future events, or otherwise. Actual results, performance or achievements could differmaterially from those expressed or implied in such forward-looking statements. Readers arecautioned not to place undue reliance on these forward-looking statements that speak onlyas of their dates. This Report should be read in conjunction with the financial statementsincluded herein and the notes thereto.

Acknowledgement

Your Directors would like to record its appreciation for the co-operation and supportreceived from its employees, shareholders, Government agencies and all stakeholders.

ANNEXURE TO DIRECTORS’ REPORT

Information as per Section 217(1)(e) of the Companies Act, 1956, read with Companies(Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 andforming part of the Directors’ Report for the year ended 31st March, 2011.

I. Conservation of Energy

The Company accords great importance to conservation of energy. The main focus of theCompany during the year was: a. Close monitoring of consumption of electricity, LPG,Diesel and water. b. Close monitoring of electricity consumption based on ‘KWH/MT ofLead Consumed’. c. Optimisation of electricity, LPG, diesel and water by reducingprocess cycle time, process modification and also by equipmentmodification/replacement/retrofitting. d. Usage of renewable energy, viz. Solar. e.Achieving power factor standards nearing unity. All of the Company’s plants targetedunity.

Chinchwad Plant

1. Use of Non Conventional Energy (Wind Power) of 482958 KWH.

2. Power Factor Maintained at 0.97 thereby getting an incentive of 28,48,582.

3. Optimum use of Energy by Switching off Machines, Lights, Fans, Air Conditioners andExhaust Systems whenever not required.

4. 100% use of Recycled water for Gardening and Shop Floor Washing.

5. Reduction in Compressed Air Consumption by arresting Air Leakages.

6. Creating awareness among workmen to conserve energy.

7. Installed 50 nos. FRP transparent sheets over the roof to maximize use of naturallight.

Bawal Plant

1. Use of Grid Cast pot insulation resulting in saving of 46064 KWH (2.99 lacs) perannum.

2. Installation of Variable Frequency Drive in AHU resulting in saving of 349350 KWH(23 lacs) per annum.

3. Street light replacement with LED, Acidic fume free lights installed in Motor CycleAssembly Shed resulting in saving of 75599 KWH (4.91 lacs) per annum.

4. Turning-off 60 HP motor of assembly dust collector through modification in ductingresulting in saving of 324000 KWH (21.06 lacs) per annum.

5. Power saving through compressed air line modification and close-looping systemresulting in saving of 36052 KWH (2.34 lacs) per annum.

6. Improvement in power factor (0.96 – 0.98) resulting in saving of 18.67 lacs perannum.

7. Saving water through re-use of RO1 & RO2 reject resulting in saving of 17658KL(1.05 lacs) per annum.

8. Saving water through Reduction in J/F effluent resulting in saving of 2298 KL (0.11lacs) per annum.

9. Increase in efficiency of RO1, Soft water resulting in saving of 15573 KL (4.67lacs) per annum.

10. Saving in water consumption through increase in OBR used in DM plant resulting insaving of 690 KL (0.41 lacs) per annum.

11. Saving in Diesel consumption through synchronization of DG sets resulting in savingof 72523 KL (23.57 lacs) per annum.

Hosur Plant

1. Conversion of 2 sets of Ball mill lead pots from Electrical heaters into LPG burner.

2. Replacement of all DG cooling towers with the coil coolers.

3. Individual chillers have been connected to common tank to reduce the consumption.

4. All the fume killers are interlocked with the machine operation.

5. Shop floor high bay sodium light fittings replaced with LED light fittings.

6. 40% of required raw water is fed by recycling.

7. System of segregation of Compressed air into Low pressure and High pressure withrespect to machines requirement.

8. Low air pressure requirements were met through air blowers.

9. Purchasing power from Indian Energy Exchange at reduced cost during peak hoursinstead of running Diesel generator.

10. 100% of Acid dilution was done with recycled acid.

11. Power Factor Improvement from 0.99 to 0.993 with incentive from Tamil NaduElectricity Board. 12. Demand control due to optimisation of Load utilization incentivefrom Tamil Nadu Electricity Board. 13. The Plant saved an amount of 371.83 lacs during theyear in its efforts to conserve energy.

Taloja Plant

1. Reduction of KWH per ton of lead from 934 to 874 by optimisation ofmotors/increasing output of oxide generation/reduction in heating losses.

2. Reduction in LPG consumption from 31kg/ton of lead to 29 kg/ton of lead bycontrolling the main line pressure, use of energy efficient LPG burners.

3. Use of common Steam generator for E-Bike Curing Chambers resulted in saving of LPGcost by 3.0 lacs/annum.

4 Use of Star Delta Convertor to conserve energy in blowers of Formation, JF resultedin saving of 8.0 lacs.

5. Automatic switching of Fresh Air Blower during shift change resulted in saving of2.5 lacs.

6. Replacing tube lights by CFL Bulbs at New Mezzanine floor.

7. Reduction of Fixed energy consumption by 5% by using Solar street light, energyefficient lights in E-Bike.

8. Maintaining Power Factor as unity throughout the year resulted in saving of 27 lacs.

9 Switching -Off the JF / Formation rectiformers to avoid energy loss due to no loadlosses in the transformers, resulted in savings of 5 lacs.

10. 100% use of recycled water for gardening and floor washing.

11. Reduction in charging cycle time by pulse charging at JF to avoid no load lossesresulting in 10 lacs savings.

12. Day light improvement by use of transparent sheet in E -Bike area.

13. Increase in use of no. of turbine ventilators to improve ventilation and workenvironment. 14. Cycle time reduction in curing process resulting in savings of 6 lacs perannum.

Shamnagar Plant

1. Maintained Plant power factor above 98.5% by installation of additional AutomaticPower Factor Control Panel of 300 Kilo Volt Ampere Rating. Annual savings achieved: 15.50lacs.

2. Maintained Plant load factor of about 74%. Annual savings achieved: 28.50 lacs.

3. Installed Variable Frequency Drive in one no. 60 HP dust extraction system. Annualsavings achieved: 5.60 lacs.

4. Installed Variable Frequency Drive in one no. 100 HP Acid fume extraction system.Annual savings achieved: 12.50 lacs.

5. Installed one no. energy efficient screw compressor. Annual savings achieved: 1.90lacs.

6. Replaced two nos. old reciprocating compressors by 2 nos. screw compressors. Annualsavings achieved: 8.90 lacs.

7. Replaced roof asbestos sheets by transparent sheet. Thus, increased day light whichresulted in switching off bay-lights in day time. Annual savings achieved: 2.40 lacs.

8. Installed about 200 nos. natural draft turbine ventilators in New IndustrialGeneration building to improve ventilation and working environment. Annual savingsachieved: 7.90 lacs.

9. Installed cooling tower which in turn saves water of about 30000 KL/year. Annualsavings achieved: 0.75 lacs.

10. Installed wash water recovery system which in turn saves water of about 60000KL/year. Annual savings achieved: 1.50 lacs.

Haldia Plant:

1. Improved Power Factor from 0.98 to 0.99 by installation & commissioning ofadditional 1 no. 1000 KVA, 1 no. 500 KVA & 6 nos. 100 KVA capacity Automatic PowerFactor Control panels with Capacitor banks and harmonic filters. Annual Savings: 66 lacs.

2. Achieved the average Load Factor of the plant at 77.9% by controlling Maximum Demandthrough Demand Controller. Annual Savings: 1.65 Crores.

3. Installation of 1 no. 135 KVA Lighting energy saver panel for lighting at Tractionplant. Annual Savings: 1.5 lacs.

4. Installation of energy saver tube lights (2x28 W) instead of conventional tubelights (2x40W) in shop floor, canteen & office areas. Annual Savings: 2.6 lacs.

5. Installation of Light Detecting Sensor for Automatic switching ON/OFF of Shop Floorlights. Annual Savings: 8.9 lacs.

6. Installation of 28 W T5 Energy saver tube lights instead of 60W BC lamp at Auto J/Ftank lighting. Annual Savings: 2.2 lacs.

7. Electrical Interlocking of Fresh air & Exhaust Blowers with production machinesto avoid idle running during non-productive hours. Annual Savings: 1.67 lacs.

8. Installation of Silicon Control Rectifier control heating system in lead pot atWirtz machines. Annual Savings 1.5 lacs.

9. Installation of translucent sheet in Auto casting, Industrial ball mill areas toimprove day light & better working environment.

Ahmednagar Plant:

1. Power Factor Maintained at unity (0.996).

2. Optimum use of Energy by Switching off Machines, Lights, Fans, Air Conditioners andExhaust Systems whenever not required.

3. Energy efficient T-5 (216, 120 & 28 watts) lighting system provided instead ofHigh Pressure Sodium Vapour lamps (400, 210 & 40 watts) in existing plant.

4. 100% use of Recycled water for Gardening.

5. Installation of air turbine roof ventilators in the existing plant for improvingventilation as well as working environment.

6. Reduction in Compressed Air Consumption by arresting Air Leakages.

7. Creating awareness among workmen to conserve energy.

A1. Research & Development (R&D)

Specific areas in which R&D is carried out by the Company

Research & Development activities are mainly concentrated on development of newproducts in various segments and for advancement of designs and technology. The activitiesalso include development of production tools for both existing as well as new products.Additionally, special focus is given for improving product consistency.

A2. Benefits derived as a result of the above R&D

Due to the R&D activities the Company has been able to maintain a technologyleadership in several product ranges. Significant achievements in the recent past wouldinclude development of Idling Stop Start battery for Mahindra & Mahindra, developmentof battery for Toyota’s Fortuna MCV, new products for General Motors, India and valueengineered products for Maruti Suzuki’s ALTO. New products introduced would alsoinclude long life batteries for Inverter and Solar applications, batteries for E-bikes andVRLA motor cycle batteries.

A3. Future Action Plan

Research & Development would continue to be a major focus area for the Company. Inview of the emerging needs for advanced lead-acid batteries for varied applications, thefocus on technology and innovation would continue. Ongoing projects include development ofstate-of-the-art batteries for various applications including Idling Stop Start batteries,mild hybrid and electric vehicles. Upcoming projects would include rechargeability anddeep cycling capability in the new range of batteries, enhancement of battery shelf lifeand introduction of new materials and advanced processes. Being a full member of ALABC(Advanced Lead Acid Battery Consortium), the Company will actively participate in thedevelopment of advanced products.

A4. Expenditure on R&D

The capital and revenue expenditure on R&D were 1.09 Crores and 8.67 Croresrespectively, aggregating to 9.76 Crores.

Total R&D Expenditure as percentage of Net Turnover: 0.20%.

B1. Technology Absorption, Adaptation and Innovation

The Agreements with the Foreign Collaborators covers not only imports of new technologybut also continued technical assistance and sharing of Best Practices in all spheres ofmanufacturing operations. This is an ongoing process and apart from absorption of thetechnology, efforts are directed towards further improvements and innovation.

B2. Benefits

Introduction of new products has helped the Company to meet the emerging market needsand also maintain its technological leadership. Significant benefits have been derived byway of enhanced market penetration by meeting the specific requirements of internationaland domestic vehicle manufacturers and the highly quality conscious export markets.

B3. Particulars of Imported Technology in the last 5 years

III. Foreign Exchange – Earnings and Outgoings

1. Activities relating to exports, initiatives taken to increase exports, developmentof new export markets for products and services and export plans: Your Company continuedwith its initiatives for developing the export market for both Automotive and Industrialbatteries. During the year, MF batteries with Ca-Ca Alloy were launched into markets ofArmenia & Uzbekistan. Successful inroads were made in Finland and Norway in Europe andMozambique and Tanzania in Africa for the first time. Exide brand automotive batterieswere supplied to Mauritius.

In the Industrial Battery segment, the Company received the prestigious approval fromone of the Globally Leading OEM of Motive Power Segment and is continuing to supplyTraction batteries to them. Also, successful inroads were made in France, Norway andFinland in Europe with Traction batteries. We have also entered into the solar markets ofAustralia, Dubai and Nigeria and have also supplied to the Telecom market of Nigeria forthe first time.

2. Total Foreign Exchange used and earned: Used: 704.74 crores Earned: 147.04 crores