Shivam Autotech Ltd

To The Members,

The Directors have pleasure in presenting the 7^th Annual Report of theCompany together with its Audited Statement of Profit and Loss Account for the year endedMarch 31, 2012 and the Balance Sheet as on that date:

FINANCIAL RESULTS

The summarized financial results of the Company for the year ended March 31, 2012 arepresented below:

PERFORMANCE

The company has maintained the earnings at a strong level despite of rise in price ofcommodities, inflation & interest rates.We are committed in bringing the new processesand technological advancements in order to optimze the utilization of resources and tomaximize the profits.

The total income of the company increased by 35.80% from Rs.27,913.42 Lacs in 2010-11to Rs.37,908.70 Lacs in 2011-12. Operating profit (PBDIT) of the company increased by38.46% from Rs.6,136.20 Lacs in 2010-11 to Rs.8,497.27 Lacs in 2011-12.

The overall performance of the company can be termed as satisfactory.

DIVIDEND

The Board of Directors of the Company recommend, for consideration of shareholders atthe 7^th Annual General Meeting, payment of dividend of 32% (Re.3.20 per share)on equity shares of the face value of Re.10/- each for theyear ended March 31, 2012. Thedividend paid during the previous year was 25%.

BUSINESS OVERVIEW

The global economic recovery is fast losing traction due to the continuing Euro Zonedebt crisis. Domestically, the state of the economy is a matter of growing concern withslowing economy, persistently high inflation, uncertain political environment and thedepreciation of the Indian rupee is weakening the overall economic sentiment of thecountry. With the smoothening of operations at its Binola plant and Haridwar plant, thecompany expects growth in its top line and bottom line during the ongoing financial year2012-13.The company’s efforts in adding new customers and increased business from itsexisting customers has started yielding results.

Hero MotoCorp Limited (HMCL), the main customer of the company and the world No. 1 twowheeler manufacturer for 11 consecutive years, continues to maintain its leadershipposition in the two wheeler industry, and has achieved a growth of 15.00% in the year2011-12 by selling 62,35,205 two wheelers.

CORPORATE GOVERNANCE

The Company has followed the principles of Corporate Governance with all integrity andfairness aimed at building trust among stakeholders, customers and employees etc., beingtransparent with regard to all transactions, making the necessary disclosures andcomplying with the laws prevalent and applicable to the industry.

Separate detailed chapters on Corporate Governance, Additional Shareholder informationand Management Discussion and Analysis are attached herewith and form part of this Report.All the board members and senior managerial personnel have affirmed compliance with thecode of conduct for the F.Y. 2011-12.

A certificate from the Practising Company Secretary regarding the compliance of theconditions of Corporate Governance by the Company stipulated under Clause 49 of theListing Agreement is also attached to this Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217 (2AA) of the Companies Act, 1956, as amended,with respect to the directors’ responsibility statement, it is hereby confirmed:

(i) That in preparation of accounts for the financial year ended March 31, 2012, theapplicable accounting standards have been followed along with proper explanation relatingto the material departures;

(ii) That the directors’ of the company have selected such accounting policies andapplied them consistently and made judgements and estimates that are reasonable andprudent, so as to give a true and fair view of the state of affairs of the Company as atMarch 31, 2012 and of the profits of the Company for the year ended March 31, 2012;

(iii) That the directors’ of the company have taken proper and sufficient care forthe maintenance of adequate accounting records in accordance with the provisions of theCompanies Act, 1956, for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; and

(iv) That the directors’ of the company have prepared the accounts of the companyfor the financial year ended March 31, 2012 on a going concern basis.

FIXED DEPOSITS

During the year, the Company has not accepted any deposit under Section 58A and Section58AA of the Companies Act, 1956 read with Companies (Acceptance of Deposits) Rules, 1975.

FINANCE

The company has met with its working capital requirement from a mix of internalaccruals and availing cash credit facilities from its Bankers during the year. The capitalexpansion undertaken during the year at both the Gurgaon and Haridwar Plant have beenfinanced from internal accruals and term loans from the Banks. The working capital and theterm loans are tied to the base rate of the Banks.

DIRECTORS

Pursuant to Section 256 of the Companies Act, 1956 and Articles of Association of theCompany, Dr. Vinayshil Gautam and Mr. Surrinder Lal Kapur, Directors of the Company,retire by rotation at the ensuing Annual General Meeting and being eligible offerthemselves for re-appointment.

Dr. Anil Kumar Gupta was appointed as a Whole Time Director designated as"Director (Technical)" for a period of three years with effect from December 20,2011. Taking into consideration his knowledge and experience, the Board recommends hisappointment as Whole Time Director of the Company to the Members of the Company.Member’s approval for his appointment as Whole time director has been sought in theNotice convening the Annual General Meeting of the Company.

The appointments/re-appointments form part of the Notice of the seventh Annual GeneralMeeting and the relevant Resolutions are recommended for your approval.

Profiles of these Directors, as required by the Listing Agreement provisions, are givenin the Notice / Corporate Governance Report forming part of this Annual Report.

HOLDING COMPANY

The promoters of the Company i.e. Dayanand Munjal Investments Private Limited (DMIPL)hold 74,79,595 equity shares which represents 74.80% of the paid up equity capital of theCompany. Your company continues to be a subsidiary company of DMIPL.

SUBSIDIARY COMPANIES

The Company has no subsidiary.

INTERNAL CONTROL SYSTEMS

Your company maintains an adequate and effective internal control system commensuratewith its size and complexity. We believe that these internal control systems provide,among other things a reasonable assurance that the transactions are executed withmanagement authorizations and they are recorded in material respects to permit preparationof the financial statements in conformity with established accounting principles and thatthe assets of the company are adequately safe-guarded against any significant misuse orloss.

The internal audit is done by an independent firm of Chartered Accountants. Internalaudit and other controls are reviewed periodically by the Audit Committee and have beenfound to be adequate.

AUDITORS AND AUDITORS’ REPORT

M/s. S.S. Kothari Mehta & Co., Chartered Accountants, existing StatutoryAuditors’ will retire at the conclusion of the ensuing Annual General Meeting andseek reappointment as Statutory Auditors of the Company at the ensuing Annual GeneralMeeting.

The company has received certificate from M/s. S.S. Kothari Mehta. & Co. to theeffect that their appointment, if made, would be within the limits prescribed underSection 224 (1B) of the Companies Act, 1956.

The Board of Directors recommends to the shareholders the appointment of M/s. S.S.Kothari Mehta & Co. as Statutory Auditors of the Company.

The observations and comments given in the report of the Auditors read together withnotes to the accounts are self explanatory. The observation of the Auditors in theAudit Report under point no. 11 & 17 of the Annexure to the Auditors Report aboutdelay in some instalment payment of loans and deployment of some of the funds raised onshort term basis as long term investments.

The investments have been made in the fixed assets and the company is in the process ofarranging suitable long term funds to replace these short term funds.

COST AUDIT

The Directors have appointed M/s Gurdeep Singh & Associates, Cost Accountants, asCost Auditors to audit the Cost Records relating to "Engineering Industries" forthe year ending 31^st March 2013.

ENVIRONMENT, HEALTH & SAFETY

The company is committed for delivering quality with minimum adverse impact on theenvironment. A well developed Environment Management System (EMS) is established in theCompany. EMS is adherent to the highest possible standards of environmental management,health, safety and compliance with all relevant environmental legislations andregulations.

Reviews and audits of EMS are carried out on regular basis. Environment relatedinitiatives are undertaken practically at all levels and in all functions of theorganization. Environmental impacts are assessed and actions are taken in planned manner.Some of the environment related initiatives are installation of fume extraction tomitigate air emission and rain water harvesting.

Safety and health of the employees receives utmost importance at every workplace of theCompany. Safe operating procedures, standards and systems have been laid down at allmanufacturing locations. Regular training of employees regarding safe working guidelines,audit and review of every accident, mock drills on emergency are some of the steps thatare followed to achieve higher safety standards. Safety requirements are also extended toour sub-contractors and visitors.

Your company also continues to be a constituent of a very important and responsibleinitiative of Hero MotoCorp Limited toward the commitment to environment, viz.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Information required under Section 217(1)(e) of the Companies Act, 1956, read withCompanies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988is given as per Annexure – ‘D’ and forms an integral part of thisReport.

PARTICULARS OF EMPLOYEES

The Directors express their appreciation for the contribution made by the employees tothe significant improvement in the operations of the Company and for the support receivedfrom them.

As required under the provisions of section 217(2A) of the Companies Act, 1956, readwith the Companies (Particulars of Employees) Rules, 1975, as amended, the names and otherparticulars of employees are set out in the Annexure – ‘C’ included in thisreport.

HUMAN RESOURCE DEVELOPMENT

Attracting and retaining talent remained a major challenge for the company in FY2011-12. Like last few years, the Company has focused on various people developmentinitiatives such as Learning and Development, Developing Leadership Culture, SuccessionPlanning, Employee Engagement and Performance Management.

Learning and development initiatives were more sharpened with the process of CompetencyMapping and Competency Development. The company continued the structured LeadershipProgrammes with the focus on Value Based Leadership Development for all the Managers.

A number of initiatives are being taken for all employees –Operating Engineers aswell as staff for enhancing "employee value". This includes skill enhancement,training and soft skills. Coaching/guidance for selected talent is also included. Thisinitiative is aimed at preparing the company for high growth in the coming years.

The Directors are pleased to record their appreciation of the services rendered by theemployees and staff at all levels.

ACKNOWLEDGMENTS

The Directors express their appreciation for the sincere cooperation and assistance ofCentral and State Government Authorities, Bankers, Customers, Suppliers and BusinessAssociates. Your Directors also wish to place on record their deep sense of appreciationfor the committed services by your Company’s employees. Your Directors acknowledgewith gratitude the encouragement and support extended by our valued shareholders.

Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies(Particulars of Employees) Rules, 1975 and forming part of the Directors’ Report forthe year ended March 31, 2012.

Notes:

1. Remuneration includes Basic Salary, Commission, other allowances and taxable valueof perquisites and Company’s contribution to provident fund.

2. The above mentioned appointment is on contractual basis.

3. Managing Director Mr. Neeraj Munjal is related to Mr. Satyanand Munjal, a Directorof the Company.

(a) Conservation of Energy

The Company regularly measures and records its direct and indirect emissions of GreenHouse Gases, water consumption and re-use, as well as waste generation and disposal. Weare conscious of our environmental impact across our operations and strive to reduceconsumptions.

Various on-going measures for conservation of energy include (i) use of energyefficient lighting like LED and better use of natural lighting, (ii) reduction of energyloss, and (iii) replacement of outdated energy intensive equipment with power efficientequipments.

Installation of electric control panels and high voltage control stabilizers and UPS,which has saved costs and improved the quality of power supply. Energy Audit is beingconducted.

(b) Technology Absorption, Adaptation and innovation

The R & D activities helped the Company to add new quality products and to improveprocess capabilities. These activities also enabled the Company to reduce process waste,lower the energy consumption and increase productivity.

The company carries out research and development in several areas including materialand process developments towards efficiency improvements, quality improvements, wastereduction, etc. Apart from process improvements, the research and development also aims atfinding equivalent substitutes of various inputs and materials to have cost savingswithout compromising quality.

The research and development is an ongoing exercise and suitable efforts will continueto be made in future. The company has derived benefits of cost reduction and betterquality as a result of these efforts. Development team has been strengthened byincrease in number of professionals.