Exide Industries Ltd

(including Management Discussion & Analysis)

Your Board of Directors have pleasure in presenting the 63rd Annual Report of theCompany together with Audited Accounts for the year ended 31st March, 2010.

Economic Environment

The initial months of 2009-10 for the Indian economy were mired with uncertainty andconfidence was running low. The financial crisis in the industrialized nations spreadacross to all sections of the World economy thereby leading to severe slowdown acrosscountries. India, not being insulated from the World, also felt the tremors of the crisis,albeit on a lesser scale. The growth rate of GDP which was over 9% till 2007-08 plummetedto less than 6.7% in 2008-09 and hovered around 6% in the first quarter of 2009-10. Thoughthere were small signs of recovery but the apprehension was that the sluggish rate ofgrowth was here to stay for some time, thereby wiping out the gains and momentum achievedin the economic progress over the past few years. The Government and the Reserve Bankswung into action and a spate of fiscal and monetary packages were announced in stages. Acalculated risk was taken to provide enough fiscal expansion to counter the negative fallout. Adding to the woes was the delayed and sub-normal monsoon. Apart from the domesticproblems, recession in the economies of USA, U.K. and other industrialized nations meant asluggish export market and stoppage of financial inflows into the Indian economy. However,thanks to the financial stimulus initiated by the Government and the Reserve Bank of Indiathe country witnessed a strong economic recovery within a short period. This recovery wasnot only in terms of overall growth but, more importantly, it re-established faith in ourbanking system and proved that our fundamentals are in place, which leads to optimism inthe Indian economy in the medium to long term. India was once again on the growth path!

The real turnaround came in the second quarter of 2009-10 by recording a growth of 7.9%which resulted in the growth rate of GDP to climb upto 7.2% during the year. Theindustrial and service sectors grew by 8.2% and 8.7% respectively which, given the globalsituation, was indeed a commendable performance by any standards.This growth rate was moresignificant since this was achieved inspite of a decline in agricultural output and moreimportantly the manufacturing sector, which had been witnessing continuous decline sincemid-2008, grew more than double from 3.2% in 2008-09 to 8.9% in 2009-10. In December 2009,the Index of Industrial Production (IIP) reached an all time high of 16.8% year on yeargrowth, which was the highest monthly growth recorded by the Index since 1982.

A heartening feature was that this recovery was broad based as seven out of the eightsectors / sub-sectors registered a growth rate between 6.5% to 10%. Within the industryand infrastructure sectors, automobiles, rubber and plastic goods, textiles, chemicals,power, telecom etc. recorded an impressive turnaround.

Foreign Institutional Investors who had withdrawn from the scene at the early stages ofthe economic downturn returned with a renewed vigour and in the month of March 2010 therewas a net investment of over US $ 4 billion in equity and US $ 2 billion in debtinstruments, according to data released by the Securities & Exchange Board of India.Foreign Exchange Reserves as of end March 2010 was US $ 280 billion and Foreign Investmentwas around US $ 20 billion. According to estimates, India would achieve a growth rate of8.5% in the current year, be back to a growth rate of over 9% from 2011-12 and would bethe fastest growing economy in the World within the next four years.

However, in spite of this euphoric growth, the rising fiscal deficit, mainly arisingout of the fiscal packages announced by the Government to counter the slowdown, whichpresently stands at 6.8% of the GDP, and the abnormally high inflation for food itemsremain to be a source of concern. Though these inflationary pressures are expected to lastfor a short term the Government needs to take stringent measures to control the fiscaldeficit in the medium term.

Industry Structure and Development

The domestic battery industry is passing through an exciting phase. Whilst on the onehand there was a set back due to sluggish growth in the telecom, infrastructure and exportsectors during the early part of the year it was compensated by the more than expectedgrowth in the Automobile sector.

The passenger car market in India is expected to grow by 12% annually over the nextfive years which in effect would translate to more than 100% growth for the domesticbattery industry during this period. The unorganized sector, which accounts for two thirdsof the Battery Industry, may not benefit from this growth due to strict pollution controland regulatory norms, especially with regard to recycling of toxic wastes such as Lead.The organised sector is, therefore, expected to reap the full benefits of such growth.

India is emerging as a small car hub in the Asia-Pacific region with most of the majorglobal players setting up their manufacturing bases in this country. The existingautomobile manufacturers are expanding their capacity and also setting up greenfieldprojects. In addition, India is not only being looked at as a manufacturing base forexport of passenger vehicles but also heavy vehicles including tractors. The growth of theIndian middle class, availability of trained manpower at competitive costs and stagnationin the US, European and Japanese markets is attracting the global majors to invest incapacities in India and China. This will not only increase the market base for thedomestic battery industry several fold but would also lead to strict conformity to globalquality standards and processes.

Infrastructure development is a key focus area for the Government and in the UnionBudget 2010-11 an amount of Rs 1,73,555 crores has been allocated for this sector which is46% of the total plan allocation. This huge spending on infrastructure by the Governmentcoupled with plans for modernization of railways and setting up of nuclear power plantsetc. would augur well 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 recorded12% growth in net sales with an increase of 86% in profit before tax. The increase inprofitability was partly due to availability of Lead and alloys, which constitutes a majorraw material for the products, from the two captive Lead Smelters acquired two years ago.Apart from the same, favourable foreign exchange rates, strict austerity measures andcontrol on costs on all fronts contributed to the sharp rise in the profitability.

Automotive Batteries

Your Company has achieved a growth in sales of 13% in automotive batteries over theprevious year. Inspite of increased competition, such growth was possible due to increasedmarketing efforts, aggressive forays in the replacement segment, securing larger volumesin the two wheeler segment and introduction of new technology products.

Nearly all the vehicle manufacturers have chosen your Company as their major supplier.Your Company is supplying batteries for Tata Motors small car Nano and in view of certaininnovative features a design registration for this type of battery has been filed inIndia.

Your Directors are pleased to inform that your Company was a preferred supplier formost of the new vehicles launched by the vehicle manufacturers during the year underreview. These included Chevrolet Beat, Honda Zazz & Accor V6, Toyota Fortuner, MarutiSuzuki Ritz & EECO, Fiat Grand Punto, Premier RIO, Tata Sumo Grande and CaterpillarDumpers. Your Company has also been selected as a supplier for several new vehiclesproposed to be launched by the vehicle manufacturers during the current year. All thesebatteries were developed in house and underwent rigorous tests both in India as well as inlaboratories overseas before being selected for supplies.

Your Directors are also pleased to inform that your Company has won the prestigiousZERO PPM award from Toyota Japan signifying zero defect supplies and the Best Kaizen Awardfrom Toyota Kirloskar. These awards and the continued support by most of the vehiclemanufacturers recognizes the trust reposed by the automobile industry on the quality andreliability of the products manufactured by your Company.

Your Company has launched the Deep Cycling E-bike batteries for electric bicycles andscooters and is also in the process of developing batteries for Stop Start Micro Hybridvehicles. Further, the possibilities of development and marketing of Lithium-ion batteriesfor the emerging electric vehicle segments is also under active consideration.

Your Company had recently re-organised its marketing and distribution set up by settingup Hubs and Spokes which are monitored by the Regional Controlling Centres. Presentlythrough this model the Company is present in 206 locations and it is proposed to increasethe presence in 250 cities and towns by the third quarter of the current year. This hasenabled your Company not only to reach customers in B class and C class cities, but alsoto provide better after-sales and warranty services to the customers. The CRM initiative exidereachout.comis running successfully and has helped in building up a substantial number of loyalcustomers. "Project Kissan", another initiative by the Company to service therural markets has also gained great popularity and resulted in conversion of large numberof customers from the unorganised sector. Your Company continued with its Humsafar moduleunder which batteries are sold by the dealers through various motor garages thus makingthe products reach the consumers at their doorstep. As reported earlier, arrangements withIndian Oil Corporation, Hindustan Petroleum and Toyota Kirloskar for distribution of yourCompany’s products through their retail outlets have been entered into which alsowould go a long way to have a presence across the country, including highways and smalllocations.

Due to the unprecedented growth in the Automotive Sector, mainly in the small car andtwo wheeler segments, your Company was at times not able to cater to the market demandsinspite of running the plants nearly full capacity. Your Company is, therefore, expandingits manufacturing capacities at all plants and a new manufacturing facility is being setup at Ahmednagar, Maharashtra to cater to the growing demand.

Industrial Batteries

Sales of Industrial batteries for 2009-10 registered a growth of around 10%, both interms of value as well as volume. This has been possible inspite of severe competition andlow cost imports in the domestic market. Fluctuations in lead prices have also beeneffectively countered through imposition of Price Variation Clauses.

As a result of economic downturn, overall Infrastructure business has shown degrowth of10%, mostly contributed by a Telecom degrowth of 35%.However, a handsome growth could beachieved in other Infrastructure segments. In Railways, a 17% growth was maintained. Powersegment recorded a growth of 36% with a very healthy order booking for future months.Projects sales were higher than last year by 27% and Traction also recorded a growth of36%.

In the Fast Moving Industrial Battery segment, sales for 2009-10 recorded a growth ofaround 21% in terms of value and 18% in terms of volume. While there had been a degrowthof 7% in UPS manufacturing segment, trade growth during the period was 28%.

Measures have been initiated for upgrading quality and performance of VRLA batteries.Further, your Company has developed Expanded VRLA and Long Life VRLA batteries which havebeen recently launched in the market.

Substantial manufacturing efficiencies have been achieved through productivityimprovements negotiated with permanent workmen in Hosur, Shamnagar and Haldia.

Submarine Batteries

Your Company continues to be the sole supplier for Submarine batteries to the IndianNavy. As informed earlier, your Company remains an accredited supplier to the AdmiraltyShipyard, Russia.

Exports

Due to the depressed international market conditions, exports of both the automotive aswell as industrial batteries registered a degrowth during the year. Details of activitiesrelating to exports is given in Part III of the Information as per Section 217 (1)(e) ofthe Companies Act, 1956, which is annexed to this Report.

Technology Upgradation

Your Company is constantly working towards upgrading its existing technology andacquiring new technology to meet the increasing requirements of the consumers. In itsquest for upgrading its technology, processes and quality your Company has severalTechnical Collaboration/Assistance Agreements with leading international batterymanufacturing companies.

Your Company has ongoing Agreements with Furukawa Battery Company Limited, Japan forLead Acid Storage batteries including Hybrid batteries and Maintenance Free batteries forfour wheelers and VRLA batteries for two wheelers and with Changxing Noble Power SourcingCompany Limited, China for manufacture of Deep Cycling E-bike batteries for electricbicycles and scooters.

During the year, your Company entered into a new Agreement with Furukawa BatteryCompany Limited, Japan for Idling Stop System (ISS) automotive batteries. The Agreementswith Shin-Kobe Electric Machinery Company, Limited, Japan (a part of Hitachi Group) forautomotive applications and VRLA batteries for stationery applications expired during theyear and your Company entered into a new Agreement with the said company for all varietiesof Lead Acid batteries and components used for starting, lighting and ignition ofautomobiles and also for VRLA batteries for industrial applications with effect from 1stApril, 2010 for a period of five years.

Apart from the above, your Company engages foreign experts from time to time foradvising on improvements in its manufacturing processes and development of hi-techproducts. Your Company also sends its engineers regularly for training and knowledgesharing both at its foreign collaborators’ facilities as well as to internationalseminars and conferences. The in-house R&D Division also is engaged in creation ofinnovative products through improvements in manufacturing processes and materials.

QIP Issue

Your Company issued 5,00,00,000 equity shares of Re. 1/- each to QualifiedInstitutional Buyers, viz. FIIs, FIs, Mutual Funds etc. on Qualified InstitutionsPlacement basis in accordance with the SEBI (Issue of Capital and Disclosure Requirements)Regulations, 2009. The shares were allotted on 12th March, 2010 at a price of Rs 107.90(including a premium of Rs 106.90) per equity share. The proceeds of this Issue areproposed to be utilized for capital expenditure, acquisitions, long term working capital,repayment of debts, investments by way of equity and / or debt in companies includingsubsidiaries, joint ventures and associated companies and general corporate purposes.Consequent to the above Issue, the paid-up share capital of your Company stands increasedto Rs 85,00,00,000.

Financial Results

Consolidated Financial Statements

In accordance with Accounting Standard 21- Consolidated Financial Statements form partof the Report & Accounts. These Accounts have been prepared on the basis of auditedfinancial statements received from the subsidiaries and associate companies as approved byits respective Board of Directors.

Dividend

Your Company paid an interim dividend on 5th November 2009, at the rate of 60% on theequity shares to the shareholders whose names appeared on the Register of Members on 28thOctober, 2009. Your Directors are now pleased to recommend a final dividend at the rate of40% on the equity shares of the Company for the year ended 31st March, 2010, subject toyour approval at the ensuing Annual General Meeting. Consequently, the total dividend forthe year ended 31st March, 2010, including the interim dividend paid during the year,amounts to 100% (Re.1/- per equity share of Re.1/- 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 have taken all necessary steps to ensure compliancewith all statutory and listing requirements. The Directors and key management personnel ofyour Company 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

In keeping with its vision to provide credible value addition to our stakeholders andbeing recognized as a responsible corporate citizen your Company has implemented anexhaustive Total Quality Management System (TQM) throughout the organization. The TQMsystem involves the latest techniques of Total Productive Maintenance (TPM), 6 Sigma andLean Manufacturing - leading towards business excellence.

Products manufactured at your Company’s state-of-the-art manufacturing facilitiessymbolise quality and customer satisfaction. Quality is designed into products through useof techniques like - Advanced Product Quality Planning (APQP), Failure Mode & EffectAnalysis (FMEA) , Statistical Process Control (SPC) and Measurement System Analysis (MSA).Process capability monitoring ensures that products are well within specification withminimal rework and scrap.

TQM is a strategic initiative and your Company has progressed considerably in itsjourney towards Business Excellence. For its Quality Management System (QMS), theIndustrial SBU part of Haldia, Hosur and Shamnagar factories have been certified forISO-9001. For the Automotive SBU - Bawal, Chinchwad, Haldia, Hosur, Shamnagar and Talojafactories have been certified for ISO/ TS-16949. The Submarine SBU is certified forISO-9001. These certifications, by the renowned TUV-NORD, headquartered in Germany,although issued in the names of the different factories, however include all businessprocesses of R&D, Manufacturing, Marketing, Sales, After Sales Support and Corporatefunctions.

In line with its core value of striving for Excellence, your Company is implementingthe European Foundation for Quality Management (EFQM) Business Excellence Model. YourCompany has won the CII-EXIM Bank Award for " Strong Commitment to Excel" in2006 and 2007. In 2008 your Company bettered its performance and has been amongst eightcompanies in India to get the coveted "Significant Achievement Award."

Apart from these, in the last few years , your Company has won several awards andaccolades in Quality, Safety-Health-Environment, 5-S, Energy Conservation, Productivityand Quality Circles. In 2009 the Hosur plant won the prestigious Asia ManufacturingExcellence Award-Gold Category in Auto Ancilliary from Frost & Sullivan as well as theABK-AOTS 5-S Award 1st Prize in Large Manufacturing category . For the same year theShamnagar plant has won the TQM Role Model Quality Award from CII (ER). As a proof ofcustomer satisfaction, your Company has also won awards and recognitions from Toyota, TataMotors and Bajaj Auto.

To improve efficiency and utilization of machines your Company has implemented TotalProductive Maintenance (TPM) in the factories, following the methodology given by theJapanese Institute of Plant Maintenance (JIPM). For its efforts in TPM, the JIPM hasconferred the "Award for TPM Excellence - 2008" to your Haldia plant . Otherfactories are also gearing up to the challenge to win this award in the near future.

Environment & Safety

For the Environmental Management System (EMS) the Chinchwad, Haldia, Hosur, Shamnagarand Taloja factories are certified to ISO 14001. Your Company is committed to preserve theenvironment and prevent pollution by going much beyond statutory compliance and ISO 14001certification. Your Company has implemented several environmental projects and receivingthe Teri Corporate Environment Award in 2007 and Best Innovation Award in Leadership andExcellence in Environment-Health-Safety from CII (SR) in 2008 has further encouraged yourCompany to continuously improve its environmental performance, minimize waste and preservenatural resources.

The concern for Occupational Health and Safety issues has prompted your Company toimplement OHSAS 18001 standard in its factories. The Hosur plant has already beencertified and the other factories are expected to receive the certification in due course.

Energy conservation continues to be an area of focus for your Company not only as apart of its social obligations but also since this is a major cost in the manufacturingprocess. Your Company has taken several initiatives at each plant level in order toconserve energy. Necessary information relating to steps taken for conservation of energyis given in the annexure to this report.

Corporate Social Responsibility

Your Company believes that apart from ethical conduct of business, as a responsiblecorporate citizen it has various societal obligations. Fulfillment of such obligations ispart of the Companies long term vision through engagement of all stake holders and thesociety at large. Towards this end, your Company has identified five core areas of HealthCare, Education, Women Empowerment, Environment and Philanthropic activities.

Your Company continues to partner UNICEF in their Child Environment Programme in Indiathat aims to create a greener and healthier world and to ensure equitable and sustainableaccess to basic health and hygiene facilities, particularly for the unreached andmarginalized rural communities. This initiative has been linked to raising consumerconsciousness and creating awareness for return of used batteries which contain lead andthereby inducing the vehicle owners to participate in the cause. In Kolkata, your Companyhas partnered with CINI ASHA for providing education and development of societal skillsamongst slum and street children.

As reported earlier a village near Hosur Plant has been adopted for converting it to a‘Model Village’ and extensive work has been undertaken for infrastructure andcommunity development for the same. The new school building in the village has recentlybeen inaugurated. Apart from the same, support was extended for educational needs forstudents in rural areas, health camps organized for migrant labourers and sewing machinesprovided to village women.

In Haldia Sewing and Zari machines were distributed through the Cooperative System andvocational training was organized for the rural women folk. Your other plants alsocontinued with their CSR activities which included organizing health camps, distributionof free medicines and conducting pathological tests, development of community gardens,providing drinking water facilities and participation in various health awareness campsincluding the pulse polio programme. Tree planting activities and other initiatives forcreating awareness about the preservation of the environment were also organized.

Internal Controls

Your Company has proper and adequate system of internal controls. The Internal Auditteam conducts both Systems and Financial Audit which are carried out in two phases at eachFactory, Branch, Regional and Corporate offices. The audit findings are reviewed by theAudit Committee of Directors and corrective action, as deemed necessary, is taken. TheCompany 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 has laid down the procedure formitigation of the same. The Risk Management & Mitigation Systems are reviewed by theAudit Committee of Directors from time to time.

Outlook

With the growth momentum picking up and the all round sense of buoyancy the futureoutlook, as far as the battery industry is concerned, looks promising. Both auto and autoancillary Industries are expected to register double digit growth year on year basis forthe next five years. Added to this, the huge expenditure proposed in the infrastructuresector, both by public and private enterprises, augur well for your Company’sbusiness. The high growth envisaged in telecom and power including setting up of nuclearpower plants should lead to increased opportunities. It is imperative to usher in a secondGreen Revolution which would necessitate increase in mechanized farming and ruralelectrification projects which in turn would lead to increased demand of yourCompany’s products. Due to rise in the disposable income of all sections of thepopulation there would be a shift towards procurement of quality and technologicalsuperior products as compared to cheaper substitutes.

In the international market, though signs of recovery are evident, but the growth isexpected to be sluggish. This may, in the medium term, lead to depressed markets forexport of your Company’s products, mainly for industrial batteries.

Opportunities and Threats

Your Company’s strength lies in its technologically superior and high qualityproducts coupled with a wide distribution and after sales network. The wide range ofstorage batteries ranging from 2.5 Ah to 15000 Ah capacity covers a broad spectrum ofapplications thereby giving your Company a definite edge in the automotive,infrastructure, power, telecom, information technology and agricultural sectors. YourCompany’s foray into new areas such as Electric and Hybrid batteries for cars and twowheelers and in development of environmental friendly storage power alternatives would notonly result in building up its strength for the present but also lead to being recognizedas a major player in the new generation storage power solutions industry.

Your Company continuously seeks to modernize and upgrade its manufacturing facilitiesand processes as part of its philosophy. Further the in-house R&D Department has notonly been consistently developing quality products for existing as well as newapplications, but also has been successful in reducing costs which ultimately benefits theend consumers. The strong support received by the foreign technical collaborators, notonly in sharing their technology but also by continuously assisting in manufacturing andother processes, also helps your Company to manufacture technologically superior productswith sustainable quality.

Several battery manufacturers are present in the Indian market and quite a few bigcompanies have recently diversified into this industry which will lead to increasedcompetition. Whilst on the one hand this leads to betterment of quality and service, onthe other, it may also result in unreasonable reduction in prices thereby creatingpressure on margins.

Risks & Concerns

Volatility in the prices of Lead, which is the major constituent of your Company’sproducts, continued to remain a constant area of concern. During the last two years, theprices of Lead had peaked to US$ 2800 per MT, crashed to US $ 963 per MT and is presentlyaround US $ 2100 per MT. These volatile prices not only have a major impact on themanufacturing costs but also creates uncertainty for procurement and availability. Theimpact of this risk is however sought to be mitigated through constant monitoring andprudent business practices. Further, through regular supplies from the subsidiary leadsmelting and refining companies, the dependence on imported Lead is being graduallyreduced to a considerable extent.

Imports from China mainly for industrial batteries, especially after the economic slowdown in the West, has been a source of concern. Unfortunately, the present Anti-Dumpinglaws do not provide adequate protection against such imports. Your Company has been ableto counter this threat to a considerable extent through technology upgradation,maintaining its quality and efficient after sales service.

Subsidiary Companies

Your Company has four Indian subsidiaries viz. Chloride Metals Limited, CaldyneAutomatics Limited, Leadage Alloys India Limited and Chloride International Limited, andthree foreign subsidiaries, viz. Chloride Batteries S.E. Asia Pte. Ltd., Singapore, EspexBatteries 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 turnover of Rs 264 crores representing a growth of 52% over the previous yearand a profit before tax of Rs 15 crores which is 106% 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 2009-10, the said company achieveda turnover of Rs 37 crores and a profit before tax of Rs. 1.54 crores representing anincrease of 18% and 304% respectively over the previous year.

Leadage Alloys India Limited, a 51% subsidiary of your Company, has its plant at KolarDistrict, Karnataka and is engaged in lead smelting and refining activities. During theyear 2009-10 the said company has achieved a turnover of Rs 546 crores representing anincrease of over 23% over the previous year and profit before tax of Rs 54 croresrepresenting a growth of 621% over 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 sales of the said company during 2009-10amounted to Rs 12 crores which was 224% higher than that of the previous year. The ProfitBefore Tax also increased from Rs 0.01 crores to Rs 0.37 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 2009-10 the companyachieved a turnover of SGD 36.916 million (Rs. 122.67 crores) and Profit before Tax of SGD1.422 million (Rs. 4.73 crores).

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 2009-10 the company achieved a turnover of GBP 40,01,095 (Rs 30.21 crores)and made a Profit Before Tax of GBP 47,915 (Rs. 0.36 crores).

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 2009-10 the said company achieved a turnover of SLR 1560million (Rs. 63.96 crores) which was higher by 9% over the previous year and Profit beforetax of SLR 151.1 million (Rs. 6.20 crores) representing a growth of 81% over the previousyear.

During the year your Company divested its 26% shareholding in Ceil Motive PowerPty.Ltd., Australia (as Associate Company). This investment was made in July 2007 with aview to expand the Company’s export market in Australia through an existing localcompany having manufacturing and marketing facilities. However, as a result of theeconomic downturn and cheap imports from China and Taiwan flooding the market, thisCompany was incurring heavy losses. Instead of investing additional amounts involvingforeign exchange outflow, your Company decided to sell its shares to the othershareholders of the Joint Venture Company, after a valuation of shares by a CharteredAccountant. Your Company had provided in full for a possible diminution in the value ofthe investment in the Accounts for the year ended 31st March, 2009. Hence, there has beenno charge to the profit and loss account in the current year and instead a small income asconsideration for the divestment was earned.

The dividends received from and proposed by the Subsidiaries during 2009-10 aggregatesto Rs 4.98 crores as compared to Rs 1.33 crores in the previous year.

The statement of the Holding Company’s interest in Subsidiaries as specified insub section (3) of section 212 of the Companies Act, 1956 along the Accounts,Directors’ Reports’ and Auditors’ Report of the subsidiaries are attachedto the Report and Accounts of your Company.

Human Resources

Nurturing and development of Human Capital is of key importance and the HR policies andprocedures of your Company are geared towards this objective. The processes forattracting, retaining and rewarding talent are well laid down and the systems aretransparent to identify and reward performers. Several initiatives are taken both at thecorporate level as also in the shop floor to inculcate team work and camaraderie. SkillGap Analysis is carried out on regular basis and necessary training interventions are madebased on the results. Succession Planning and Talent Management continues to receivepriority.

Labour Agreements were signed in all factories except Taloja which is due only in thecurrent year 2010-11. Discussions are now in progress with the Union at Taloja factoryregarding the Long Term (4 year) Agreement. The industrial unrest at Bawal Factory whichaffected production has since been resolved amicably.

As on the date of this Report your Company has 4208 employees.

Directors

Dr S K Mittal, Director - R&D will be retiring from the services of the Companywith effect from 30th April, 2010. Dr Mittal has worked in the Company for 36 years andwas in overall charge of the Research, Development and Quality Control of the Company.Your Board places on record its sincere appreciation for the services rendered by DrMittal during his long association with the Company.

Mr A H Parpia, who was a Director of your Company since 1993, resigned from the Boardof Directors with effect from 28th April, 2010 for health reasons. Your Board records itsdeep appreciation for the services rendered by Mr Parpia as a Director of the Company.

At its meeting held on 28th April, 2010, your Board appointed Ms Mona N Desai as anAdditional Director to hold Office till the ensuing Annual General Meeting of the Company.A notice has been received from a Member under Section 257 of the Companies Act, 1956proposing the appointment of Ms Mona N Desai as a Director at the ensuing Annual GeneralMeeting.

The term of appointment of Mr T V Ramanathan as Managing Director & Chief ExecutiveOfficer expires on 30th April, 2010. Your Board has, subject to your approval, reappointedMr T V Ramanathan, as Managing Director & Chief Executive Officer for a further periodof two years with effect from 1st May, 2010. A resolution to this effect is being placedfor your approval at the ensuing Annual General Meeting to be held on 14th July, 2010.

Mr. R G Kapadia, Mr. S B Raheja and Mr. H M Kothari, Directors retire by rotation andbeing eligible offer themselves for re-appointment.

None of the Directors of your Company are disqualified for being appointed asDirectors, 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.

a. Conservation of Energy and Technology Absorption

Information pursuant to Clause (e) of Sub-Section (1) of Section 217 of the CompaniesAct, 1956 read with Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988 and forming part of the Directors’ Report for the financialyear ended 31st March, 2009, 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, 2010.

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 of LeadConsumed’.

c. Optimisation of electricity, LPG, diesel and water by reducing process cycle time,process modification and also by equipment modification/replacement/retrofitting.

d. Usage of renewable energy, viz. Solar.

e. Achieving power factor standards nearing unity. All of the Company’s plantstargeted unity.

Chinchwad Plant

1. Use of Non Conventional Energy (Wind Power) of 612757 KWH.

2. Power Factor Maintained at 0.97.

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 9 nos. variable frequency drives for exhaust fans for dust collectors andscrubbers.

Bawal Plant

1. VFD installation in seven Grid Casting Machines resulting in savings of 8813 KWH perannum and cost savings of Rs 0.57 lacs per annum.

2. VFD installation in Grid casting/pasting fume extraction system resulting in savingsof 58752 KWH per annum and cost savings of Rs 3.82 lacs per annum.

3. Energy efficient T – 5 (216, 120 & 28 watts) lighting system provided inplace of HPSV (400, 210 & 40 watts) in Motorcycle Assembly plant and SLI Plantresulting savings of 38585 KWH per annum and cost savings of Rs 2.51 lacs per annum.

4. Optimisation of cooling air requirement in AHU 2 & 3 by damper as per therequirement in summer and winter resulting in savings of 23731 KWH per annum and costsavings of Rs 1.54 lacs per annum.

5. Optimisation of cooling air requirement in AHU 4 & 11 by damper as perrequirement in summer and winter resulting in savings of 24270 KWH per annum and costsavings of Rs 1.53 lacs per annum.

6. Optimisation of cooling air requirement in overall plant by modifying the AHU’sin the plant resulting in savings of 118404 KWH per annum and cost savings of Rs 7.70 lacsper annum.

7. Energy savings by providing Timers, switching off all MCA AHU’s during lunchbreak and tea break resulting in savings of 56654 KWH per annum and cost savings of Rs3.68 lacs per annum.

8. Reduction of air pressure requirement by providing the close loop system in the airdistribution line in MCA resulting in savings of 269156 KWH per annum and Rs 17.50 lacsper annum.

9. 5 hp ETP equalisation tank pump being replaced by 2HP maintenance free seal lesspump after the energy measurement resulting in savings of 1400 KWH per annum and Rs 0.09lacs per annum.

10. Optimisation of JF Cooling water requirement by providing the required capacitycooling tower and pump resulting in savings of 84343 KWH per annum and cost savings of Rs5.48 lacs per annum.

Hosur Plant

1. Improved Power Quality and Power factor from 0.980 to 0.990 resulting in saving of8.3 Lac Units / Rs.48 Lacs per annum.

2. Optimum Utilization of Chillers 3No’s of 13Tr to 1No of 24Tr. resulting insavings of 1.25 Lac Units –Rs.7.4 Lacs per annum.

3. Optimization of Process pumps 12No’s of 7.5HP to 12No’s of 3HP resultingin savings of 1.22 Lac Units / Rs.5.75 Lacs per annum.

4. Conversion of Tube light fitting (2*40W to 2*28W) resulting in savings of 0.45 LacUnits / Rs.2.15 Lacs per annum.

5. Optimization of Genset Cooling towers 3No’s of 150Tr to 2No’s of 150Tr.resulting in savings of 0.39 Lac Units / Rs.2.04 Lacs per annum.

6. Day light Improved by using Ultraviolet transparent sheet (Green Energy) resultingin savings of– 0.48 Lac Units / Rs.2.27 Lacs per annum.

7. Conversion of Electric fired Ovens to LPG fired Ovens – Savings of 2.05 Lacunits / Rs.11.84 Lacs per annum.

8. Conversion of 4No’s Individual Pot to Common pot - Savings of 1.90 Lac Units /Rs.11 Lac per annum.

9. Optimization of Compressed air resulting in Savings of 1.03 Lac units / Rs.6.06 Lacper annum.

10. Optimization of Lead lump cutting resulting in Savings of 0.97 Lac Units / Rs.5.60Lac per annum.

Taloja Plant

1. Optimum utilisation of motors in the Various Departments / Machines: Saving of 41400KWH per annum (Approximately Rs. 2.2 Lac)

2. Use of Z conveyor in the Casting Section to eliminate bottom Electrical Heating Pot:Saving of 103200 KWH per annum (Approximately Rs. 5.4 Lac)

3. Achieved Power Factor Unity consistently throughout the year: Saving Rs 16.4 Lac

4. Replacement of CFL 65 W in Place of HPMV Lamps 250 W: Saving of 15980 KWH per annum(Approximately Rs. 0.90 Lac)

5. Installation of Energy less Roof Ventilators 10 Nos.: Saving of Rs. 2 Lac

6. Use of natural light by using transparent sheets for roof and sides: Saving of Rs. 3Lac

7. Optimization of compressed air: Saving of Rs. 2 Lac

Shamnagar Plant

1. Installation of VFD in dust Extraction system resulting in savings of 2.70 KWH andcost savings of Rs. 12.00 lacs.

2. Installation of additional Capacitor bank resulting in savings of Rs. 17.50 lacs.

3. Installation of Screw compressors in place of reciprocating compressors resulting insavings of 3.60KWH and cost savings of Rs. 15.84 lacs.

4. Usage of Natural Draft resulting in savings of 1.90 KWH and cost savings of Rs.8.20lacs.

5. Substantial reduction of Energy in day time resulting in savings of 0.43 KWH andcost savings of Rs 1.90 lakhs.

Haldia Plant

1. Maintained Power Factor at 0.98 by installation of additional 2 nos. x 670 KVARcapacity APFC panels with Capacitor banks and D- tuned harmonic filters. Annual Savings:Rs. 45 Lacs.

2. Maintained the Plant Load Factor to 75 % & above (average L.F. 76.5 %) bycontrolling MD. Annual Savings: Rs. 1.28 Crores.

3. Solar water heating system introduced at canteen for preparing hot water. AnnualSavings: Rs.0.4 Lacs.

4. Installation of 1 no. 105 KVA Lighting energy saver panel for lighting at Automotiveplant. Annual savings: Rs. 1.4 Lacs.

5. Installation of energy saver tube lights (28 W) instead of conventional tube lights(40W). Annual Savings: Rs. 0.35 Lacs.

6. Installation of air turbine ventilators at Traction plant for improving ventilationas well as working environment.

7. Reuse of treated sewerage water in gardening, road and floor washing.

8. Installation of electronic timers in Plate drying ovens (PDO) at Automotive plantwhich reduces the cycle time (previously, cycle time was 20 hrs. but now it has come downto 14 hrs.) as per requirement of Technical dept. Annual Savings: Rs. 1.35 Lacs.

9. Installation of translucent sheet in Automotive Despatch, Jar Formation areas toreduce lighting load at day time. Annual Savings: Rs.10 Lacs.

10. Use of solar light for street lighting near main gate.

11. Common mould cooling system for Spine casting M/cs in Industrial factory.

Annual Savings: Rs. 30 Lacs.

12. Installation of Air Booster for oxide filling area to maintain constant airpressure of 6.0 bars. Savings: Rs. 1.3 Lacs.

13. Installation of water flow meter to monitor the consumption of water inside thefactory. 14. Recycling or reuse of acid, already used in Forming, to reduce theconsumption of acid in mixing process by 4- 5 M3 per day which in turn reduces effluentand generation of sludge. Annual savings: Rs. 20 Lacs.

15. Recycle & re-use of RO reject water in Alloy Blending, Automotive JarFormation, Industrial Jar Formation areas etc. Annual savings: Rs. 5.0 Lacs.

16. Replacement of V-belt by Flat belt to reduce transmission loss in continuousoperation area. Annual Savings: Rs. 1.5 Lacs.

17. Installation of VFD in 75 HP Air Compressors. Annual Savings: Rs.1.9 Lacs.

A1. Research & Development (R&D)

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

Research & Development activities are aimed at advancement of designs &technology to provide a cutting edge, the development of new products to suit the emergingmarket requirements in different segments, viz. Automotive, Motor Cycle, Electric Bikes,Railways, Motive Power, UPS, Telecom and Submarine.

Several Advanced Technology Projects are in progress which include ISS batteries forIdling Stop-Start vehicles (micro-hybrid vehicles), Deep Cycling VRLA Batteries forElectric-Bikes & Scooter applications, VRLA motor cycle battery, new battery forVolkswagen’s Polo car, Long Life VRLA batteries for UPS & Telecom applications,High Energy Density Lead Acid batteries for Electric Vehicles and a low cost MF range forthe rural markets.

The R&D activities also include Production Tools for the new Products. In addition,there is a special focus on improving the Product consistency.

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

R&D activities have helped the Company to provide Technology leadership in selectareas. Significant achievements would include: Development of battery for Toyota’sFortuna MCV, new products for General Motors India, Value Engineered Product for MarutiSuzuki’s ALTO. New Products introduced would also include Long Life batteries forInverter and Solar applications, Exide Electrica for E-bikes and VRLA motor cycle forHero-Honda and HMSIL.

A3. Future Action Plan

The major R&D focus will continue to be on the development of state-of-the-art ISSbatteries for Idling Stop-Start vehicles (micro-hybrids), mild hybrid and electricvehicles. New Research Projects are being initiated to enhance the life of the E-bikebatteries under the Indian conditions.

The on-going Research Projects will continue to focus on enhanced re-chargeability anddeep cycling capability in the new range of batteries for a variety of applications,materials & processes and enhancement of battery’s shelf life.

A4. Expenditure on R & D

The capital and revenue expenditure on R & D were Rs. 2.73 Crores and Rs. 8.82Crores respectively, aggregating to Rs. 11.55 Crores.

Total R & D Expenditure as percentage of Net Turnover: 0.30%

a) Continuous improvement in the Product Design & Technology, new innovationsand adaptations are taking place in the area of ISS batteries for micro-hybrid vehiclesand batteries for industrial applications.

In view of the emerging needs for the Advanced Lead-Acid batteries for a variety ofapplications, the focus on Technology Absorption & Innovation will continue.

b) New innovations to enhance the life of E-bike batteries under the Indian conditionsas well as the improvement in Production & Process Technology with the assistance fromTechnical Collaborators.

B2. Benefits

R&D innovations and new products have helped the Company to meet the emergingmarket needs for Advanced Technology Products and maintain its Technological leadership inthe country. Significant benefits have been derived by way of enhanced market penetrationby meeting the specific requirements of International and Domestic Vehicle Manufacturers,Replacement Markets and certain Exports markets.

B3. Particulars of Imported Technology in the last 5 years

III. Foreign Exchange – Earnings and Outgo

1. Activities relating to exports, initiatives taken to increase exports, developmentof new export markets for products and services and export plans:

Your Company continued with its initiatives for developing the export market for bothAutomotive and Industrial batteries. During the year, MF batteries with Ca-Ca Alloy waslaunched into markets of Armenia & Uzbekistan. Successful inroads were made in Finlandand Norway in Europe and Mozambique and Tanzania in Africa for the first time. Exide brandautomotive batteries were 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 are continuing to supplyTraction batteries to them. Also, successful in roads 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 : Rs. 565.02crores

Earned : Rs. 108.74crores