Atlas Copco India Ltd Directors Report

To The Members:

The Directors of Atlas Copco (India) Ltd. have the pleasure in presenting their Fifty-Third report and the Audited Accounts for the year ended 31st March, 2013.

1. FINANCIAL RESULTS:

		(Rs. in lakhs)*
Particulars	For the year ended 31st March, 2013	For 15 months period ended 31st March, 2012
Profit for the period before exceptional items & tax	34299	33224
(Less): Exceptional items	(166)	-
Profit for the period before tax	34133	33224
Less: Provision for tax (including adjustments for prior years provision/deferred tax)	(11570)	(10815)
Net profit for the period	22563	22409
Adding thereto:
Balance in profit & loss account brought forward	53543	34944
On Account of Amalgamation	-	-
Appropriations:
Proposed Dividend	1128	1128
Corporate dividend tax	192	183
General Reserve	2500	2500
Balance carried forward	72286	53543

*One Million equals 10 Lakhs rupees.

2. OPERATIONS:

The figures for the previous period are for Fifteen (15) months and are not comparable to those of current year.

The total revenue for the period ended 31 st March, 2013 was Rs. 252,867 lakhs against Rs. 252,628 lakhs for the previous 15 months period ended 31st March, 2012, showing an annualised growth of 20% over previous year. The profit before exceptional items and taxes for the year ended 31st March, 2013 was Rs. 34,299 lakhs against Rs. 33,224 lakhs for the previous 15 months period ended 31st March, 2012, showing an annualised increase of 29% over previous year.

Your Company has completed the construction of a state of the art manufacturing facility for Compressors at Chakan at an investment of Rs. 11,500 lakhs. This facility has commenced the production in the forth quarter of 2012.

While the global economic activity remains subdued, RBI expects Indian economy to grow at the rate of about 5.7% during the year 2013-14. Considering the current market conditions, in the near term the overall demand for Companys products and services is expected to remain at the current level. Despite such an uncertain environment, your Company is looking forward for a reasonably stable performance for the current year, barring unforeseen circumstances.

3. DIVIDEND & TRANSFER TO GENERAL RESERVE:

Your Directors are pleased to recommend a dividend of Rs. 5/-per share (50%) for the year ended 31st March, 2013 which will be tax free in the hands of the shareholders, as the Company will bear the dividend distribution tax of Rs.192 lakhs. The dividend will absorb an amount of Rs. 1,128 lakhs (previous year Rs. 1,128 lakhs). Your Directors propose to transfer an amount of Rs. 2500 lakhs (previous year Rs. 2500 lakhs) to the General Reserve, having regard to the requirements of Section 205 (2A) of the Companies Act, 1956. The balance amount of Rs. 72,286 lakhs (previous year Rs. 53,543 lakhs) will be retained in the Profit & Loss Account.

4. TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND:

During the period, in accordance with terms of Section 205 C of the Companies Act, 1956, an amount of Rs. 6.30 lakhs, being unclaimed dividend for the year 2004 was transferred to the Investor Education & Protection Fund established by Central Government.

5. EMPLOYEES AND INDUSTRIAL RELATIONS:

The industrial relations during the period under review continued to be cordial. The total number of employees of the Company as at 31st March, 2013 were 2382. The Directors place on record their sincere appreciation of the services rendered by employees at all levels.

6. INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956:

a) Conservation of Energy, Technology absorption and Foreign Exchange Earnings & Outgo:

Information in accordance with Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is given in Annexure A to this report.

b) Particulars of Employees:

Particulars pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, and forming part of the Directors Report for the year ended 31st March, 2013, are not attached to this report. Members desiring to have a copy of the same may write to the Company Secretary at the registered office of the Company.

7. DIRECTORS:

Mr. H.O. Meyer retires by rotation and being eligible, offers himself for reappointment.

8. AUDIT COMMITTEE:

The audit committee of the Company comprises of following Directors:

Mr. A. K. Hirjee - Chairman

Mr. H.O. Meyer - Member

Mr. F.Vandenberghe-Member

9. CORPORATE SOCIAL RESPONSIBILITY:

During the year, your Company has provided clean drinking water by installation of water purification plants at Warandh, a village on the outskirts of Pune.

Your Company continues to support an orphanage at Pune by providing financial help. Further, donations were made to the Lila Poonawalla Foundation which is Involved in promotion of education for women.

10. DIRECTORS RESPONSIBILITY STATEMENT:

The Directors confirm;

i) that in the presentation of annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures.

ii) that the Directors have selected such accounting policies, and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a due and fair view of the state of affairs of the Company as at 31 March, 2013 and of the profit of the Company for the year ended on that date.

iii) that the Directors have taken proper and sufficient care in the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and preventing and detecting fraud and other irregularities.

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

11, AUDITORS;

M/s. Deloitte Haskins & Sells, Chartered Accountants, retire at the end of the 53rd Annual General Meeting, and, being eligible, offer themselves for re-appointment.

12. ACKNOWLEDMENTS:

Your Board of Directors wishes to express its sincere appreciation for the excellent support and co-operation by Atlas Copco Group, shareholders, vendors, customers, bankers and all other business partners. The Board also wishes to express its sincere appreciation for the contribution and commitment of all the employees to the success of the Company.

	On behalf of the Board of Directors
Mumbai	A. K. Hirjee
1st August, 2013	Chairman

ANNEXURE A TO THE DIRECTORS REPORT

Information as per Section 217(1 )(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, and forming part of the Directors Report for the year ended 31st March,2013.

A. Conservation of energy:

The Company has continued its efforts to conserve energy by adopting following measures:

i) Elimination of wastes at every stage of use.

ii) Preventive maintenance of various equipment to keep them in good running condition.

iii) Improvement in electrical power factor.

iv) Optimal use of waste water treatment plant.

v) Use of polycarbonate sheets for all roofs to allow natural light in the factory building and use of Compact Fluorescent Lamps (CFLs) in the offices.

vi) Use of appropriate size equipment to ensure optimum energy consumption.

vii) Monitor and control testing time for Diesel/Motor driven compressors.

viii) Use of high efficiency elements in Compressors which reduces power consumption.

ix) Installation of FRP Fans driven by natural blowing air on the roofs of heat treatment plant for hot air and smoke evacuation.

x) Use of timers on air conditioners.

xi) Use of energy monitoring systems.

The above actions have resulted in reduction of power consumption, saving in energy and fuel costs and environment protection.

B. Technology absorption:

Research and Development.

1. Specific areas in which the Company carries out R&D.

The Company maintains close contacts with the Atlas Copco Group Companies, which are responsible for the research and development of various product lines. Value engineering and value analysis, with respect to these products, processes and substitute materials, is carried out on a continuous basis to improve quality, reduce rejections and give better value to the Companys customers.

The Engineering Competency Centres of the Company, located at Pune and Bangalore, which provide mechanical engineering, CAE and software development services, have been working in close coordination with Product Development Departments of more than 30 group companies all over the world.

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

The benefits derived are, improvements in quality and cost reductions for the existing range of products, development of new products with less energy consumption, noise and emission reduction, more local product development and increased local production, import substitution, export promotion and faster product launch in the markets.

3. Future plans and actions.

The Company has an ongoing program for up-gradation of existing products, introduction of new products, improvement in manufacturing processes and reducing product costs, import substitution and export promotion. This is done through continuous process and product development in close interaction with Group companies, customers and vendors.

4. Expenditure on R&D.

Since the Company has no specific Research and Development Department, it is not possible to quantify expenditure, whether capital or revenue, incurred on research and development activities.

Technology absorption, adaptation and innovation.

1. Efforts in brief, made towards absorption, adaptation and innovation:

The Company maintains constant contacts with Atlas Copco Group companies to absorb the latest technology developed by them. Continuous interaction with their technical staff, visits and training of our employees at Group company factories, regular meetings of Product Committees, and visits of technical staff from other Group companies to our factories, help us to keep up to date with all the latest technical developments.

2. Benefits derived as a result of the above efforts

The benefits of the technology developed by the Atlas Copco Group are available for the Company on a continuous basis, which enables the Company to manufacture abroad range of existing and new products at optimum costs for both domestic and export markets. This also helps to increase the Companys market share and to improve the Companys competitive position.

3. Imported technology (Imported during the last five years reckoned from the beginning of the financial year).

During the last five years, technology and know-how for screw, centrifugal and reciprocating compressors, dryers and air filters, hydro fracturing rigs, hydraulic drill rigs, breakers, rock drills, Down The Hole hammers, rock drilling equipment and road construction equipment was imported. This has been successfully absorbed in the Companys manufacturing activity after extensive field trials. The active interaction of the Company with Atlas Copco Group companies ensures a continuous flow of rapid changing technologies. The Company can, as a result, meet the ever-demanding requirements of domestic and overseas customers.

C. Foreign Exchange Earnings and Outgo:

1. Activities relating to exports:

The Company continues to focus on development of new products and services for export market, up-gradation of existing products and improvement in quality and costs with technological support from Atlas Copco Group companies.

2. Total foreign exchange used:

i. Earning in foreign currency - Rs. 55,244 lakhs.

ii. Payments in foreign currency - Rs. 80,622 lakhs.