aia engineering ltd. · 2013-08-09 · aia engineering limited 1995 1997 2000 2003 1991 1991 2005 6...

AIA ENGINEERING LTD.

16TH ANNUAL REPORT2005-2006

AIA ENGINEERING LIMITED

SEGMENT I

THE WORLD OF AIA ENGINEERING

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Break Up of Sales (% )

D om estic E xport

32.4242.97

52.1047.90

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FY 03-04 FY 04-05 FY 05-06

Order Book (Rs. crores)

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F Y 04-0 5 F Y 05-0 6

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Mill Audit

- Complete understanding of the mill by AIAEL engineers

- Studying the application parts for the mill internals

- Determination of the mill condition from maintenance and

process point of view.

- Understanding the bottleneck, studying the wear profile and

determination of proposed guarantees

Designing - Ensure the right design for the right application after several

design reviews, verification and validations.

Alloy Selection - Most crucial stage prior to manufacturing

- Determined after taking into considerations the three wear

mechanisms – impact, corrosion and abrasion.

Supervision during

installation

- The installation of the wear parts supplied by us is done under

the careful supervision AIAEL’s experienced engineers

Optimizing of grinding system

- Regularly visits to the plants to conduct mill studies.

- Fine tuning

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Power Plant

R educed output o f g round coa l trans la tes in to reduced ava ilab ility o f coa l fo r pu lve riz ing ; it leads to lo wer heat g enera tion and eventua lly reduction in the e lectric ity p roduced .

Cement mills

R educed e ffic iency m eans reduced output o f req u is ite g round cem ent produced , increase in pow er and m ain tenance costs

M ining Sector

H igh rep lacem ents dem and as com pared to o the r sectors, products have to be custom ized as per d iffe rent m in ing requ irem ents.

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SEGMENT II

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F Y 05

Net Sales (Rs. M illion)

F Y 06

0.0

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EBID TA (Rs. M illion)

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815.1

FY 05 FY 06

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Profit A fter Tax (R s. M illion)

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FY 05 FY 06

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5

10

15

20

25

30

35

40

Earning Per Share (Rs.)

16.66

35.94

FY 05 FY 06

57.6

47.3

0.0

10 .0

20 .0

30 .0

40 .0

50 .0

60 .0

FY 05 FY 06

Raw Material Costs as a % of Net Sales

3.9

2.6

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1 .0

2 .0

3 .0

4 .0

F Y 05 F Y 06

Current Ratio

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SEGMENT III

STATUTORY REPORTS

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16th ANNUAL REPORT 2005-0631 �

AIA ENGINEERING LIMITEDAIA ENGINEERING LIMITEDAIA ENGINEERING LIMITEDAIA ENGINEERING LIMITEDAIA ENGINEERING LIMITED

To,The Members,AIA Engineering Limited

Ahmedabad

Your Directors take pleasure in submitting the 16th Annual Report and the Audited Annual Accounts of the Company forthe year ended 31st March, 2006.

1. FINANCIAL HIGHLIGHTS :

Particulars Year ended Year ended31.3.2006 31.3.2005Rs.in Lacs Rs.in Lacs

Sales & Other Income 30771.09 22628.97

Profit before Interest, Depreciation and Taxation. 6124.58 3464.47

Interest 283.57 152.53

Depreciation 191.72 133.34

Profit before tax 5649.29 3178.60

(i) Provision for Taxation (Current) 1890.00 1151.00

(ii) Short / Excess provision of Taxation 0.93 -26.22

(iii) Provision for Taxation (Deferred) -0.92 13.50

(iv) Provision for Fringe Benefits Tax 31.20 0.00

Total Tax (i+ii+iii+iv) 1921.21 1138.28

Profit after tax 3728.08 2040.32

Surplus Brought Forward from Previous Year 2650.78 3065.10

Balance available for appropriations 6378.86 5105.42

Transferred to Capital Redemption Reserve 0.00 1913.38

Transferred to General Reserve 372.81 0.00

Dividend on Preference Shares 0.00 445.00

Proposed Dividend on Equity Shares 444.41 29.69

Tax on Dividend on Preference Shares 0.00 62.41

Tax on Dividend on Equity Shares 62.33 4.16

Balance Carried Forward 5499.31 2650.78

2. OPERATIONAL REVIEW :

During the year under review, the Turnover of the Company has gone up by 35.62% from Rs.22249.32 lacs toRs.30175.35 Lacs. Exports of the Company has gone up by 63.06 % from Rs.831.93 lacs to Rs.1356.53 Lacs. TheProfit Before Tax (PBT) has increased by 77.73% from Rs.3178.60 lacs to Rs.5649.29 Lacs. The Profit After Tax(PAT) has increased by 82.72% from Rs.2040.32 Lacs to Rs.3728.08 Lacs.

On a consolidated basis, your company(together with its subsidiaries) registered a turnover of Rs.406.96 croresin the financial year 2006 as compared to the turnover of Rs.293.68 crores registered in the financial year 2005,representing a 38.57% growth in the consolidated turnover. Correspondingly, the consolidated profit after tax grewby a healthy 96.55% at Rs.52.36 crores in the fiscal year 2006 as compared to PAT of Rs.26.64 crores in 2005.

3. DIVIDEND :

The Board of Directors is pleased to recommend a Dividend of Rs.2.50 per Share on 17776380 Equity Shares ofRs.10 each of the Company for Financial Year 2005-06. The amount of Equity Dividend outgo, including tax thereonwill be Rs.506.74 lacs.

4. INITIAL PUBLIC OFFER OF SHARES :

During the year under review the company made Initial Public Offer (IPO) of 4700000 Equity Shares of Rs.10 eachat a premium of Rs.305 per share through 100% Book Building Route which opened on 17th November 2005 andclosed on 22nd November 2005. Consequent to this, the Issued and Paid-up Share Capital of the Company hasincreased by Rs.470 Lacs and a premium of Rs.14335 Lacs has been credited to Share Premium Account.

5. CAPITAL EXPENDITURE OUTLAY :

During the year under review, the Company has incurred Rs. 1232.41 lacs (including Rs.650.86 Lacs of Capitalwork in progress) on Capital Expenditure.

DIRECTORS’ REPORT

16th ANNUAL REPORT 2005-0632�32�


6. TECHNOLOGY :

The mill internals developed for tube mills, with superior quality alloys, have now been well accepted by the

leading customers of the company and for all their new requirements, the customers have switched over to these

alloys. Similarly for mining application, the company has conducted several tests for reduction in wear rate and

eventually reduced cost of grinding for the customers. The results were encouraging and the new alloys have been

introduced to various customers.

The new alloys introduced for Vertical Mill spares have given very encouraging results compared to the conventional

alloys and in view of that most of the customers in this segment have started accepting these alloys as standard.

Moreover, the products of the company have become the benchmark for quality for the customer.

7. SALES & SERVICE ORGANISATIONS :

The Company today has sales offices in U.A.E., UK, USA, Australia and Philippines and two warehouses in USA

and one warehouse in UK. The Company is actively pursuing penetrating Chinese market through a strategic

alliance where potential for Vertical Mill spare parts is huge.

8. HUMAN RESOURCE POLICY :

Continuing with highly motivated and committed team of employees, the company instilled further confidence,

offering higher remuneration and renewed the wage agreements for next three years. With active participation and

inter-action at all levels, top to bottom, employees performed to their potential and contributed to the growth and

development of the company. Employment process for the expansion project at Moraiya has begun.

9. COMPUTERISATION AND COMMUNICATION :

The Company has continued to invest resources in maintenance and up-gradation of the existing ERP software.

Our IT team is now building software using the latest programming technology. Company has also invested in

new hardware (including a new server) and improved the data redundancy levels. Besides the core function of IT

to serve the business needs, the Company is continuously trying to use IT as a means to enhance communication

and information sharing.

10. BUSINESS PROSPECTS :

Your company is operating in a high technology oriented niche engineering segment, involving manufacturing of

impact, abrasion and wear resistant, high chrome mill internal products. These high chrome mill internals are used

as consumables in the process of grinding /crushing in the mills in the cement industry, mining industry and

utility industry.

As you may be aware, all the above three segments have excellent growth prospects. Within India, the Cement

Industry is booming, thanks to a tremendous growth in Real Estate, Construction and Infrastructure segment.

Similarly, utility industry (Thermal Power Plants) is also booming owing to severe deficit in the power generation.

Also, mining is essential for extraction of core minerals, which are the raw material for various ferrous and non-ferrous

industries. The mining activity is also gaining a tremendous momentum, especially in the iron ore segment.

Your Directors are very happy to inform you that your Company has a significant market share in this business in

India; and world over, it has established itself as one of the leading suppliers to Holcim of Switzerland, Lafarge of

France, Heidelberger of Germany, etc. Apart from cement manufacturers, your company also has very strong

relationships with the OEMs like FL Smidth of Denmark, Polysius of Germany, etc.

Moreover, the company has succeeded in building a business which is hedged against external market conditions

because of the following :

1. There are only a few recognized suppliers, who are manufacturing the products manufactured by your

company.

2. More than 70% of the company’s business comes from the ‘replacement’ demand which is not linked to the

economic capital spending cycles and OEM business.

3. The company supplies to three different industries across geographies – Cement, Mining and Utility are all

local industries and a down turn in some part of the world will always be negated by a boom in another. Your

company supplies products to more than 60 countries world wide.

4. The top customer does not account for more than 10% of sales.

Indeed, your company has excellent growth prospects in the years to come. Incidentally, your Directors would like

to place on record that the present capacities are fully booked for virtually next six to nine months, and your

company is currently facing a severe capacity constraint, which would be partly relieved once the ongoing

Greenfield expansion project is implemented in full.



11. FUTURE EXPANSION :

The company has started with expansion at Changodar, which is an industrial area located at 35 kms from ourexisting facilities in Ahmedabad, for starting an engineering unit, which will engage in manufacture of grindingmill internals for its customers all over the world. The unit will have a rated capacity of 50,000 Metric Tonnes.

12. INTELLECTUAL PROPRIETORY RIGHTS :

To protect our intellectual property, we have filed 4 patents in 2002-2003 and one in January 2005. Out of the firstfour patents, three have already been examined by the patent office and unless there is any pre-grant opposition,the patents are likely to be granted by the end of this year. The patent filed in 2005 will take at least 5 years for grantbased on the current time taken.

The draft of new patent “Liners for Check End of Tube Mills” is also ready and it will be filed by July / August 2006.

13. SUBSIDIARY COMPANIES :

As required under the Listing Agreements with the Stock Exchanges and in accordance with the AccountingStandard 21 (AS-21), Consolidated Financial Statements being prepared by the Company include Financialinformation of its subsidiaries.

An application dated 21st February 2006 was made to the Ministry of Company Affairs, Government of India, forgranting exemption to the Company from attaching to its Annual Report for the year ended 31st March 2006, theindividual Annual Reports of each of its subsidiary companies. The Company has 7 subsidiaries in India andabroad. A statement containing brief financial details of these companies for the year ended 31st March 2006 isincluded in the Annual Report. The Annual Accounts of the Subsidiary Companies and the related detailedinformation will be made available to the investors of the Company seeking such information at any point of time.The annual accounts of the subsidiary companies will be available for inspection by any investor at the RegisteredOffice of the Company.

14. INSURANCE :

The Company has taken adequate insurance coverage of all assets and stocks against various calamities viz. fire,floods, earthquake, cyclone, act of terrorism etc.

15. DEPOSITS :

The Company has not accepted deposits from the public during the year under review, within the meaning ofSection 58A of the Companies Act, 1956.

16. INDUSTRIAL RELATIONS:

The company achieved all the statutory compliances and maintained its image of being a progressive and compliantcompany. As member of prestigious institutions like Confederation of Indian Industries, Gujarat Chamber ofCommerce and Industries and Ahmedabad Management Association, the company maintained high state ofindustrial relations and kept abreast with the latest developments in the business and industry in Gujarat State andthe Country.

17. ENVIRONMENT – SAFETY – HEALTH :

With a motto “Safety First” and an aim to ensure a safe work place for all, the company strived and achievedcontinuous improvement in the Safety, Health and Environment practices and performances. Good occupationalhealth and shop floor training were identified as the two main thrust areas and all out awareness and safetyconsciousness were achieved.

18. INTERNAL CONTROL AND AUDIT :

Company has a proper and adequate system of internal control to ensure that all assets are safeguarded andprotected against loss from un-authorised use or disposition and those transactions are authorised, recorded andreported correctly.

During the year under review, Internal Audit of the Company has been carried out by a firm of Chartered Accountants.

19. CORPORATE GOVERNANCE :

In line with the Company’s commitment to good corporate governance practices, your Company has compliedwith all the mandatory provisions of Corporate Governance as prescribed in the Clause 49 of the Listing Agreementwith the Stock Exchanges. A separate report on Corporate Governance and Practicing Company Secretaries Reportthereon are included as a part of the Annual Report.

20. MANAGEMENT’S DISCUSSION AND ANALYSIS (MDA) :

MDA covering details of operations, international markets, research and development, opportunities and threats,etc. for the year under review is given as a separate statement, which forms part of this Annual Report.



21. DIRECTORS :

Mr. Jules Spede, resigned as a Director of the Company with effect from 31st March 2006.

Mr. Rajendra S. Shah, Director of the Company retires by rotation at the ensuing Annual General Meeting and beingeligible for re-appointment. The Board recommends the re-appointment of Mr. Rajendra S. Shah who has offeredhimself for re-appointment.

Pursuance to Clause 49 of the Listing Agreement, brief resume of Mr. Rajendra S. Shah together with his expertisein specific functional areas and names of the Companies in which he holds office of a Director and / or theChairman / Membership of Committees of the Board, is given in the Notice of the Annual General Meeting.

22. AUDITORS :

Members are requested to appoint Statutory Auditors for the current year and fix their remuneration. M/s Talati &Talati, Chartered Accountants, the Company’s Auditors will retire at the conclusion of the ensuing Annual GeneralMeeting and being eligible offer themselves for reappointment.

23. PARTICULARS OF EMPLOYEES :

The particulars of employees, as required under Section 217 (2A) of the Companies Act, 1956 are given as anAnnexure-A to this report.

24. PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS

AND OUTGO :

The additional information regarding conservation of energy, technology absorption and foreign exchange earningsand outgo, stipulated under Section 217 (1)(e) of the Companies Act, 1956 are given as an Annexure–B to thisreport.

25. DIRECTORS’ RESPONSIBILITY STATEMENT :

Pursuant to Section 217(2AA) of the Companies Act, your Directors hereby confirms that:

(i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed;

(ii) sound accounting policies have been selected and applied consistently and judgments and estimates made thatare reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end ofthe Financial Year ended 31st March 2006 and the Profit and Loss Account for the year ended on that date;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordancewith the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;

(iv) the Annual Accounts have been prepared on a going concern basis.

26. ACKNOWLEDGEMENT :

Your Directors thank the Company’s customers, vendors, bankers, auditors, investors and Government bodies fortheir continued support during the year. Your Directors place on record their appreciation of the contributionsmade by employees at all levels. Your Company’s consistent growth was made possible by their hard work,solidarity, co-operation and support.

For and on behalf of the Board,

Place : Ahmedabad (VINOD NARAIN)

Date : 9th June 2006 Chairman



ANNEXURE- “A” TO THE DIRECTORS’ REPORT

Information under section 217(2A) of the Companies Act, 1956 read with the Companies (particulars of employees)Rules, 1975 and forming part of the Directors’ report for the year ended 31st March, 2006.

(A) Employed throughout the financial year under review and were in receipt of remuneration for the financial year inthe aggregate of not less than Rs.24,00,000/- p.a.

1. Name Shri Bhadresh K. Shah

2. Age 55 Years

3. Qualification B.Tech Metallurgical

4. Designation Managing Director

5. Date of commencement of employment. 1.4.1991

6. Experience 29 Years

7. Remuneration Rs.65.21 lacs p.a.

8. Particulars of last employment:

a) Employer Ahmedabad Induction Alloys Ltd.

b) Last Post Managing Director

c) No. of Years 17 Years

(B) Employed for part of the financial year under review and were in receipt of remuneration at the rate of not less thanRs.2,00,000/- per month : Nil






ANNEXURE - “B” TO THE DIRECTORS’ REPORT

Information under section 217(1)(e) of the Companies Act, 1956 read with companies (Disclosure of particulars in thereport of Board of Directors) Rules, 1988 and forming part of the Directors report for the year ended 31st March 2006.

FORM – A

A) CONSERVATION OF ENERGY :

a) Due to installation of new 1000 KW Induction Melting Furnace in place of 450 KW Induction MeltingFurnace, the production of Grinding Media has increased to 500 MT/Month level from 300 MT/Month level.In view of this power consumption for Auxiliary Operations per MT of production has decreased from 130KW/MT to 98 KW/MT i.e. 25%.

b) Production capacity of Liner Pusher Furnace has been increased by increasing the number of Trays from 19to 25. This has resulted in higher production capacity (increase from 600 MT/Month to about 900 MT/Month). In view of this, consumption of LDO has decreased from 90 Ltr./MT of Castings Heat Treated to 80Ltr./MT.

I. POWER & FUEL CONSUMPTION :

Particulars Current Year Previous Year

2005-2006 2004-2005

1. Electricity

a) Purchased Units 28505948 20036794

Total Amount (in Rs.) 141353638 101065518

Rate/Unit (Rs.) 4.96 5.04

b) Own Generation

Through Diesel Generator Unit 63710 63855

Unit per Litre of Diesel Oil 2.21 2.65

Cost/Unit (Rs.) 15.92 12.34

c) Through Steam Turbine/Generator

Units N.A. N.A.

Units per Ltr.of Fuel/Oil/Gas N.A. N.A.

Cost/Unit (Rs.) N.A. N.A.

2. Coal(Specify Quantity and where used)

Quantity (in Tons) N.A. N.A.

Total cost (Rs.) N.A. N.A.

Average Rate/(Rs.) N.A. N.A.

3. Light Diesel Oil

Quantity (in Kilo Ltrs) 1386570 1141630

Total Amount 37160076 29339891

Average Rate (Rs.) 26.80 25.70

4. Others/Internal Generation.

Quantity N.A. N.A.

Total Cost N.A. N.A.

Rate/Unit (Rs.) N.A. N.A.

II. CONSUMPTION PER UNIT OF PRODUCTION :

Product :

Castings Unit (Tonnes) 18486 11915(Excluding production on job work – 9347 Tonnes)

[Previous Year 14892 Tonnes]

Electricity per Ton of Castings (Units) 1542 1682



FORM – B

(B) TECHNOLOGY ABSORPTION :

I. RESEARCH & DEVELOPMENT ( R & D)

a) Specific areas in which R & D carried out by the company.

Alloys with superior wear resistant for vertical mill parts developed.

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

Field trials have proved viability of new alloys developed.

c) Future plans of action.

Extending concept in (a) above to quarry products.

d) Expenditure on R & D (Rs. in lacs).

1. Capital - Nil

2. Recurring - Nil

3. Total - Nil

4. Total R & D expenditure as percentage of total turnover - Nil.

II. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

a) Efforts in brief made towards technology absorption, adaptation and innovation.

Special type of grinding roll being developed for a Russian firm.

b) Benefits derived as a result of the above efforts.

For coal grinding applications, it is expected that mills of similar size will be adopted and company willenjoy improved market share.

c) Imported technology.

No technological inputs were used from outside. All developments were in house.

d) Foreign Exchange Earnings and outgo :

Year ended Year ended31.3.2006 31.3.2005Rs. in lacs Rs. in lacs

i) Total foreign exchange used 149.57 353.41

ii) Total foreign exchange earned 11035.64 7217.84






REPORT ON CORPORATE GOVERNANCE

With a view to list its shares on the Stock Exchanges during the year under review, Company has started to comply withthe provisions of Clause 49 of the Listing Agreement from September 2005. Accordingly, the Company made a PublicOffer of 47,00,000 Equity Shares of Rs.10/- each at a premium of Rs.305/- per share through 100% Book Building routein the month of November 2005 and trading of its Shares started w.e.f. 14th December 2005.

1. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE

The Company’s philosophy on Corporate Governance aims at assisting the management of the Company in theefficient conduct of the business and in meeting its responsibilities to all the stakeholders. The Company alwaysstrives to achieve optimum performance at all levels by adhering to corporate governance practices, such as :

• Fair and transparent business practices.

• Effective management control by Board.

• Adequate representation of promoter, executive and independent directors on the Board.

• Monitoring of executive performance by the Board.

• Compliance of Laws.

• Transparent and timely disclosure of financial and management information.

2. BOARD OF DIRECTORS

Composition and Category of Directors and Attendance Record for the year 2005-06:

The present strength of the Board of Directors is 4. The Board consists of 1 Executive Director and 3 Non-ExecutiveIndependent Directors. The Non-Executive Directors bring independent judgment in the deliberations and decisionsof the Board.

Name of the Director Category Board Meetings Attendance at Remarks

Attended the Last AGM

held on

5-8-2005

Mr. Vinod Narain Non-Executive - Independent 2 Absent

Mr. Bhadresh K. Shah Executive - Promoter 7 Present

Mr. Jules Spede Executive - Independent 5 Absent Ceased w.e.f.31-3-2006

Mr. Rajendra S. Shah Non-Executive - Independent 6 Absent

Dr. S. R. Ganesh Non-Executive - Independent 5 Absent

Mr. Kunal D. Shah Executive - Independent 1 N.A. Ceased w.e.f.5-7-2005(Alternate toMr. Jules Spede)

Number of other Directorships & Committee Membership/Chairmanship :

Name of the Director Other Directorships Committee Memberships Committee Chairmanships

Mr. Vinod Narain 1 2 2

Mr. Bhadresh K. Shah 2 2 1

Mr. Jules Spede None None None

Mr. Rajendra S. Shah 1 4 1

Dr. S. R. Ganesh 1 2 None

Number of Board Meetings held and the date on which held :Eight Board Meetings were held during the Financial Year 2005-06. The dates on which the meetings were held areas follows :14-4-2005, 5-7-2005, 13-9-2005, 25-10-2005, 25-11-2005, 6-12-2005, 31-1-2006, 31-3-2006The maximum time gap between any two meetings was not more than 4 months.

RE-APPOINTMENT OF RETIRING DIRECTOR:

As per the Articles of Association of the Company, Mr. Rajendra S. Shah will retire at the 16th Annual GeneralMeeting of the Company and being eligible, offer himself for re-appointment.

Mr. Rajendra S. Shah

Mr. Rajendra S. Shah is on the Board of the Company from 15-3-2005. His age is about 58 years and he is B.E.(Mech.). He is currently Managing Director of Harsha Engineers Limited and possesses rich and varied experiencein Administration and Finance.



Name of the Companies in which he is a Director

Harsha Engineers Limited (Managing Director)

3. AUDIT COMMITTEE (Constituted on 13-9-2005)

a) Brief description of terms of reference :

i) Oversight of the company’s financial reporting process and disclosure of financial information.

ii) Review of Quarterly, Half Yearly and Annual Financial Statements.

iii) Recommending the appointment and removal of external auditors and their remuneration.

iv) Review of adequacy of internal control systems and internal audit functions.

v) Review of company’s financial and risk management policies.

b) Composition, Name of the Members and Chairman:

In Compliance with Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956, theBoard of Directors of the Company has constituted an Audit Committee comprising of the following 3 Non-Executive Independent Directors.

1) Mr. Vinod Narain - Chairman

2) Mr. Rajendra S. Shah - Member

3) Dr. S. R. Ganesh - Member

c) Meetings and attendance during the year :

During the year 2005-06, one Audit Committee Meeting was held on 31-1-2006 when all the members of theCommittee were present.

d) Name & Designation of the Secretary of the Committee :

Mr. S. N. Jetheliya, Company Secretary of the Company acts as a Secretary of the Audit Committee.

4. REMUNERATION COMMITTEE (Constituted on 13-9-2005)

a) Brief description of terms of reference :

To formulate a remuneration policy and recommend/review the remuneration payable to the Executive Directorsand other Senior Executives.

b) Composition, Name of Members and Chairperson :

1. Mr. Vinod Narain - Chairman

2. Mr. Rajendra S. Shah - Member

3. Dr. S. R. Ganesh - Member

c) Attendance during the year :

No Remuneration Committee had met since its constitution.

d) Remuneration Policy :

To review the remuneration package of the Managing Director / Senior Executives and recommend suitablerevision to the Board.

e) Details of remuneration to all the Directors:

The details of remuneration paid to the Directors during the year 2005-2006 is given below :

Name of the Director Salary Perquisites Total

and Designation (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs)

Mr. Bhadresh K. Shah, Managing Director 60.00 5.21 65.21

Mr. Jules Spede, Director 2.87 Nil 2.87

The Company does not have any Stock Option Plan or performance linked incentive for the ExecutiveDirectors. The appointments are made on the terms and conditions in the respective resolutions.

The details of Sitting Fees paid to the Non-Executive Directors for attending Board and Committee Meetingsduring the Financial year 2005-2006 is given below :

Sl.No. Name of the Director Sitting Fees Paid (Rs. in Lacs)

1 Mr. Vinod Narain 0.15

2 Mr. Rajendra S. Shah 0.30

3 Dr. S. R. Ganesh 0.30



5. SHAREHOLDERS/INVESTORS GRIEVANCE COMMITTEE (Constituted on 13-9-2005)

a) Composition, Name of Members and Chairperson:

1. Mr. Rajendra S. Shah - Chairman

2. Mr. Bhadresh K. Shah - Member

b) Brief description of terms of reference :

1. Redressal of Shareholders and investors complaints like non-receipt of refund orders, non receipt of dematcredits, transfer of shares, non receipt of annual reports, non-receipt of declared dividends, etc.

2. Oversee the performance of the Registrar and Transfer Agents and recommend measures for overallimprovement in the quality of investor services.

c) Name and designation of the Compliance Officer :

Mr. S. N. Jetheliya, Company Secretary

d) Number of Shareholders complaints received so far :

The total number of Complaints received and replied to the satisfaction of Shareholders during the year underreview was 486. There are no outstanding complaints as on 31st March, 2006.

e) Number of Complaints not solved to the satisfaction of shareholders:Nil

f) Number of pending share transfers :Nil

6. IPO PROCEEDS UTILISATION COMMITTEE (Constituted on 13-9-2005)

a) Composition, Name of Members and Chairperson:

1. Mr. Bhadresh K. Shah - Chairman

2. Mr. Rajendra S. Shah - Member

b) Brief description of terms of reference :

1. To monitor the execution of the projects specifically in context of utilization of the issue proceeds.

2. To submit quarterly reports to BSE, NSE and SEBI till the completion of the project.

7. CEO / CFO CERTIFICATION

The Managing Director and the Chief Financial Officer of the Company have certified to the Board with respect toreview of Financial Statements and Cash Flow Statement.

8. GENERAL BODY MEETINGS

a) Location, date and time for last 3 Annual General Meetings were :

Financial Year Date Venue Time

2004-05 05-08-2005 115, GVMM Estate, Odhav Road, Ahmedabad-382 410 11.30 AM



b) Extraordinary General Meetings :

Date of EGM : 25-4-2005

Special Resolutions :

(i) Pursuant to the provisions of Section 81(1A) of the Companies Act, 1956 to authorise the Board ofDirectors of the Company to offer, issue and allot Equity Shares through Book Building Process.

(ii) Pursuant to the provisions of Section 293 (1) (d) of the Companies Act, 1956 to borrow any sum orsums of money, from time to time, notwithstanding that the money or moneys to be borrowed togetherwith the money already borrowed by the company may exceed the aggregate of the paid up capital andfree reserves of the Company.

(iii) Pursuant to the provisions of Section 293 (1) (a) of the Companies Act, 1956 to authorize the Board ofDirectors of the Company to mortgage, hypothecate or otherwise create charge or encumbrance of allassets of the Company, movable or immovable present and future.

(iv) Pursuant to the provisions of Section 309 (4) of the Companies Act, 1956 authorizing the Board ofDirectors of the Company to make payment of Commission at the rate of 1% of the Net Profits of theCompany to any one or more of the Directors of the Company other than the Whole-time Director orManaging Director of the Company, to be computed in the manner laid down in Section 198 (1) of theCompanies Act, 1956 for a period of five years, commencing from 1st April, 2005.

(v) Pursuant to the provisions of Section 293 (1) (e) of the Companies Act, 1956 to authorize the Board ofDirectors of the Company to contribute and /or subscribe on behalf of the Company in any financial yearto Charitable or other funds not directly relating to the business of the Company or to the welfare of theemployees of the Company.



Date of EGM : 14-8-2005

Special Resolutions :

(i) Pursuant to the provisions of Section 31 of the Companies Act, 1956 for adoption of the New Articlesof Association of the Company in substitution for and to the exclusion of the existing Articles ofAssociation of the Company.

(ii) Pursuant to the provisions of Section 314 of the Companies Act, 1956 approving the Appointment ofMrs. Gita B. Shah holding of an Office or Place of Profit as Estate Planner w.e.f. 1-8-2005.

c) Whether special resolutions were put through postal ballot last year, details of voting pattern :No

d) Person who conducted the postal ballot exercise:N.A.

e) Whether any resolutions are proposed to be conducted through postal ballot :

The provisions of The Companies (passing of resolution by Postal Ballot) Rules, 2001, shall be complied withwhenever necessary.

f) Procedure for Postal Ballot :

Prescribed procedure shall be complied with whenever necessary.

9. DISCLOSURES

a) Disclosures on materially significant related party transactions, i.e. transactions of the Company ofmaterial nature with the promoters, the directors or the management, their subsidiaries or relativesetc. that may have potential conflict with the interests of the Company at large :

There were no materially significant related party transactions having potential conflict with the interests of theCompany at large. Transactions with related parties are disclosed in Note No.11 of Notes on Accounts underSchedule 16.

b) Details of non-compliance by the Company, penalties, strictures imposed on the Company by the StockExchanges or Securities and Exchange Board of India (SEBI) or any other statutory authority on anymatter related to the Capital Markets during the last 3 years :

There were no non-compliance by the Company that entails any penalties etc.

10. MEANS OF COMMUNICATION

a) Half yearly report sent to each household of Shareholders:

No. as the results of the Company are published in the Newspapers having wide circulation.

b) Newspapers in which Quarterly results normally published :

Economic Times, Business Standard and Financial Express (Gujarati).

c) Website, where the results and other official news releases are displayed.

The Quarterly Results of the Company are posted on the Company’s Website i.e. www.aiaengineering.com

d) Whether the Management Discussion and Analysis is a part of the Annual Report.

The Management Discussion and Analysis is a part of the Annual Report.

11. GENERAL SHAREHOLDER INFORMATION

Date and Time of 16th AGM Wednesday, the 27th September 2006 at 10.00 A.M.

Venue of AGM H.K. Parekh Convention Centre,Ahmedabad ManagementAssociation,ATIRA Campus, Dr. Vikram Sarabhai Marg,Ahmedabad –380 015

Financial Year 31-03-2006

Book Closure Date 16-09-2006 to 27-09-2006 (both days inclusive)

Registered Office Address 115, GVMM Estate, Odhav Road,Odhav, Ahmedabad – 382 410

Dividend Payment Date After 2nd October 2006

Compliance Officer Mr. S. N. Jetheliya, Company Secretary

Website www.aiaengineering.com

a) Listing on Stock Exchanges :

Name and Address of the Stock Exchange Scrip Code

Bombay Stock Exchange Limited25th Floor, P.J. Towers,Dalal Street, Fort, Mumbai – 400 001 532683National Stock Exchange of India LimitedExchange Plaza, Bandra-Kurla Complex,Bandra (E), Mumbai – 400 051 AIAENG

The listing fees for the year 2006-07 have been paid to both the Stock Exchanges.



During the year under review, the Company made its Initial Public Offer of 4700000 Equity Shares ofRs.10/- each at a premium of Rs.305/- per share through 100% Book Building Route, which was opened on17th November 2005 and closed on 22nd November 2005. The shares of the company are listed on BSE andNSE. The trading in shares started with effect from 14th December 2005.

b) Market Price Data : The Shares of the Company have been listed on BSE and NSE only on 14th December2005 therefore the data prior to 14th December is not applicable.

Bombay Stock Exchange National Stock Exchange

Limited of India Limited

Month BSE High Low High Low

Sensex Rs. Rs. Rs. Rs.

Dec.05 8813.82 592.00 391.20 592.00 387.00

Jan.06 9422.49 637.00 524.90 649.95 523.30

Feb.06 9959.24 645.85 552.00 645.80 552.00

Mar.06 10368.75 690.00 573.00 689.90 571.00

c) Registrar & Transfer Agents :

Intime Spectrum Registry Limited

C/13, Pannalal Silk Mills CompoundKantilal Maganlal Ind. EstateL.B.S. Marg, Bhandup (West)MUMBAI – 400 078Phone No. 022-25960320-28Fax No. 022-25960329Email:[email protected]

d) Share transfer System :

The share transfers are processed and the share certificates are returned to the shareholders within a maximumperiod of 30 days from the date of receipt, subject to the documents being valid and complete in all respects.

e) Distribution of Shareholding :

(i) Shareholding pattern as on 31st March, 2006.

Category No. of Shares held No. of % of

Physical Electronic Shares holding

Promoters Shareholding 13075378 16900 13092278 73.649

Mutual Funds & UTI 0 2323432 2323432 13.070

Banks, FI & Insurance Companies 0 0 0 0.000

Foreign Financial Institutions 0 1419480 1419480 7.985

NRIs / OCBs 0 8041 8041 0.045

Other Corporate Bodies 0 264790 264790 1.489

Indian Public 14 668345 668359 3.759

Total 13075392 4700988 17776380 100.000

(ii) Distribution of Shareholding as on 31st March 2006

No. of Equity Shares No. of folios % of total folios No. of Shares % of holding

1 to 500 14517 98.400 439434 2.472

501 to 1000 105 0.712 83280 0.468

1001 to 2000 44 0.298 63335 0.356

2001 to 3000 20 0.136 46236 0.260

3001 to 4000 8 0.054 29585 0.166

4001 to 5000 9 0.061 43190 0.243

5001 to 10000 7 0.047 49006 0.276

10001 & above 43 0.291 17022314 95.758

Grand Total 14753 100.000 17776380 100.000

Shareholders in Physical Mode 19 99.871 13075392 73.555

Shareholders in Electronic Mode 14734 0.129 4700988 26.445

14753 100.000 17776380 100.000



f) Dematerialisation of Shares & Liquidity :

The shares of the company are compulsorily traded in DEMAT form in the Stock Exchanges where they are listed.The shares are available for dematerialisation on both the Depositories viz. National Securities Depository Limited(NSDL) and Central Depository Services (India) Limited (CDSL).

As on 31-03-2006, 4700988 Equity Shares were Dematerialised representing 26.45% of the total paid up Equityshare capital of the Company. The ISIN allotted to the company’s scrip is INE212H01018 The shares of thecompany are actively traded at Bomaby Stock Exchange Limited (BSE) and National Stock Exchange of IndiaLimited, Mumbai (NSE).

g) Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, conversion date and likely Impact on Equity :

The company has not issued GDRs / ADRs / Warrants or any convertible instruments.

h) Plant Locations :

G.V.M.M. Estate, Odhav Road,

Odhav, Ahmedabad – 382 410

i) Address for Correspondence :

i) for transfer/dematerialisation of shares, change of address of members and other queries:

Intime Spectrum Registry Limited

C/13, Pannalal Silk Mills CompoundKantilal Maganlal Ind. Estate,L.B.S. Marg, Bhandup (West),MUMBAI – 400 078Phone No. 022-25960320-28Fax No. 022-25960329Email: [email protected]

ii) any queries relating to Dividend, Annual Reports etc.The Company SecretaryAIA Engineering Limited115, GVMM EstateOdhav RoadAHMEDABAD-382 410

Phone No. 079-22901078-81Fax No. 079-22901077Email: [email protected]

12) CODE OF CONDUCT

All Board Members and Senior Management have affirmed Compliance with the Code of Conduct adopted by the Board.

13) NON-MANDATORY REQUIREMENTS

a) Chairman of the Board

A Non-Executive Chairman heads the Board of the company.

b) Remuneration Committee

The Board has constituted a Remuneration Committee consisting of three non-executive and independent directors.

c) Shareholder Rights

As the Quarterly, Half Yearly and Annual Results are published in leading newspapers having wide circulation, thesame are not sent to the shareholders of the company individually.

d) Postal Ballot

The company has no occasion to place a resolution requiring Postal Ballot for Shareholders approval as recommendedunder the relevant rules & Clause 49 of the Listing Agreement.



Practicing Company Secretaries Certificate on Corporate Governance

To :

The Members of

AIA Engineering Limited

Ahmedabad

We have examined the compliance of conditions of Corporate Governance by AIA ENGINEERING LIMITED for the year ended31st March 2006 as stipulated in Clause 49 of the Listing Agreement of the Company with the Stock Exchanges in India.

The Compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination waslimited to the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditionsof Corporate Governance. It is neither an audit nor an expression of an opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanation given to us, we certify that the Companyhas complied with the conditions of Corporate Governance as stipulated in the above listing agreement.

We state that in respect of Investor grievances received during the year ended 31st March 2006, no investor grievances arepending against the Company as on 31st March 2006 as per the records maintained by the Company and presented to theInvestors/ Shareholders Grievance Committee.

We further state that such Compliance is neither an assurance as to the future viability of the Company nor the efficiency oreffectiveness with which the management has conducted the affairs of the Company.

For Tushar Vora & Associates

Company Secretaries

Place : Ahmedabad TUSHAR M.VORA

Date : 9th June 2006 Proprietor



MANAGEMENT DISCUSSION AND ANALYSIS

A. INDUSTRY OVERVIEW

Infrastructure is the pivot on which economic development of any country rests. Cement, mining and utilities arethe basic drivers of infrastructure development. Mill Internals manufactured by AIAEL find application in the abovementioned industries.

The company basically employs alloy-casting process for manufacture of the products, which require designing ofalloys in relation to end application. The casting process is followed by precision heat treatment to developrequired end properties. Therefore, Company can generally be classified as a foundry. The industry produces aspecific range of high chrome mill internals which are used as wear parts in the crushing / grinding operations inthe mills/plants of Cement, Mining and Utility industries, therefore the market prospects are linked with therequirement of these industries.

The demand of our products is driven by maintenance requirement market and project requirement market.Outlook in both areas of demand is healthy.

Presently, the company is mainly focusing on the cement and mining segment outside India, however, in India,it is servicing all the three segments.

B. SWOT ANALYSIS :

Your company is uniquely positioned as a supplier of High Chrome Mill Internals on a global scale, on account ofthe following competitive strengths :

• Strong focus on the combination of Metallurgy, Design and Applications.

• Comprehensive solutions based approach, as distinct from supply of commodity products.

• A strong focus on technology research and development.

• Worldwide presence in more than 60 countries, being directly in front of the customers through a net work

of overseas marketing subsidiaries in the Middle East, Europe and USA, warehouses in Europe and USA; andagents in various other countries.

• Low cost of production owing to India specific advantages.

• Strong strategic commercial partnerships with leading OEMs and customers.

• A strong management team comprising of Technocrats, Professionals and Consultants having rich experience

in High Chrome Mill Internals industry.

WEAKNESS/THREATS :

• Inability to scale up the capacities rapidly owing to extremely high importance of absolutely zero failure rate

of the products expected from the customers, requiring close monitoring of the quality.

• Issues related to logistics, particularly with the increasing volumes of the products.

OPPORTUNITIES AND STRATEGIES :

• To tap the opportunities available in the global Mining segment.

• Segment in the Chinese Market.

• To maintain and further strengthen our capabilities of offering total solutions by increasing our focus on

Research & Development activity.

• To focus more on strategic relationship/ commercial partnerships with international groups.

C. SEGMENTWISE PERFORMANCE :

The company primarily operates in only one segment-i.e. manufacturing of High Chrome Mill Internals. However, fromthe market stand point, to give a better understanding of our market positioning, it may be mentioned that in F.Y. 2006,52% of the total consolidated sales came from within India and balance 48% came from outside India.

Further, in India 44% of the turnover came from Cement industry, 40% came from Utility industry and 16% camefrom Mining industry.

Outside India, in F.Y.2006 almost 100% sales came from Cement segment and company has just marked itspresence in mining sector.

D. OUTLOOK AND PROSPECTS :

The company is operating in a high technology oriented niche engineering segment, involving manufacturing ofimpact, abrasion and wear resistant, high chrome mill internal products used by cement, mining and utilityindustries. The company services the ‘replacement’ demand of these industries and the OEM requirement for newcapacities added.

• The ‘replacement’ market is strong thanks to the strong demand of metals and cement.



• The OEM business is also poised for growth as new cement capacities are being added not only in India, butin many other parts of the world.

The present capacities are fully booked for virtually next six months, and your company is currently facing acapacity constraint, which would be partly relieved once the ongoing Greenfield expansion project is implementedin full.

A new Greenfield plant is being set up by the company at village: Moraiya, which is an industrial area nearAhmedabad. The new facility will manufacture 50,000 Metric tones of high chromium mill internals. This facilityis expected to start trial runs by November/December 2006.

E. RISKS AND CONCERNS

Given its large exports, your company is exposed to foreign exchange rate fluctuation risk. Your company hasstarted hedging the risk in a systematic manner, so as to mitigate the same.

Another major area of risk is with regard to fluctuation in the raw material prices. However, the company hasconverted major portion of its contracts from fixed price to fluctuating price regime. Again, the company is closelymonitoring the price movements and is regularly buying the raw materials during low price cycles so as to averageout the impact of price fluctuations.

Your company faces the project risks for its Greenfield project –particularly pertaining to delays in the implementation,which can upset the targeted production schedules. However, the company is closely monitoring the projectimplementation and is taking all steps to ensure that there are no abnormal delays in physical implementation.

The capacity expansion will augur well for the company’s future growth prospects, as it has hitherto been aconstraint in accepting new orders.

The company is exposed to certain operating business risks, similar to most manufacturing companies, which ismitigated by regular monitoring and corrective actions.

F. INTERNAL CONTROL SYSTEM AND THE ADEQUACY:

The Company has proper and adequate system of internal controls commensurate with its size and nature ofoperations to provide reasonable assurance that all assets are safeguarded, transactions are authorized, recorded &reported properly and to certain operating business risks, which is mitigated by regular monitoring and correctiveactions.

The internal control system has been designed so as to ensure that the financial and other records are reliable andreflects a true and fair view of the state of the Company’s business.

A qualified and independent Audit Committee of the Board of Directors actively reviews the adequacy andeffectiveness of internal control systems and suggests improvements for strengthening them.

G. FINANCIAL PERFORMANCE REVIEW

The financial performance of the company as a whole (on consolidated basis) is as under :-

I. Consolidated Performance :

An analysis of the consolidated performance of the company is given below:

(a) Physical Production

The production achieved is as under :

(Qty. in M/.tons)

Product F.Y. 2006 F.Y. 2005

High Chrome Mill Internals 59329 25000

It will be seen that in physical terms, the company has achieved 137% growth in F.Y.2006 over the financial year 2005.It may be noted here that the growth comes to 23% if we consider the production of 23397 of Welcast Steels Ltd. forF.Y.2005 which became subsidiary of the company on 28th September, 2005.

(b) Sales Turnover

The comparative position of sales turnover achieved by the company is as under :

(Rs. in Lacs)

Particulars F.Y. 2006 F.Y.2005

Sales in India 21202.96 16748.73

Sales Outside India 19493.41 12618.95

Total 40696.37 29367.68

It will be seen that the total sales of the company have increased by 39% over the previous financial year.Further, sales in India have increased by 27% over the previous financial year and sales outside India haveincreased by 54% over the previous financial year.



(c) Key Performance Indicators

An analysis of the key indicators as percentage to net value of production (NvOP) is given below :

(Rs. in lacs)

Particulars F.Y: 2006 F.Y :2005

1 NvOP

- Net Sales 40696.37 29367.68

- Increase/Decrease in stock 1314.01 60.16

- Net Value of Production (NvOP) 42010.38 29427.84

2 Raw Materials Consumed (incl. stores, spares 19257.19 16909.36

& Trading Purchase)

- % of NvOP 45.84% 57.46%

3 Employee Costs 2258.91 1574.68

- % of NvOP 5.38% 5.35%

4 Other Expenditure 12343.08 7054.54

- % of NvOP 29.38% 23.97%

5 EBIDTA 8151.20 3889.26

- % of NvOP 19.40% 13.22%

6 Interest Cost 527.83 278.59

- % of NvOP 1.26% 0.95%

7 Depreciation 709.22 334.03

- % of NvOP 1.69% 1.14%

8 Profit Before Tax 7954.10 4074.45

- % of NvOP 18.93% 13.85%

9 Profit After Tax 5235.78 2663.87

- % of NvOP 12.46% 9.05%

The following observations are relevant :

(i) There is a handsome increase in EBIDTA, PBT and PAT percentages. Thanks to a better product

mix and increased level of operation resulting into the increase in the operating and net margins.

(ii) There is a reduction in the raw material consumption cost partially due to the reduction in the

input price and partially due to passing of price fluctuation to the customers

II. Standalone performance :

The analysis of standalone performance of the company is given below :

(a) Physical Production

The production achieved is as under:

(Qty. in M/.tons)

Product F.Y. 2006 F.Y. 2005

High Chrome Mill Internals 27833 26808

It will be seen that in physical terms, the company has achieved 4% growth in F.Y.2006 over the financial year

2005.

(b) Sales Turnover

The comparative position of sales turnover achieved by the company is as under:

(Rs. in Lacs)

Particulars F.Y. 2006 F.Y.2005

Sales in India 16610.07 13929.96

Sales Outside India 13565.28 8319.36

Total 30175.35 22249.32

It will be seen that the total sales of the company have increased by 36% over the previous financial year.

Further, sales in India have increased by 19% over the previous financial year and sales outside India have

increased by 63% over the previous financial year.



(c) Key Performance Indicators

An analysis of the key indicators as percentage to net value of production (NvOP) is given below :

(Rs. in lacs)

Particulars F.Y: 2006 F.Y :2005

1 NvOP

- Net Sales 30175.35 22249.32

- Increase/Decrease in stock 179.19 172.56

- Net Value of Production (NvOP) 30354.54 22421.88

2 Raw Materials Consumed (incl. stores, spares & 16872.36 12528.55

Trading Purchase)

- % of NvOP 55.58% 55.88%

3 Employee Costs 969.92 789.01

- % of NvOP 3.20% 3.52%

4 Other Expenditure 6983.42 6019.49

- % of NvOP 23.01% 26.85%

5 EBIDTA 5528.84 3084.83

- % of NvOP 18.21% 13.76%

6 Interest Cost 283.57 152.53

- % of NvOP 0.93% 0.68%

7 Depreciation 191.71 133.34

- % of NvOP 0.63% 0.59%

8 Profit Before Tax 5649.30 3178.61

- % of NvOP 18.61% 14.18%

9 Profit After Tax 3728.08 2040.33

- % of NvOP 12.28% 9.10%

H) INDUSTRIAL RELATIONS AND HUMAN RESOURCE MANAGEMENT

The company believes that human resource is the most important asset of the organization. During the year underreview, your company continued its efforts to improve HR related processes, practices and systems to align theseto the organizational objectives. Training and development of its employees is ensured through on the job andoutside training programs and workshop.

The company presently has 510 employees on its roll and continue to attract excellent talent to further its businessinterest. Industrial Relations continue to be cordial.

Cautionary Statement

Statements made in the Management Discussion & Analysis describing the Company’s objectives, projections,estimates, expectations may be “Forward-looking statements” within the meaning of applicable securities laws &regulations. Actual results could differ from those expressed or implied, Important factors that could make adifference to the Company’s operations include economic conditions affecting demand supply and price conditionsin the domestic & overseas markets in which the company operates, changes in the government regulations , taxlaws & other statutes & other incidental factors.



AUDITORS’ REPORT

To

The Members


AHMEDABAD

1. We have audited the attached Balance Sheet of AIA ENGINEERING LIMITED as at 31st March 2006, and

also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed

thereto. These financial statements are the responsibil ity of the company ’s management. Our

responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those

standards require that we plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free of material misstatement. An audit includes examining, on a test basis,

evidence supporting the amounts and disclosures in the financial statements. An audit also includes

assessing the accounting principles used and significant estimates made by management, as well as

evaluating the overall financial statement presentation. We believe that our audit provides a reasonable

basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India

in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure, a

statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that ;

i. We have obtained all the information and explanations which to the best of our knowledge and

belief were necessary for the purpose of our audit.

ii. In our opinion, proper books of accounts as required by law have been kept by the company so far

as appears from our examination of those books;

iii. The Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with by this Report

are in agreement with the books of account;

iv. In our opinion, the Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with

this Report comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of

the Companies Act, 1956;

v. On the basis of written representations received from the Directors, as on 31st March, 2006 and

taken on record by the Board of Directors, we report that none of the Directors is disqualified as on

31st March, 2006 from being appointed as a Director in terms of Clause (g) of Sub-Section (1) of

Section 274 of the Companies Act, 1956;

vi. In our opinion and to the best of our information and according to the explanations given to us, the

said accounts give the information required by the Companies Act, 1956, in the manner so required

and give a true and fair view in conformity with the accounting principles generally accepted in

India;

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2006.

(b) In the case of the Profit and Loss Account, of the profit for the year ended on that date.

(c) In the case of the Cash Flow statement, of the cash flows for the year ended on that date.

For TALATI & TALATI

Chartered Accountants

(UMESH TALATI)

Place : AHMEDABAD Partner

Date : 9th June, 2006 Mem.No. 34834



ANNEXURE TO THE AUDITORS’ REPORT

(Referred to in paragraph 3 of our report of even date)

( i) (a) The company has maintained proper records showing full particulars including quantitative details

and situation of fixed assets.

(b) Majority of the assets have been physically verified by the management during the year and there

is a regular programme of verification which, in our opinion, is reasonable having regard to the size

of the Company and the nature of its assets. No material discrepancies were noticed on such

verification.

(c) During the year, the company has not disposed off any major part of the Fixed Assets.

(ii) (a) The inventory has been physically verified during the year by the management. In our opinion, the

frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable

and adequate in relation to the size of the company and the nature of its business.

(c) On the basis of our examination of the records of the company, we are of the opinion that the

Company is maintaining proper records of inventory. The discrepancies noticed on verification

between the physical stocks and the book records were not material.

(iii) (a) The Company has granted unsecured loan to a Company covered in the register maintained under

Section 301 of the Companies Act, 1956. The maximum amount involved during the year was

Rs.40.72 Lacs and the year-end balance of loan granted to this Company was Rs.40.48 Lacs.

(b) In our opinion and according to the information and explanations given to us, the rate of interest and

other terms and conditions on which loans have been granted to company listed in the register

maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the

interest of the Company.

(c) The company has repaid principal amounts as stipulated and has been regular in the payment of

interest.

(d) There is no overdue amount of loans granted to the Company listed in the register maintained u/s.

301 of the Companies Act, 1956.

(e) The Company had taken loans from a company and one other party covered in the register maintained

under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was

Rs. 245.83 Lacs and the year-end balance of loans taken from such Company and party was Rs. NIL.

(f) In our opinion and according to the information and explanations given to us the rate of interest and

other terms and conditions on which loans have been taken from companies or other parties listed

in the register maintained under Section 301 of the Companies Act, 1956 are not, prima facie,

prejudicial to the interest of the Company.

(g) The company is regular in repaying the principal amounts as stipulated and has been regular in the

payment of interest.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal

control procedures commensurate with the size of the company and the nature of its business with

regard to purchase of inventory, fixed assets and with regard to the sale of goods. During the course of

our audit, no major weaknesses have been noticed in the internal controls.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations

provided by the management, we are of the opinion that the transactions that need to be entered

into the register maintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made

in pursuance of contracts or arrangements entered in the registers maintained under Section 301 in

respect of any party during the year are of specialized nature of job and non-availability of alternative

source of supply hence the price paid/received could be considered reasonable.

(vi) In our opinion and according to the information and explanations given to us, the company has not

accepted any deposit from the public and hence the provisions of Section 58A and 58AA or any other

relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,

1975 with regard to the deposits accepted from the public are not applicable to the company.



(vii) In our opinion, the company has an internal audit system commensurate with the size and nature of its business.

(viii) The Central Government has not prescribed maintenance of cost records under section 209(1)(d) of the CompaniesAct, 1956. Hence the provision of this clause is not applicable to the company.

(ix) (a) According to the records of the company, the company is generally regular in depositing with appropriateauthorities undisputed statutory dues including Provident Fund, Employees State Insurance, Income-Tax,Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other Statutory Duties applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect ofSales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty and Cess were outstanding, as at31st March, 2006 for a period of more than six months from the date they become payable.

(c) According to the information and explanations given to us, details of dues of Income Tax, Excise Duty andService Tax which have not been deposited on account of any dispute are given below:

Particulars Period to which the Forum where Amount (Rs.)

amount relates dispute is pending in Lacs

Income-Tax 2001-02& 2003-04 Commissioner-Appeals 20.39

Excise Duty 1995-96-1999-2000 Commissioner-Appeals 1.45

Service Tax 1997-98-2003-04 CommissionerAppeals 18.81

(x) The company does not have any accumulated losses. The company has not incurred cash losses during the financialyear covered by our audit and the immediately preceding financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, we are of theopinion that the company has not defaulted in repayment of dues to the banks.

(xii) The company has not granted any loans against security by way of pledge of shares, debentures and other securities.

(xiii) The company is not a chit fund or a nidhi mutual benefit fund/society. Therefore, the provisions of this clause of theCompanies (Auditor’s Report) Order, 2003 are not applicable to the company.

(xiv) The company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, theprovisions of clause XIV of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

(xv) In our opinion the company has not given any guarantee for loans taken by others from bank or financial institutionhence the provision of this clause is not applicable to the company.

(xvi) To the best of our knowledge and belief and according to the information and explanation given to us, in our opinion,Term Loans availed by the Company were, prima facie, applied by the Company during the year for the purpose for whichthe loans were obtained, other than temporary deployment pending application.

(xvii)Based on the information and explanations given to us and on an overall examination of the balance sheet of thecompany, we report that no significant funds raised on short-term basis have been used for long-term investment by thecompany.

(xviii)The Company has not made any preferential allotment of shares to parties covered in register under Section 301 of theCompanies Act, 1956 except the issue of 18500 Equity Shares to the wife of the Managing Director under theEmployees Reservation Portion at the time of the Initial Public Offer. The price at which the shares are issued are notconsidered to be prejudicial to the interest of the Company.

(xix) During the period covered by our audit report, the company has not issued any debentures. Accordingly, the provisionof clause (xix) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the Company.

(xx) We have verified that the end use of money raised by Public Issue is as disclosed in the Notes to Accounts.

(xxi) We report that no fraud on or by the company has been noticed or reported during the course of our audit.

For TALATI & TALATI


(UMESH TALATI)





BALANCE SHEET AS AT 31st MARCH, 2006

As at As at31st March, 2006 31st March,2005

Schedule Rs. in Lacs Rs. in Lacs

SOURCES OF FUNDS

1. SHAREHOLDERS’ FUNDS :

(a) Share Capital 1 1777.64 1307.64

(b) Reserves and Surplus 2 22610.02 5809.60

—————— ——————

24387.66 7117.24

2. LOAN FUNDS :

(a) Secured Loans 3 1373.61 3567.44

(b) Unsecured Loans 4 0.00 392.23

—————— ——————

1373.61 3959.67

3. DEFFERED TAX LIABILITIES (NET) : 5 139.82 140.73—————— ———————————— ——————

TOTAL : 25901.09 11217.64—————— ———————————— ——————

APPLICATION OF FUNDS

1. FIXED ASSETS :

(a) Gross Block 6 3309.14 2760.35

(b) Less : Depreciation 1487.60 1308.18

—————— ——————

Net Block 1821.54 1452.17

(c) Capital Work In Progress 650.86 147.29

—————— ——————

2472.40 1599.46

2. INVESTMENTS : 7 11449.14 623.17

3. CURRENT ASSETS, LOANS AND

ADVANCES : 8 20854.66 14919.18

Less : CURRENT LIABILITIES AND

PROVISIONS : 9 8875.11 5924.17

—————— ——————

NET CURRENT ASSETS : 11979.55 8995.01—————— ———————————— ——————

TOTAL : 25901.09 11217.64—————— ———————————— ——————

Notes forming part of the Accounts 16

As per our report of even date attached.

For and on behalf of

TALATI & TALATI VINOD NARAIN BHADRESH K. SHAH RAJENDRA S. SHAH

Chartered Accountants Chairman Managing Director Director

UMESH TALATI DR. S. R. GANESH DINESH C. SHAH S. N. JETHELIYA

Partner Director Chief Financial Officer Company Secretary

PLACE : AHMEDABAD PLACE : AHMEDABAD

DATE : 9th June, 2006 DATE : 9th June, 2006



PROFIT AND LOSS ACCOUNT FOR THE FINANCIAL YEAR ENDED 31st MARCH 2006

Year ended Year ended31st March, 2006 31st March,2005

Schedule Rs. in Lacs Rs. in Lacs

INCOME :

Sales 10 30175.35 22249.32Other Income 11 595.74 379.65Increase / Decrease (+/-) in Stock 12 179.19 172.56

—————— ——————TOTAL : 30950.28 22801.53

EXPENDITURE :

Manufacturing Expenses 13 15372.29 13541.04Trading Purchases 6778.52 3839.41Administrative,Selling and Other Expenses 14 2674.89 1956.60Interest Expenses 15 283.57 152.53Depreciation 6 191.71 133.34

—————— ——————TOTAL : 25300.98 19622.92

—————— ———————————— ——————PROFIT BEFORE TAXES 5649.30 3178.61

PROVISION FOR TAXES :

a) Current Tax 1890.00 1151.00

b) Short (Excess) Provision for earlier years 0.93 -26.22

c) Deffered Tax -0.91 13.50

d) Fringe Benefits Tax 31.20 1921.22 0.00 1138.28—————— ——————

PROFIT AFTER TAXES 3728.08 2040.33

Surplus Brought forward from Previous year 2650.79 3065.10

PROFIT AVAILABLE FOR APPROPRIATIONS : 6378.87 5105.43

Appropriations :



Corporate Tax on Dividend on Preference Shares 0.00 62.41

Corporate Tax on Dividend on Equity Shares 62.33 4.16


Transferred to General Reserve 372.81 0.00—————— ——————

879.55 2454.64—————— ———————————— ——————

Balance carried to Balance Sheet 5499.32 2650.79—————— ———————————— ——————

Basic and Diluted Earning Per Share (Rs.) 16 25.59 11.84Notes forming part of the Accounts 16











SCHEDULES 1 TO 9 FORMING PART OF THE BALANCE SHEET AS AT 31st MARCH 2006


Rs. in Lacs Rs. in Lacs

SCHEDULE : 1 SHARE CAPITAL

AUTHORISED :

26000000 Equity Shares of Rs.10/- each

(Previous Year 26000000 Shares) 2600.00 2600.00

2000000 Redeemable Cumulative Preference

Shares of Rs.100/- each

(Previous Year 2000000 Shares) 2000.00 2000.00—————— ——————

TOTAL 4600.00 4600.00—————— ———————————— ——————

ISSUED, SUBSCRIBED & PAID UP :

17776380 Equity Shares of Rs.10/- each fully paid 1777.64 1307.64

up ( Previous year 13076380 Shares )

(Includes 10461104 ( Previous Year 10461104 )

fully paid Bonus Shares issued by Capitalisation

of Share Premium)—————— ———————————— ——————

TOTAL 1777.64 1307.64—————— ———————————— ——————

SCHEDULE : 2 RESERVES AND SURPLUS

A. Capital Redemption Reserve 1913.38 0.00

Add : Transferred from Profit and Loss Account 0.00 1913.38

—————— ——————

1913.38 1913.38

B. Share Premium Account 850.57 1896.68

Add : Premium on Issue of Shares 14335.00 0.00

Less : Capitalised for issue of Bonus Shares 0.00 1046.11

Less : Initial Public Offer Expenses 755.92 0.00

—————— ——————

14429.65 850.57

C. General Reserve 394.86 394.86


—————— ——————

767.67 394.86

D. Profit and Loss Account 5499.32 2650.79—————— ———————————— ——————

TOTAL 22610.02 5809.60—————— ———————————— ——————





SCHEDULE : 3 SECURED LOANS

A. TERM LOAN :

From Banks 0.00 459.54

B. WORKING CAPITAL LOAN :

From Financial Instituition 0.00 1000.00

From Banks 1373.61 2107.90—————— ——————

1373.61 3107.90

All the above Loans are secured by paripassu

charge in favour of State Bank of India and

ABN AMRO Bank N.V (Previous Year State

Bank of India, ABN AMRO Bank N.V.and IDBI Ltd.)

on the Company’s movable and immovable

properties both present and future by way of

hypothecation and mortgage.—————— ———————————— ——————

TOTAL 1373.61 3567.44—————— ———————————— ——————

SCHEDULE : 4 UNSECURED LOANS

A. From Directors and Shareholders 0.00 20.45

B. Inter Corporate Deposits 0.00 371.78—————— ———————————— ——————

TOTAL 0.00 392.23—————— ———————————— ——————

SCHEDULE : 5 DEFFERED TAX LIABILITIES /

DEFFERED TAX ASSETS (NET)

A. DEFFERED TAX LIABILITIES :

Arising on account of timing difference

- Depreciation 160.93 162.45—————— ——————

TOTAL DEFERRED TAX LIABILITIES (A) 160.93 162.45

B. DEFFERED TAX ASSETS :

Arising on account of timing difference

- Technical Knowhow Fees 5.90 5.90

- Leave Encashment 13.41 7.11

- Non Deductible Expenses u/s 40 (a) 0.00 7.64

- Service tax 1.80 1.07

—————— ——————

TOTAL DEFERRED TAX ASSETS ( B ) 21.11 21.72—————— ———————————— ——————

TOTAL : ( A - B ) 139.82 140.73—————— ———————————— ——————



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SCHEDULE : 7 INVESTMENTS (AT COST)

LONG TERM NON TRADE INVESTMENTS: (QUOTED)

A. INVESTMENT IN SUBSIDIARY COMPANIES IN INDIA :

456881 Equity Shares of Welcast Steels Ltd. of

Rs.10/- each fully paid up.

(Previous year 134998 Equity Shares) 1296.27 139.02

LONG TERM NON TRADE INVESTMENTS: (UNQUOTED)


1. 82939 Equity Shares of Paramount Centrispun

Castings Pvt.Ltd.of Rs.100/- each fully paid up

(Previous year 82939 Equity Shares ) 166.91 166.91

2. 157000 Equity Shares of Reclamation Welding

Ltd. of Rs. 100/- each fully paid up

(Previous year 157000 Equity Shares) 157.22 157.22—————— ——————

324.13 324.13

B. INVESTMENT IN SUBSIDIARY

COMPANIES OUTSIDE INDIA :

1. 32500 Equity Shares of Vega Industries (Middle

East) FZE, U.A.E. of US$ 10/- each fully paid up


2. 30000 Class A Shares of Vega Industries,Inc.

Canada of $ 1 CAD each fully paid up

(Previous year 30000 Class A Shares ) 10.60 10.60—————— ——————

159.99 159.99

C. INVESTMENT IN OTHER COMPANIES :

25 Equity Shares of Koramangla Properties Pvt. 0.03 0.03

Ltd.of Rs.100/-each fully paid up

(Previous year 25 Equity Shares)

D. CURRENT INVESTMENT

IN MUTUAL FUND : (UNQUOTED)

1. DSP Merill Lynch Liquidity Fund IP-DDR Plan 520.45 0.00

52034.531 Units NAV of Rs.1000.20 each

2. DSP Merill Lynch FTP-II Series Plan 503.27 0.00


3. DSP Merill Lynch FTP-IB Series Plan 1004.08 0.00






D. CURRENT INVESTMENT

IN MUTUAL FUND : (UNQUOTED) (Contd...)

4. DSP Merill Lynch FTP-IC Series Plan 1500.26 0.00

150025.500 Units NAV of Rs.1000 each

5. Reliance FMP III Series II Plan 500.36 0.00

5000000 Units NAV of Rs.10.0088 each

6. Reliance FMP IX Series II Plan 504.31 0.00


7. ING Vysya FMP Series VIII Plan 500.00 0.00


8. Birla Cash Plus Institutional Daily Dividend Plan 321.28 0.00


9. Birla FTP Series I Plan 503.50 0.00


10. Standard Chartered GCCD Liquidity Manager Plan 404.97 0.00


11. Standard Chartered GCCD FMP 21st Plan 504.71 0.00

5047100 Units NAV of Rs.10 each

12. Standard Chartered GCCD FMP 4th Plan 501.93 0.00

5019250 Units NAV of Rs.10 each

13. LIC Daily Dividend Plan 193.04 0.00


14. Kotak FMP Series XV Plan 505.52 0.00


15. Kotak FMP Series 23 Plan 500.00 0.00


16. Kotak Liquid Institutional Premium Plan 0.05 0.00


17. JM Financial FMP Series II Plan 500.00 0.00


18. ABN AMRO FTP Series II Plan 200.99 0.00


19. PNB Principal Mutual Fund FMP Series III Plan 500.00 0.00

5000000 Units NAV of Rs.10.0182 each—————— ——————

9668.72 0.00

AGGREGATE VALUE QUOTED UNQUOTED

Cost 1296.27 10152.87

Previous Year 139.02 484.15

Market Value 4429.00

Previous Year 208.84—————— ———————————— ——————

TOTAL 11449.14 623.17—————— ———————————— ——————





SCHEDULE : 8 CURRENT ASSETS, LOANS AND ADVANCES

CURRENT ASSETS :

A. INVENTORIES

(As taken, valued & certified by the Directors)Raw Materials ( Including Goods in Transit 545.13 1000.26Rs.72.75 Lacs Previous year Rs.100.87 Lacs)Stores & Spares ( Including Goods in Transit 187.29 98.33Rs.56.44 Lacs Previous year Rs. 11.70 Lacs)Work-In Process 1332.17 1152.98

—————— ——————2064.59 2251.57

B. SUNDRY DEBTORS

(Unsecured, Considered Good)

a). Debts outstanding for a period exceeding 1115.18 763.49six months

b). Others (*) 9623.04 7300.08—————— ——————

10738.22 8063.57

Note : (*) Includes due from : Maximum due

during the year

Subsidiaries : 6073.61 4683.77 2874.63Previous Year 3923.39

C. CASH AND BANK BALANCES

a) Cash on hand 4.57 3.78b) Balance with Scheduled Banks

i) In Fixed Deposit 1114.63 264.63ii) In Current Accounts 83.47 196.90

—————— ——————1202.67 465.31

D. LOANS & ADVANCES :

(Unsecured , Considered Good)

A) Advances recoverable in cash or in kind or forvalue to be received (*) 682.82 194.76

B) Inter Corporate Deposits (*) 40.48 40.72

C) Advance Income tax & tax deducted at source 5354.84 3542.65

D) Sundry Deposits and Advances 316.05 164.14

E) Loans and Advances to Staff 43.29 33.47

F) Balance with Central Excise Department 411.70 162.99—————— ——————

6849.18 4138.73

Note : (*) Includes due from : Maximum due

during the year

(a) Companies in which some of

the Directors of the company

are Directors and / or Members 0.00 0.00 0.07

Previous Year 0.07

(b) Subsidiaries : 371.91 40.48 77.42

Previous Year 91.21—————— ———————————— ——————

TOTAL 20854.66 14919.18—————— ———————————— ——————





SCHEDULE : 9 CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIES :

a) Sundry Creditors 2407.14 1577.59

b) Other Liabilities 53.51 41.01

c) Statutory Liabilities 95.09 10.64

d) Advances from Customers 236.19 117.14—————— ——————

2791.93 1746.38

PROVISIONS :

a) Provision for Taxation 5518.25 3597.06

b) Dividend on Preference Shares 0.00 445.00

c) Proposed Dividend on Equity Shares 444.41 29.69

d) Corporate Tax on Dividend on Preference Shares 0.00 62.41

e) Corporate Tax on Dividend on Equity Shares 62.33 4.16

f) Provision for Leave Encashment Payable 58.19 39.47—————— ——————

6083.18 4177.79—————— ———————————— ——————

TOTAL 8875.11 5924.17—————— ———————————— ——————



SCHEDULES 10 TO 15 FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE

FINANCIAL YEAR ENDED 31st MARCH 2006



SCHEDULE : 10 SALES

A. Domestic Sales 16610.07 13929.96

B. Export Sales 13565.28 30175.35 8319.36 22249.32—————— ———————————— —————— —————— ——————

TOTAL 30175.35 22249.32—————— ———————————— ——————

SCHEDULE : 11 OTHER INCOME

A. Interest ( Gross) 22.63 21.78

(T.D.S Rs.1.56 Lacs Previous Year Rs. 2.25 Lacs)

B. Lease Rent (Gross) 0.00 2.70

(T.D.S Rs.NIL Previous Year Rs. 0.56 Lacs)

C. Miscellaneous Receipts 113.88 18.94

D. Dividend received 161.05 13.49

E. Profit on Sale of Assets 5.28 4.65

F. Premium on Sale of Import Licenses 283.93 318.02

G. Sales tax Refund 4.37 0.07

H. Profit on Sale of Mutual Fund Units 4.60 595.74 0.00 379.65—————— ———————————— —————— —————— ——————

TOTAL 595.74 379.65—————— ———————————— ——————

SCHEDULE : 12 INCREASE / DECREASE (+/-) IN STOCK

A. Opening Stock

Work In Process 1152.98 931.07

Finished Goods 0.00 49.35

—————— ——————

1152.98 980.42

B. Closing Stock : Work In Process 1332.17 1152.98—————— ———————————— —————— —————— ——————

TOTAL 179.19 172.56—————— ———————————— ——————

SCHEDULE : 13 MANUFACTURING EXPENSES

A. RAW MATERIALS CONSUMED

Opening Stock 1000.26 1203.54

Add : Purchases 6629.41 6395.25—————— ——————

Sub Total 7629.67 7598.79

Less : Closing Stock 545.13 1000.26 —————— ——————

7084.54 6598.53

B. STORES CONSUMED


Add : Purchases 3098.26 2110.36—————— ——————

Sub Total 3196.59 2188.94

Less : Closing Stock 187.29 98.33—————— ——————

3009.30 2090.61

C. PAYMENT TO & PROVISIONS FOR EMPLOYEES

a) Salaries, Wages and Bonus 734.40 608.85

b) Contribution to Provident Fund /ESIC/ Gratuity 101.44 86.38

c) Staff Welfare Expenses 134.08 93.78—————— ——————

969.92 789.01





SCHEDULE : 13 MANUFACTURING EXPENSES (Contd....)

D. OPERATIONAL AND OTHER EXPENSES

a) Power and Fuel 1413.54 1010.66b) Labour Charges (Net) 437.75 258.58c) Job Conversion Charges 1754.63 2346.61d) Freight Inward,Octroi and Coolies,Cartages 481.13 312.77e) Repairs and Maintenance

- To Plant and Machineries 179.33 108.59- To Buildings 25.50 13.78- To Other Assets 16.65 11.90

—————— ——————221.48 134.27

4308.53 4062.89—————— ———————————— ——————

TOTAL 15372.29 13541.04—————— ———————————— ——————

SCHEDULE : 14 ADMINISTRATIVE,

SELLING AND OTHER EXPENSES

1. Insurance Premium Expenses (Net) 20.79 27.652. Rent, Rates and Taxes 18.79 47.403. Freight Outward and Coolies, Cartages 1060.07 818.144. Commission Expenses (Net) 406.00 133.055. Service Charges 6.28 6.796. Directors’ Remuneration and Perquisites 64.72 75.607. Travelling Expenses - For Directors 60.52 57.33

- For Staff,Guests,Visitors 212.82 247.55—————— ——————

273.34 304.888. Statutory Audit Fees 1.50 1.619. Legal and Professional Consultancy Fees 142.14 136.1910. Bank Commission Charges 63.43 70.7111. Printing and Stationery Expenses 19.58 14.7812. Postage,Telephones,Courier,Internet & E-mail 53.30 56.0813. Sales Promotion Expenses 12.35 23.4814. Computer Expenses 10.92 8.5415. Vehicle Repairs and Maintenance 30.74 30.2116. Conveyance Expenses 7.09 6.4117. Security Expenses 18.21 13.6118. Subsciption and Membership Fees 9.50 2.5019. Entertainment Expenses 8.77 6.4320. Donation Expenses 27.35 5.0521. Advertisment Expenses 5.11 3.7322. Bad Debts 22.50 0.1223. Product Warranty Expenses 38.96 25.0224. Late Delivery Penalty Charges 49.50 1.0225. Water Charges 10.09 6.4626. Office Expenses 15.55 8.2327. Electricity Expenses 6.02 4.5128. Central Excise Duty 28.28 16.04





SCHEDULE : 14 ADMINISTRATIVE ,

SELLING AND OTHER EXPENSES (Contd....)

29. Sales tax 0.04 2.0730. Service tax 3.10 1.2231. Cash Transaction tax 0.56 0.0032. Loss on Sale of Assets 4.69 1.5933. Assets Written off 0.00 3.8834. Goodwill Written off 5.72 1.4335. Exchange Rate Fluctuation Difference 195.73 71.9136. General / Miscellaneous Expenses 34.17 20.26

—————— ———————————— ——————TOTAL 2674.89 1956.60

—————— ———————————— ——————

SCHEDULE : 15 INTEREST EXPENSES

A. To Corporate Entities 13.04 9.78

B. To Financial Institutions 35.10 34.47

C. To Banks

- For Cash Credit 4.51 0.13

- For Working Capital Demand Loan 126.73 57.80

- For Export Packing Credit Loan 1.19 1.62

- For Term Loan 81.06 22.05

- For Inland / Foreign Bills Discounting 18.94 20.72————— —————

232.43 102.32

D. To Directors 2.52 5.53

E. To Others 0.48 0.43—————— ———————————— ——————

TOTAL 283.57 152.53—————— ———————————— ——————

SCHEDULE :16 NOTES TO ACCOUNTS

1. Significant Accounting Policies:

i) Basis of Accounting :

The Accounts have been prepared on Mercantile Method of Accounting and recognise significant items of Income

and Expenditure on accrual basis.

ii) Revenue recognisation :

Sales of goods is recognised at the point of despatch to the customer and stated net of central excise duty, sales tax,

rebate and discount.

Export Benefits (Pass Book Credit) is accounted/recognised as and when utilized by the Company.

iii) Fixed Assets :

a) All costs relating to acquisition and installation of Fixed Assets upto the time the assets get ready for theirintended use are Capitalised.

b) Patents and Copyrights are in the form of other Intangible Assets and are stated at cost net of accumulated

amortization.

iv) Depreciation :

a) Depreciation has been provided on Fixed Assets on Straight Line Method as per the rates specified in Schedule

XIV of the Companies Act, 1956 as amended from time to time.

b) Patents and Copyrights are amortized over a period 20 years as the life of the same are 20 years from the date

of application as prescribed in Patents and Copyrights Act.

c) Goodwill is amortized over a period of 5 years.



v) Investments :

Investments are classified as Long Term & Current Investments. Long Term Investments are shown at cost or written

down value (in case of other than temporary diminution) and current investments are shown at cost or market value

whichever is lower.

vi) Inventories :

Inventories of Raw Materials and Stores are valued at cost or net realizable value whichever is lower after considering

the credit of VAT and Cenvat .

Inventories of Work In Process is valued at cost exclusive of Central Excise Duty.

Inventories of Finished Goods is valued at cost or net realizable value whichever is lower.

vii) Retirement Benefit :

a) Contribution to Provident Fund is accounted on accrual basis.

b) Company has a scheme of Retirement Benefit namely Gratuity Fund recognized by the Income Tax authorities.

This fund is administered through Trustees and the Company’s contribution thereto is charged to revenue

every year.

c) Leave encashment is charged to revenue on basis of actuarial valuation.

viii) Central Excise Duty :

Central Excise Duty payable on Finished Goods is accounted for on clearance of the Goods from the Factory.

ix) Foreign Currency Transactions :

a) Current Assets and Liabilities are translated at the exchange rate prevailing on the last day of the year.

b) Gains or Losses arising out of remittances/translations at the year-end are credited/debited to the Profit & Loss

Account for the year.

c) Foreign exchange transactions are converted into Indian Rupees at the prevailing rate on the date of the

transaction.

x) Borrowing Cost :

Other cost in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction

of qualifying Fixed Assets are capitalized upto the date when such assets are ready for its intended use and other

borrowing cost are charged to Profit & Loss Account.

xi) Product Warranty Expenses :

Product warranty expenses are determined based on past experience and estimates and are accrued in the year of

Sale.

xii) Initial Public Offer :

On December 7th 2005, consequent to an Initial Public Offer, the Company issued and allotted 4700000 Equity

Shares of Rs.10/- each at a premium of Rs.305 per share. The issued Share Capital increased by Rs.4.70 Crores and

a premium of Rs.143.35 Crores has been credited to the Share Premium Account. Out of the Initial Public Offer

proceeds of Rs.148.05 Crore a sum of Rs.42.16 Crore has been utilized during the year for part financing the objects

of the Issue and pending utilization of the balance proceeds, the same have been temporarily invested in Mutual

Funds and fixed deposit with State Bank of India.

xiii) Initial Public Offer Expenses :

Initial Public Offer Expenses are adjusted against the Share Premium Account.

2. Taxation on Income :

a) Provision for Current Tax is made after taking into consideration the provisions of the Income Tax Act, 1961.

b) Deferred Tax resulting from “timing differences” between book & taxable profit is accounted for, using the tax rates

and laws that have been enacted as on the Balance Sheet date. The deferred tax asset is recognised & carried forward

only to the extent that there is a reasonable certainty that the asset will be realised in future.

c) Provision for Fringe Benefit Tax is made in accordance with provisions relating to the levy of this tax as contain in

Chapter XII-H of the Income Tax Act, 1961.

3. In view of insufficient information from the suppliers regarding their status as SSI unit, amounts due to Small Scale

Industrial Undertakings as on 31st March, 2006 cannot be ascertained.

4. Previous year’s figures have been regrouped wherever necessary to make them comparable with Current year’s figures.



5. Contingent Liabilities not provided for in Accounts :

(Rs. in lacs)

2005-2006 2004-2005

A Outstanding Bank Guarantees 1890.53 1290.00

B Letters of Credit 73.81 NIL

C Excise & Service Tax matters in dispute 20.27 94.51

D Income tax matters in dispute 20.39 0.44

6. Directors’ Remuneration :

2005-2006 2004-2005

i) Remuneration 62.87 64.44

ii) Perquisites including Medical reimbursement 1.85 11.16

iii) Approximate monitory value of perquisiteson account of equipments etc. 3.36 3.55

Total 68.08 79.15

7. Auditors’ Remuneration :

2005-2006 2004-2005

a) Audit Fees 1.50 1.61

b) Tax Audit Fees 0.21 0.21

c) Management Consultancy Fees 0.50 0.50

d) For Taxation matters 0.68 0.28

e) For Certification and other services 6.11 0.19

8. Additional Information pursuant to the provisions of paragraphs 3, 4-C & 4-D of Part - II of Schedule VI of the CompaniesAct, 1956. (As certified by Directors) :

Quantitative information of Goods manufactured : (Rs. in lacs)

2005-2006 2004-2005

Capacity, Production etc. M.T. Rs. M.T. Rs.

a) Licensed Capacity Not Applicable Not Applicable

b) Installed Capacity (Castings)

(As certified by the Management) 18600.000 - 16800.000 -

c) Opening Stock of Finished Goods NIL NIL 76.000 49.35

d) Actual Production

Own Manufacturing 27367.908 - 26457.445 -

Job Conversion 465.016 - 350.154 -

e) Sales / Dispatch:

Own Manufacturing 27400.426 20852.74 26432.710 17244.63

Job Conversion 465.016 227.58 350.154 122.03

f) Closing Stock of Finished Goods NIL NIL NIL NIL

Quantitative information of Trading activity : (Rs. in lacs)

2005-2006 2004-2005

M.T. Rs. M.T. Rs.

a) Opening Stock NIL NIL NIL NIL

b) Purchases 16591.609 6778.52 9973.856 3839.41

c) Sales 16591.609 8258.60 9973.856 4191.27

d) Closing Stock NIL NIL NIL NIL

A. C. I. F. Value of Imports :

1) Raw Materials 1756.620 808.81 577.566 484.57

2) Stores 240.17 3.33

3) Capital Goods 145.45 NIL



(Rs. in lacs)

2005-2006 2004-2005

M.T. Rs. M.T. Rs.

B. Expenditure in Foreign Currency :

1) Travelling & other Expenses 97.22 104.01

2) Salary & Remuneration 47.39 48.97

3) Professional Fees 3.99 16.13

4) Subscription & Membership 0.97 0.91

TOTAL 149.57 170.02

C. Value of Imported and Indigenous Raw Materials consumed and percentage thereof :

Indigenous 27186.461 6220.91 26314.615 6008.98

Percentage 87.81% 91.07%

Imported 1810.880 863.63 1176.451 589.55


TOTAL 28997.341 7084.54 27491.066 6598.53

D. Value of Imported and Indigenous Stores consumed and percentage thereof :

Indigenous 2826.68 - 2086.88


Imported - 182.62 - 3.74

Percentage - 6.07% 0.18%

TOTAL - 3009.30 - 2090.62

E. Earning in Foreign Exchange :

Export of Goods - 11035.64 - 7217.84

9. Disclosure required by Clause 32 of the Listing Agreement.

Amount of loans and advances in nature of loans outstanding from subsidiaries for the year ended 31st March 2006.

Subsidiary Company Outstanding as Maximum amount Investment in

at 31st March 2006 outstanding during shares of the

Rs. in lacs the year Company

Rs. in lacs (No.of Shares)

Reclamation Welding Ltd. 40.48 40.72 1,57,000

10. Based on the guiding principles given in Accounting Standard on “Segment Reporting” (AS-17) issued by the Institute ofChartered Accountants of India, the Company’s primary business is manufacturing of High Chrome Mill Internals.

11. Related party disclosures under Accounting Standard 18 :

(i) Subsidiaries : (iii) Relatives of Key Management Personnel :

1 Paramount Centrispun Castings Pvt. Ltd. 1 Hotel Gulmarg

2 Reclamation Welding Ltd. 2 L.D.M. X-ray Clinic

3 Welcast Steels Limited 3 K.M.Shah Nursing home

4 Vega Industries (Middle East) F.Z.E., U.A.E. 4 Mrs. Giraben

5 Vega Industries (Canada) Inc. 5 Mrs. Gita B. Shah

6 Vega Industries Ltd., U.K. 6 Bhadresh K.Shah (H.U.F.)

7 Vega Industries Ltd., U.S.A.



(ii) Associates : (iv) Key Management Personnel :

1 Centricast Enterprises Pvt. Ltd. 1 Mr.Bhadresh K.Shah (Managing Director)

2 Keyur Financial Services Pvt. Ltd. 2 Mr.Jules Spede (Director)

3 Vrindavan Alloys Pvt. Ltd.

(Rs. in Lacs)

Sr. Nature of Relationship Subsidiaries Associates Relatives of Key Key

No Management Management

Personnel Personnel

1 Sales & Services 12313.21 NIL NIL NIL

2 Purchases / Conversion Charges 10214.36 NIL NIL NIL

3 Loans received NIL 225.00 15.55 NIL

4 Repayment of Loan NIL 610.24 32.16 NIL

5 Interest received 4.48 NIL NIL NIL

6 Rent paid NIL NIL 2.74 NIL

7 Hotel Charges NIL NIL 4.40 NIL

8 Interest Charges (Gross) NIL 13.46 1.99 0.54

9 Investment in Equity Shares 1157.25 NIL NIL NIL

10 Commission received 53.09 NIL NIL NIL

11 Commission paid 337.10 NIL NIL NIL

12 Salary and Perquisites NIL NIL 0.86 NIL

13 Recovery of Expenses 33.18 NIL NIL NIL

14 Directors’ Remuneration(Please refer Note No.6 above) NIL NIL NIL 68.08

GRAND TOTAL 24112.67 848.70 57.70 68.62

Balance O/S at the year end 3882.72 NIL 1.35 NIL

12. Earnings per Share (EPS) – The numerators and denominators used to calculate Basic and Diluted Earnings per Share :

2005-2006 2004-2005

Profit attributable to the Equity Shareholders (Rs.in lacs) (A) 3728.08 1532.92

Basic / Weighted average number of Equity Shares

outstanding during the year - (B) 14570079 12943279

Nominal value of Equity Shares – (Rs.) 10 10

Basic/Diluted Earnings per Share (Rs.) (A)/(B) 25.59 11.84



13. Additional Information pursuant to the provisions of Part-IV of Schedule VI of the Companies Act,1956 :

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE :

I. Registration Details :

Registration No.: 015182 State Code : 04

Balance Sheet Date : 31-03-2006

II. Capital raised during the year (Amount in Rs. lacs) :

Public Issue: 470 Right Issue : NIL

Bonus Issue: NIL Private Placement: NIL

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. lacs):

Total Liabilities 25901.09 Total Assets 25901.09

Source of Funds Application of Funds

Paid up Capital 1777.64 Net Fixed Assets 2472.40

Reserve & Surplus 22610.02 Investments 11449.14

Secured Loans 1373.61 Net Current Assets 11979.55

Unsecured Loans NIL

Deferred Tax Liabilities (Net) 139.82

IV. Performance of the Company (Amount in Rs. lacs):

Turnover 30175.35 Total Expenditure 25300.98

Profit Before Tax 5649.30 Profit After Tax 3728.08

Earnings per Share(In Rupees) 25.59 Dividend Rate 25%

V. Generic Names of the Three Principal Products/Services of the Company (As per Monetary Terms):

Item Code No. (ITC Code) (1) 73269013

(2) 7626990990

Product Description (1) Grinding Media Balls & Cylpebs

(2) Other Cast Articles of Iron or Steel.

Signature to Schedule 1 to 16











CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 31st MARCH 2006

AMOUNT Rs.in Lacs

A. CASH FLOW FROM OPERATING ACTIVITIES:

NET PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS 5649.30

ADD / (LESS) :

LEAVE ENCASHMENT 18.71

DEPRECIATION (NET) 191.72

SURPLUS ON SALE OF ASSETS (NET) -5.28

LOSS ON SALE OF ASSETS 4.68

INTEREST AND FINANCE CHARGES 283.57

INTEREST AND OTHER INCOME -183.68

GOODWILL AND ASSETS WRITTEN OFF 5.72——————

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 5964.74

(INCREASE) / DECREASE IN CURRENT ASSETS

SUNDRY DEBTORS -2674.65

LOANS AND ADVANCES -898.26

INVENTORIES 186.97

INCREASE / (DECREASE) IN CURRENT LIABILITIES 1046.03——————

CASH OPERATING PROFIT BEFORE INCOME TAX PAID 3624.83

INCOME TAX / FRINGE BENEFITS TAX PAID -1812.19——————

NET CASH INFLOW / (OUTFLOW ) FROM OPERATING ACTIVITIES 1812.64——————

——————

B. CASH FLOW FROM INVESTING ACTIVITIES:

INTEREST AND OTHER INCOME RECEIVED 183.68

TOTAL INFLOW OF CASH FROM INVESTING ACTIVITIES 183.68

ISSUE OF INITIAL PUBLIC OFFER 470.00

PREMIUM ON ISSUE OF INITIAL PUBLIC OFFER 13579.08

PURCHASE OF FIXED ASSETS -1042.40

PROJECT PRE-OPERATIVE EXPENDITURE -28.80

PURCHASE OF INVESTMENT / MUTUAL FUNDS -10825.96——————

NET CASH INFLOW / (OUTFLOW ) FROM INVESTING ACTIVITIES 2335.60——————

——————

C. CASH FLOW FROM FINANCING ACTIVITIES:

RECEIPT FROM BORROWINGS (NET) -2586.05

INTEREST PAID ON BORROWINGS -283.57

PREFERENCE AND EQUITY DIVIDEND PAID -541.27——————

NET CASH INFLOW / (OUTFLOW ) FROM FINANCING ACTIVITIES -3410.89——————

——————

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 737.35

CASH AND CASH EQUIVALENTS AS AT 1st APRIL 2005 465.31

CASH AND CASH EQUIVALENTS AS AT 31st MARCH 2006 1202.66












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– CONSOLIDATEDCONSOLIDATEDCONSOLIDATEDCONSOLIDATEDCONSOLIDATEDAIA ENGINEERING LIMITEDAIA ENGINEERING LIMITEDAIA ENGINEERING LIMITEDAIA ENGINEERING LIMITEDAIA ENGINEERING LIMITED

AUDITORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

TO

THE BOARD OF DIRECTORS OF


1. We have audited the attached consolidated balance sheet of AIA Engineering Limited (“the Company”), and its subsidiaries

(collectively referred as ‘the AIA Group’) as at March 31, 2006 and also the consolidated profit and loss account and the

consolidated cash flow statement for the year ended on that date annexed thereto. These financial statements are the

responsibility of the Management of the Company. Our responsibility is to express an opinion on these financial

statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require

that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of

material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures

in the financial statements. An audit also includes assessing the accounting principles used and significant estimates

made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit

provides a reasonable basis for our opinion.

3. We did not audit the financial statements of subsidiaries, whose financial statements reflect total assets of Rs.8573.24

lacs as at March 31, 2006 and total revenue of Rs.35355.35 lacs for the year then ended. These financial statements and

other financial information have been audited by other auditors whose reports have been furnished to us, and our

opinion is based solely on the report of other auditors.

4. We report that the consolidated financial statements have been prepared by the Company’s management in accordance

with the requirements of the Accounting Standard (AS) 21 - Consolidated Financial Statements issued by the Institute

of Chartered Accountants of India.

5. On the basis of information and explanations given to us and on the consideration of the separate Audit Reports on

individual Audited financial statements of AIA Engineering Limited and its subsidiaries, in our opinion the consolidated

financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the consolidated balance sheet, of the state of affairs of the AIA Group as at March 31, 2006

(ii) in the case of consolidated profit and loss account, of the profit for the year ended on that date; and

(iii) in the case of consolidated cash flow statement, of the cash flows for the year ended on that date.

For TALATI & TALATI


(UMESH TALATI)





CONSOLIDATED BALANCE SHEET AS AT 31st MARCH, 2006

As at As at

31st March, 2006 31st March,2005

Schedule Rs.In Lacs Rs.In Lacs Rs.In Lacs

SOURCES OF FUNDS

1. SHAREHOLDERS’ FUNDS :

(a) Share Capital 1 1777.64 1307.64

(b) Reserves and Surplus 2 25631.37 7447.65

27409.01 8755.29

2. MINORITY INTEREST 701.89 318.17

3. LOAN FUNDS :

(a) Secured Loans 3 4038.76 4279.30

(b) Unsecured Loans 4 815.28 1272.72

4854.04 5552.02

4. DEFERRED TAX LIABILITIES (NET) 5 198.67 209.33

T O T A L : 33163.61 14834.81

APPLICATION OF FUNDS

1. FIXED ASSETS :

(a) Gross Block 6 9397.25 5317.40

(b) Less : Depreciation 4360.88 2524.75

Net Block 5036.37 2792.65

(c) Capital Work In Progress 675.78 195.74

5712.15 2988.39

2. INVESTMENTS 7 9668.80 139.06

3. CURRENT ASSETS, LOANS AND

ADVANCES : 8 28902.19 15713.32

Less : CURRENT LIABILITIES AND

PROVISIONS : 9 11121.33 4008.47

NET CURRENT ASSETS 17780.86 11704.85

4. MISCELLANEOUS EXPENSES 1.80 2.51

( To the extent not written off )

T O T A L : 33163.61 14834.81

Notes forming part of the Accounts 18











CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE FINANCIAL

YEAR ENDED 31st MARCH 2006

Year ended Year ended


Schedule Rs.In Lacs Rs.In Lacs Rs.In Lacs

INCOME :

Sales 1 0 40696.37 29367.68

Other Income 1 1 1039.95 797.81

Increase / Decrease (+/-) in Stock 1 2 1314.01 60.16

T O T A L : 43050.33 30225.65

EXPENDITURE :

Manufacturing Expenses 1 3 27243.66 20623.26

Employees emoluments 1 4 2258.91 1574.68

Administrative and Other Expenses 1 5 1438.60 1435.42

Selling & Distribution Expenses 1 6 2918.01 1905.22

Interest Expenses 1 7 527.83 278.59

Depreciation 6 709.22 334.03

T O T A L : 35096.23 26151.20

PROFIT BEFORE TAXES 7954.10 4074.45

PROVISION FOR TAXES

a) Current Tax 2527.55 1365.45

b) Deferred Tax -46.57 19.63

c) Fringe Benefits Tax 40.15 0.00

TOTAL TAX (a+b+c) 2521.13 1385.08

PROFIT AFTER TAXES 5432.97 2689.37

LESS : MINORITY INTEREST 197.19 25.50

PROFIT AFTER MINORITY INTEREST 5235.78 2663.87

Short (Excess) Provision for earlier years 0.56 -29.36

Surplus Brought forward from Previous year 5085.55 4167.63

PROFIT AVAILABLE FOR APPROPRIATIONS : 10517.96 6886.36

Appropriations :



Corporate Tax on Dividend on Preference Shares 0.00 62.41

Corporate Tax on Dividend on Equity Shares 64.12 4.16


Transferred to General Reserve 383.81 0.00

905.10 2454.64

Balance carried to Balance Sheet 9612.86 4431.72

Basic and Diluted Earning Per Share(Rs.) 35.94 16.66

Notes forming part of the Accounts 1 8











SCHEDULES 1 TO 9 FORMING PART OF THE BALANCE SHEET AS AT 31st MARCH 2006

As at As at


Rs.In Lacs Rs.In Lacs Rs.In Lacs

SCHEDULE : 1 SHARE CAPITALAUTHORIZED :26000000 Equity Shares of Rs.10/- each (Previous Year 26000000 Shares) 2600.00 2600.002000000 Redeemable Cumulative Preference Shares of Rs.100/- each(Previous Year 2000000 Shares) 2000.00 2000.00

T O T A L : 4600.00 4600.00

ISSUED, SUBSCRIBED & PAID UP :17776380 Equity Shares of Rs.10/- each fully paid 1777.64 1307.64up ( Previous year 13076380 Shares )

T O T A L : 1777.64 1307.64

SCHEDULE : 2 RESERVES AND SURPLUSA. Capital Redemption Reserve 1922.34 1913.38


1922.34 1913.38B. Share Premium Account 850.58 1896.69

Add : Premium on Issue of Shares 14335.00 0.00Less : Capitalized for issue of Bonus Shares 0.00 1046.11Less : Initial Public Offer Expenses 755.92 0.00

14429.66 850.58C. General Reserve 492.10 500.75


870.57 500.75D. Profit and Loss Account 9612.86

Less : Adjustment on account of Consolidation 1197.55 8415.31 4182.94

E. Exchange rate difference -6.51 0.00

T O T A L : 25631.37 7447.65

SCHEDULE : 3 SECURED LOANSA. TERM LOAN :

From Financial Institution 10.27 1000.00 From Banks 505.36 823.23

515.63 1823.23B. WORKING CAPITAL LOAN :

From Financial Institution 0.00 0.00From Banks 3523.13 2456.07

3523.13 2456.07

T O T A L : 4038.76 4279.30

SCHEDULE : 4 UNSECURED LOANSA. From Directors and Shareholders 696.80 246.64B. Inter Corporate Deposits 118.48 1026.08

T O T A L : 815.28 1272.72

SCHEDULE : 5 DEFERRED TAX LIABILITIES / DEFERRED TAX ASSETS (NET)

A. DEFERRED TAX LIABILITIES : Arising on account of timing difference 232.68 240.14

B. DEFERRED TAX ASSETS : Arising on account of timing difference 34.01 30.81

T O T A L : ( A - B ) 198.67 209.33



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As at As at


Rs.In Lacs Rs.In Lacs

SCHEDULE : 7 INVESTMENTS ( AT COST )

LONG TERM NON TRADE INVESTMENTS: (QUOTED)


456881 Equity Shares of Welcast Steels Ltd. of

Rs.10/- each fully paid up.


B. INVESTMENT IN OTHER COMPANIES :

25 Equity Shares of Koramangla Properties Pvt.

Ltd.of Rs.100/-each fully paid up

( Previous year 25 Equity Shares ) 0.03 0.03

C. INVESTMENT IN GOVERNMENT SECURITIES :

National Savings Certificates 0.05 0.00

CURRENT INVESTMENT IN MUTUAL FUND UNITS : (UNQUOTED) 9668.72 0.00

T O T A L : 9668.80 139.06

SCHEDULE : 8 CURRENT ASSETS , LOANS AND ADVANCES

CURRENT ASSETS :

A. INVENTORIES

(As taken, valued & certified by the Directors)

Raw Materials 1316.83 1193.84

Stores & Spares 486.12 177.10

Work-In Process 1856.65 1570.42

Finished Goods 2323.77 1254.13

5983.37 4195.49

B. SUNDRY DEBTORS

(Unsecured, Considered Good)

a) Debts outstanding for a period exceeding six months 3048.49 829.18

b) Others 9251.53 8579.38

12300.02 9408.56

C. CASH AND BANK BALANCES

a) Cash on hand 10.87 5.61

b) Balance with Scheduled Banks

i) In Fixed Deposit 1249.24 419.75

ii) In Current Accounts 587.08 808.57

1847.19 1233.93

D. LOANS & ADVANCES :

(Unsecured , Considered Good)

a) Advances recoverable in cash or in kind or for

value to be received 1399.72 363.93

b) Inter Corporate Deposits 3.48 9.30

c) Advance Income tax & tax deducted at source 5869.46 55.70

d) Sundry Deposits and Advances 572.36 227.51

e) Loans and Advances to Staff 64.07 37.66

f) Balance with Central Excise Department 862.83 181.24

g) Exchange rate difference due to consolidation -0.31 0.00

8771.61 875.34

T O T A L : 28902.19 15713.32



As at As at



SCHEDULE : 9 CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIES :a) Sundry Creditors 2505.89 2756.94b) Other Liabilities 1220.05 286.38c) Statutory Liabilities 257.59 83.36

d) Advances from Customers 248.38 177.15

4231.91 3303.83

PROVISIONS :

a) Provision for Expenses 191.05 64.77

b) Provision for Taxation 6097.21 59.14

c) Dividend on Preference Shares 0.00 445.00d) Proposed Dividend on Equity Shares 457.17 29.69

e) Corporate Tax on Dividend on Preference Shares 0.00 62.41f) Corporate Tax on Dividend on Equity Shares 64.12 4.16

g) Provision for Leave Encashment Payable 79.87 39.47

6889.42 704.64

T O T A L : 11121.33 4008.47

SCHEDULES 10 TO 17 FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE

FINANCIAL YEAR ENDED 31st MARCH 2006




SCHEDULE : 10 SALES

a) Sales In India 21202.96 16748.73

b) Sales Outside India 19493.41 12618.95

T O T A L : 40696.37 29367.68

SCHEDULE : 11 OTHER INCOME

a) Interest ( Gross ) 27.00 24.18

b) Lease Rent (Gross) 0.00 2.07

c) Miscellaneous Receipts 441.49 399.28

d) Dividend received 161.05 13.49

e) Profit on Sale of Assets 31.30 7.10

f) Premium on Sale of Import Licenses 369.24 318.02

g) Income tax Refund 0.90 2.23

h) Sales tax Refund 4.37 26.72

i) Sundry Balances written back 0.00 4.72

j) Profit on Sale of Mutual Fund Units 4.60 0.00

T O T A L : 1039.95 797.81

SCHEDULE : 12 INCREASE / DECREASE (+/-) IN STOCK

A. Opening : Work In Process 1525.27 1144.93

: Finished Goods 1341.14 1430.86

T O T A L 2866.41 2575.79

B. Closing Stock : Work In Process 1856.65 1449.54

: Finished Goods 2323.77 1186.41

4180.42 2635.95

T O T A L 1314.01 60.16






SCHEDULE : 13 MANUFACTURING EXPENSES

A. RAW MATERIALS CONSUMED


Add : Purchases 14353.30 7584.77

Sub Total 16125.02 9013.12

Less : Closing Stock 1316.83 1190.39

14808.19 7822.73

B. STORES CONSUMED


Add : Purchases 4348.00 2466.48

Sub Total 4693.58 2604.22

Less : Closing Stock 486.12 177.10

4207.46 2427.12

C. OPERATIONAL AND OTHER EXPENSES

a) Power and Fuel 4275.69 1831.01

b) Labour Charges ( Net ) 707.47 511.63

c) Job Conversion Charges 248.58 751.13

d) Freight Inward,Octroi and Coolies,Cartages 568.48 385.07

e) Other manufacturing Expense 1438.45 40.18

f) Repairs and Maintenance

- To Plant and Machineries 613.83 138.17

- To Buildings 63.29 24.24

- To Other Assets 70.68 32.47

747.80 194.88

7986.47 3713.90

D. TRADING PURCHASES 241.54 6659.51

T O T A L : 27243.66 20623.26

SCHEDULE : 14 EMPLOYEES EMOLUMENTS

a) Salaries, Wages and Bonus 1840.05 1301.10

b) Contribution to Provident Fund /ESIC/ Gratuity 173.71 115.92

c) Staff Welfare Expenses 245.15 157.66

T O T A L : 2258.91 1574.68


SELLING AND OTHER EXPENSES

1. Insurance Premium Expenses 73.01 43.63

2. Rent, Rates and Taxes 73.68 72.97

3. Service Charges 6.28 8.01

4. Directors’ Remuneration and Perquisites 142.76 154.29

5. Traveling Expenses -Others 65.92 0.28

6. Statutory Audit Fees 26.35 17.10

7. Legal and Professional Consultancy Fees 328.17 299.34

8. Bank Commission Charges 163.19 114.94

9. Printing and Stationery Expenses 48.18 25.51

10. Postage,Telephones,Courier,Internet & E-mail 119.95 134.91

11. Computer Expenses 13.82 13.49







SELLING AND OTHER EXPENSES (Contd...)

12. Vehicle Repairs and Maintenance 70.86 63.6913. Conveyance Expenses 17.98 62.6514. Security Expenses 29.78 20.5115. Subscription and Membership Fees 11.46 7.0516. License Fees 0.98 0.0017. Donation Expenses 27.66 5.0518. Advertisement Expenses 12.51 9.2619. Bad Debts 47.39 1.4320. Recruitment and Training Expenses 0.14 0.0021. Entertainment Expenses 16.64 6.4322. Water Charges 10.09 1.6123. Books and Periodicals Expenses 0.18 0.1124. Electricity Expenses 6.02 0.0025. Tender Fees 0.64 0.7626. Sales tax / Wealth Tax 1.64 119.4627. Service tax / Cash transaction Tax 3.67 0.0028. Loss on Sale of Assets 4.69 12.1829. Goodwill Written off 5.72 1.4330. Exchange Rate Fluctuation Difference -14.44 80.4131. General / Miscellaneous Expenses 123.68 158.92

T O T A L : 1438.60 1435.42

SCHEDULE : 16 SELLING & DISTRIBUTION EXPENSESa) Freight Outward and Coolies, Cartages 1233.85 855.70b) Commission Expenses 673.75 402.87c) Traveling Expenses

- For Directors 68.19 57.33- For Staff and Others 371.84 445.02

440.03 502.35d) Sales Promotion Expenses 113.06 41.21e) Discount allowed 12.98 19.75f) Other Exps 279.87 41.26g) Warranty and LDP Expenses 136.19 26.04h) Central Excise Duty ( Net ) 28.28 16.04

T O T A L : 2918.01 1905.22

SCHEDULE : 17 INTEREST EXPENSESa) To Corporate Entities 13.04 26.15b) To Financial Institutions 35.10 37.53c) To Banks

- For Cash Credit 27.78 23.42- For Working Capital Demand Loan 156.52 57.80- For Export Packing Credit Loan 38.03 1.62- For Term Loan 132.18 81.25- For Inland / Foreign Bills Discounting 63.14 23.34

`

417.65 187.43d) To Directors 4.54 5.53e) To Others 57.50 21.95

T O T A L : 527.83 278.59



SCHEDULE 18

NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS

A) SIGNIFICANT ACCOUNTING POLICIES ADOPTED BY THE COMPANY IN PREPARATION AND PRESENTATION OF

CONSOLIDATED ACCOUNTS:

1. Basis of Accounting :

The financial statements are prepared in accordance with the requirement of the Companies Act, 1956, including the

mandatory Accounting Standards issued by the Institute of Chartered Accountants of India, as referred to in Section 211

(3C) of the Companies Act, 1956, under historical cost convention on an accrual basis.

2. Principles of consolidation :

a) The consolidated financial statements have been prepared in accordance with Accounting Standard 21 (AS 21) on

“Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India and on the basis of

the separate audited financial statements of AIA Engineering Limited (AIAEL) and its subsidiaries.

b) The consolidated financial statements have been prepared on the following basis.

(i) The financial statements of the Subsidiaries are combined on a line-by-line basis by adding together the

book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group

balances and intra-group transactions resulting in unrealized profits or losses in accordance with Accounting

Standard (AS) 21.

(ii) In case of foreign subsidiaries, being non-integral foreign operations, revenue items are consolidated at the

average rate prevailing during the year. All assets and liabilities are converted at rates prevailing at the year

end. Any exchange difference arising on consolidation is recognised in “Exchange Fluctuation Reserve”.

(iii) The difference between the costs of investment in the subsidiaries over the net assets at the time of

acquisition of the investment in the subsidiaries is recognised in the financial statements as Goodwill or

Capital Reserve as the case may be.

(iv) The consolidated financial statements are prepared using uniform accounting policies for like transactions

and other events in similar circumstances and necessary adjustments required for deviations if any have

been made in the consolidated financial statements.

The list of subsidiary companies included in consolidation with AIA Engineering Limited and AIA Engineering

Limited’s shareholding therein is as under :

Name of Country of Shareholding as Shareholding as

Subsidiary Incorporation at 31-03-2006 at 31-03-2005

Paramount Centrispun India 72.47% 72.47%

Castings Pvt. Ltd.

Reclamation Welding Ltd. India 98.13% 98.13%

Welcast Steels Limited India 71.59% 21.15%

Vega Industries U.A.E. 100% 100%

(Middle East) F.Z.E.

Vega Industries (Canada) Inc. Canada 100% 100%

Vega Industries Limited, U.K. U.K. 100% by Vega Industries 100% by Vega Industries

(Middle East) F.Z.E. (Middle East) F.Z.E.

Vega Industries Limited, U.S.A. 100% by Vega Industries 100% by Vega Industries

U.S.A. Limited, U.K Limited, U.K

3. Inventories :

Inventories of Raw Materials and Stores are valued at cost or net realizable value whichever is lower after considering the

credit of VAT and Cenvat .

Inventories of Work In Process are valued at cost exclusive of Central Excise Duty.

Inventories of Finished Goods are valued at cost or net realizable value whichever is lower.

4. Depreciation :

Depreciation has been provided on Fixed Assets on Straight Line Method as per the rates specified in Schedule XIV of

the Companies Act, 1956 as amended from time to time except for the following subsidiaries :



Name of Subsidiary Basis of Depreciation

1 Welcast Steels Limited In case of assets acquired after 31-3-1996, Written Down Value Methodas per the rates specified in Schedule XIV to the Companies Act, 1956.

2 Vega Industries (Middle East) F.Z.E. Equal annual installments over estimated useful lives of the assets.

3 Vega Industries Limited, U.S.A. Straight-line method over the estimated useful lives of the assets.

4 Vega Industries (Canada) Inc. Accelerated method over the estimated useful lives of the assets.

5 Vega Industries Limited, U.K. Written down method over the estimated useful lives of the assets.

5. Revenue recognisation :

Sales of goods is recognised at the point of despatch to the customer and stated net of central excise duty, sales tax,

rebate and discount.

Export benefits are accounted for on receipt basis except for Welcast Steels Limited where they are recognised on accrual basis.

6. Fixed Assets :

a) All costs relating to acquisition and installation of Fixed Assets up to the time the assets get ready for their intended

use are capitalised.

b) Patents and Copyrights are in the form of other Intangible Assets and are stated at cost net of accumulated

amortization.

7. Foreign Currency Transactions :

a) Current Assets and Liabilities are translated at the exchange rate prevailing on the last day of the year.

b) Gains or Losses arising out of remittances/translations at the year-end are credited/debited to the Profit & Loss

Account for the year.

c) Foreign exchange transactions are converted into Indian Rupees at the prevailing rate on the date of the transaction.

8. Investments :

a) Investments are classified as Long Term & Current Investments. Long Term Investments are shown at cost or

written down value (in case of other than temporary diminution) and current investments are shown at cost or

market value whichever is lower.

b) Investment in shares of foreign subsidiary company is expressed in Indian Currency at the rates of exchange

prevailing at the time when the investment was made.

9. Retirement Benefit :

a) Contribution to Provident Fund is accounted on accrual basis.

b) Company has a scheme of Retirement Benefit namely Gratuity Fund recognized by the Income Tax authorities. This

fund is administered through Trustees/Life Insurance Corporation of India and the Company’s contribution thereto

is charged to revenue every year.

c) Leave encashment is charged to revenue on basis of actuarial valuation.

10. Borrowing Cost :

Costs in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction of

qualifying Fixed Assets are capitalized up to the date when such assets are ready for its intended use and other

borrowing costs are charged to Profit & Loss Account.

11. Segment Accounting :

Based on the guiding principles given in Accounting Standard on “Segment Reporting” (AS-17) issued by the Institute

of Chartered Accountants of India, the Company’s primary business is manufacturing of High Chrome Mill Internals.

12. Related party Transactions :

Disclosure of transactions with Related Parties, as required by Accounting Standard 18 “Related Party Disclosures” has

been set out in a separate statement annexed to this Schedule.

13. Taxation on Income :

a) Provision for Current Tax is made after taking into consideration the provisions of the applicable Acts.

b) Deferred Tax resulting from “timing differences” between book & taxable profit is accounted for, using the tax rates

and laws that have been enacted as on the Balance Sheet date. The deferred tax asset is recognised & carried

forward only to the extent that there is a reasonable certainty that the asset will be realised in future.

c) Provision for Fringe Benefit Tax is made in accordance with provisions relating to the levy of this tax as contained

in Chapter XII-H of the Income Tax Act, 1961.



14. Initial Public Offer :

On December 7th 2005, consequent to an Initial Public Offer, the Company issued and allotted 47,00,000 Equity Shares

of Rs.10/- each at a premium of Rs.305 per share. The issued Share Capital increased by Rs.4.70 Crores and a premium

of Rs.143.35 Crores has been credited to the Share Premium Account. Out of the Initial Public Offer proceeds of

Rs.148.05 Crore a sum of Rs.42.16 Crore has been utilized during the year for part financing the objects of the Issue and

pending utilization of the balance proceeds, the same have been temporarily invested in Mutual Funds and fixed deposit

with State Bank of India.

15. Initial Public Offer Expenses :

Initial Public Offer Expenses are adjusted against the Share Premium Account.

B) NOTES ON ACCOUNTS :

1. In case of Vega Industries (Middle East) F.Z.E., U.A.E., Vega Industries (Canada) Inc. , Vega Industries Limited, U.K. and

Vega Industries Limited, U.S.A., the summarized revenue and expenses transactions at the year end reflected in Profit &

Loss Account have been translated into Indian Rupees at an average of monthly exchange rate.

The assets and liabilities in the Balance Sheet have been translated into Indian Rupees at the closing exchange rate at the

year end. The resultant translation exchange, gain/ loss has been disclosed as Exchange Reserves in Reserves and

Surplus.

2. Contingent Liabilities not provided for in Accounts :

(Rs. in lacs)

2005-2006 2004-2005

a) Outstanding Bank Guarantees 8048.11 8017.41

b) Letters of Credit 128.36 118.70

c) Excise & Service Tax matters in dispute 49.96 124.20

d) Income tax matters in dispute 134.11 17.24

e) Estimated amount of contracts to be executed on capital account 5.00 13.00

f) ESI 1.16 1.16

g) Sales Tax 81.39 -

3. Related party disclosures under Accounting Standard 18 :

(i) Relatives of Key Management Personnel : (ii) Associates :

1. Hotel Gulmarg 1. Centricast Enterprises Pvt. Ltd.

2. L.D.M. X-ray Clinic 2. Keyur Financial Services Pvt. Ltd.

3. K.M.Shah Nursing home 3. Vrindavan Alloys Pvt. Ltd.

4. Mrs. Giraben K. Shah (iii) Key Management Personnel :

5. Mrs. Gita B. Shah 1. Mr. Bhadresh K.Shah

6. Bhadresh K.Shah (H.U.F.) 2. Mr. Jules Spede

7. Mrs. Shantaben F. Shah 3. Mr. Vinod Narain

8. Mrs. Meenadevi O. Shah 4. Mr. Milind Panday

9. Mrs. Sharda B. Shah 5. Mr. Pradip R. Shah

10. Mrs. Jyotsna M. Panday 6. Mr. Omprakash F. Shah

11. Mr. Rajeev Panday 7. Mr. Balkrishna F. Shah



(Rs. in lacs)

Sr. Nature of Relationship Associates Relatives of Key

No Key Management Management

Personnel Personnel

1. Loans received 225.00 52.55

2. Repayment of Loan 610.24 104.16

3. Rent paid 2.74

4. Hotel Charges 4.40

5. Interest Charges (Gross) 13.46 48.95 0.54

6. Salary and Perquisites 4.52

7. Professional Charges 3.61

8. Directors’ Remuneration 146.62

Balance Outstanding at the year end NIL 59.93 15.19

4. Earnings per Share (EPS) :

The numerators and denominators used to calculate Basic and Diluted Earnings per Share:

2005-2006 2004-2005

Profit attributable to the Equity Shareholders (Rs. in lacs) (A) 5235.78 2156.46

Basic / Weighted average number of Equity Shares

outstanding during the year (Nos.) - (B) 14570079 12943279

Nominal value of Equity Shares – (Rs.) 10 10

Basic/Diluted Earnings per Share (Rs.) (A)/(B) 35.94 16.66

5. Welcast Steels Limited became the Subsidiary of the Company with effect from 28th September 2005, in view of this,

previous year’s figures do not include the figures of Welcast Steels Limited and to that extent they may not be regarded

as strictly comparable.

6. Previous year’s figures have been regrouped wherever necessary to make them comparable with Current year’s figures.

Signature to Schedule 1 to 18











CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 31st MARCH 2006

Amount

Rs. In Lacs

A. CASH FLOW FROM OPERATING ACTIVITIES:

NET PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS 7954.10

ADD / (LESS) :

LEAVE ENCASHMENT 40.40

DEPRECIATION (NET) 709.22

SURPLUS ON SALE OF ASSETS (NET) -31.30

LOSS ON SALE OF ASSETS 4.69

INTEREST AND FINANCE CHARGES 527.83

INTEREST AND OTHER INCOME -188.05

GOODWILL AND ASSETS WRITTEN OFF 5.72

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 9022.61

(INCREASE) / DECREASE IN CURRENT ASSETS

SUNDRY DEBTORS -2891.46

LOANS AND ADVANCES -2082.82

INVENTORIES -1787.88

INCREASE / (DECREASE) IN CURRENT LIABILITIES 6663.75

CASH OPERATING PROFIT BEFORE INCOME TAX PAID 8924.20

INCOME TAX / FRINGE BENEFITS TAX PAID -5813.76

NET CASH INFLOW / (OUTFLOW ) FROM OPERATING ACTIVITIES 3110.44

B. CASH FLOW FROM INVESTING ACTIVITIES:

INTEREST AND OTHER INCOME RECEIVED 188.05

TOTAL INFLOW OF CASH FROM INVESTING ACTIVITIES 188.05

PURCHASE OF FIXED ASSETS -4141.19

PURCHASE OF INVESTMENT / MUTUAL FUNDS -10826.05

NET CASH INFLOW / (OUTFLOW ) FROM INVESTING ACTIVITIES -14779.19

C. CASH FLOW FROM FINANCING ACTIVITIES:

REPAYMENT OF BORROWINGS (NET) -697.98

INTEREST PAID ON BORROWINGS -527.83

PREFERENCE AND EQUITY DIVIDEND PAID -541.26

ISSUE OF INITIAL PUBLIC OFFER 470.00

PREMIUM ON ISSUE OF INITIAL PUBLIC OFFER 14335.00

INITIAL PUBLIC OFFER EXPENSES -755.92

NET CASH INFLOW / (OUTFLOW ) FROM FINANCING ACTIVITIES 12282.01


CASH AND CASH EQUIVALENTS AS AT 1st APRIL 2005 1233.93

CASH AND CASH EQUIVALENTS AS AT 31st MARCH 2006 1847.19










85�85�



Final Proof Dated : 29th August, 2006

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(Rs.

in la

cs)



Statements made in this Annual Report describing the Company ’s objectives,

projections, estimate, expectations may be ‘‘Forward-looking statements’’ within the

meaning of applicable securities laws & regulations. Actual results could differ from

those expressed or implied. Important factors that could make a difference to the

Company’s operations include economic conditions affecting demand supply and price

conditions in the domestic & overseas markets in which the company operates, changes

in the government regulations, tax laws & other statutes & other incidental factors.

CAUTIONARY STATEMENT

Concept, Research and Content by

LOTUS KNOWLWEALTH PVT. LTD.e-mail : [email protected]




Regd. Office : 115, G.V.M.M. Estate, Odhav Road, Odhav, Ahmedabad – 382 410

ATTENDANCE SLIP

Sixteenth Annual General Meeting to be held on Wednesday the 27th September 2006 at 10.00 A.M. at H. K.

Parekh Convention Centre, Ahmedabad Management Association, ATIRA Campus, Dr. Vikram Sarabhai Marg,

Ahmedabad – 380 015

Folio No.: …………………… DPID No…………………… Client ID No…………………

Name of Shareholder (s) ……………………………………………………………………………………………

I /We certify that I am / We are Member (s) / Proxy of the Member (s) of the Company holding …………….. Shares.

………………….……………

Signature of Member (s) / Proxy

• A member or his duly appointed Proxy wishing to attend the meeting must complete this Attendance Slip and

hand it over at the entrance.

• Name of the Proxy in Block Letters. ………………….……………………………….……………………

(in case a Proxy attends the meeting)

……………………………………………………………………………………………………………………………………………


Regd. Office : 115, G.V.M.M. Estate, Odhav Road, Odhav, Ahmedabad – 382 410

PROXY FORM

I /We …………………………………………………………….. of …………………………… being a Member

/Members of AIA Engineering Limited hereby appoint …………………………………….. of

………………………… or failing him ………………………………………… of ……………………………..

as my proxy to attend and vote for me / us and my / our behalf at the Sixteenth Annual General Meeting of the

Company to be held on Wednesday the 27th September 2006 at 10.00 A.M. at H. K. Parekh Convention Centre,

Ahmedabad Management Association, ATIRA Campus, Dr. Vikram Sarabhai Marg, Ahmedabad – 380 015 and at

any adjournment thereof.

In witness where of

I /We have signed on this ………....…………… day of …………………2006.

Folio No.:…………………………… DPID No. ……………………………….

Client ID No. :………………………. No. of Shares ………………………….

A Member intending to appoint a Proxy should complete the Proxy Form and deposit it at the Company’s Registered

Office, at least 48 hours before the commencement of the meeting.

AFFIXREVENUE

STAMP


DE

SIG

NE

D &

PR

INT

ED

BY

: C

RY

ST

AL

FO

RM

S L

TD

. (02

2) 2

3823

151/

52, (

079)

264

2418

8-89

Registered Office :

Tel. : Fax :

Email : Website :

115, GVMM Estate, Odhav Road, Ahmedabad - 382 410.

+91 79 22901078 +91 79 22901077

[email protected] www.aiaengineering.com

If undelivered, please return to :

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