We will always remember our beloved Chairman as one of the most energetic,

knowledgeable and compassionate human being. He had a magnetic personality and was

a noble soul. A true devotee of Sri Satya Sai Baba, he was active & supportive in

social/religious activities. In true terms, he was a Karmayogi and lived a simple life.

During his long association, our Company benefitted greatly by his acumen and wisdom.

Under his able guidance, the Company recorded many notable achievements. We are

confident that his vision will continue to guide the Company in the coming years.

May his soul rest in peace and pray God to give strength to his family.

Late Sh. K. S. Bhatnagar, Retired IAAS

(20th Nov 1925 - 17th May 2008)

1

BOARD OF DIRECTORS:SH. V K MEHTA Chairman & Managing DirectorSH. K K TANEJA DirectorSH. SHITAL K JAIN DirectorSH. CHANDRA SHEKHAR AGGARWAL Additional DirectorSH. ANUJ MEHTA Executive DirectorSMT. POOJA KAPUR Director

EX-CHAIRMAN:LATE SH. K S BHATNAGAR Chairman (upto 17.5.2008)

COMPANY SECRETARY:SH. PRITAM PAUL GM-Commercial & Company Secretary

AUDITORS:M/s. B. Aggarwal & Co.,Chartered Accountants,16A/17, Ajmal Khan Road,Karol Bagh, New Delhi – 110 005

BANKERS:IndusInd Bank Ltd. Development Credit Bank Ltd.DBS Bank Ltd.Canara BankAxis Bank Ltd.

REGISTERED OFFICE:2E/14, (1st Floor)Jhandewalan Extn.,New Delhi – 110 055Telefax: (91-11) 23683548

Works & Admn. Office:Plot No.1A, Sector 27D,12/4, Mathura Road,Faridabad – 121 003.Tel: (91-129) 2275246 (6 lines)Fax: (91-129) 2276039E-mail: cal@nda.vsnl.net.in

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Dear Shareholders,Your Directors have pleasure in presenting the 37th Annual Report of the Company along with the Audited Accounts for the year ended 31st March 2008.

FINANCIAL RESULTS (Rs. in Lakhs)

2007-08 2006-07Income from Operations 23798.03 25562.02Excise Duty 2099.90 2055.19Net Sales (1-2) 21698.13 23506.83Other Income (including increase/ Decrease in value in goods in process)

488.26 509.13

Total Revenue (3+4) 22186.39 24015.96Raw Materials and Components 13495.93 14337.80Employees Costs 1885.69 1580.34Other Expenses (excl. Dep. & Interest)

3457.90 4043.12

Total Expenses (excl. Dep. & Interest)

18839.52 19961.26

PBDIT (5-9) 3346.87 4054.70Depreciation and Amortisation 592.90 644.74PBIT (10-11) 2753.97 3409.96Interest 1149.00 889.84PBT (12-13) 1604.97 2520.12Current Tax 231.21 519.25Deferred Tax 27.00 - 95.00PAT (14-15-16) 1346.76 2095.87Balance Brought Forward from last year

4146.59 2050.72

Surplus carried forward to the Balance Sheet

5493.35 4146.59

Earning per Share (EPS in Rupees) - Basic 8.26 13.51

- Diluted - 12.84

Zero Coupon Convertible Share WarrantsOut of 30,00,000 Zero Coupon Share Warrants of Rs.10/- each issued on 5th October, 2005 at a premium of Rs.108/- per warrant, remaining 8,00,000 Share warrants were con-verted into Shares on 4th April, 2007. With this conversion, the Paid up share Capital of the Company stood at Rs. 16.31 Crores from Rs.15.51 Crores.

Fixed DepositsThe Company has not accepted any Deposits within the meaning of Section 58A of the Companies Act, 1956.

Directors(i) Past Chairman of the Board -We regret to inform of the sad demise of our Hon’ble Chairman

Sh. K S Bhatnagar, who left for his heavenly abode on 17th May, 2008. During his long association, the Company has benefited greatly by his guidance, rich acumen and wisdom. Under his able supervision, Company recorded many notable achievements. His vision and spirit will continue to guide the Company in the coming years. The Board places on record its deep appreciation of the distinguished services rendered by Late Sh. K. S. Bhatnagar during his tenure as Chairman of the Company. May his soul rest in peace.

(ii) New Chairman of the BoardYour Board members elected Sh. V. K. Mehta as the Chairman of the Board with effect from 26th July, 2008.

(iii) Additional Director To fill up the vacancy caused by the death of late Sh. K. S. Bhatnagar, your Board has appointed Sh. C. S. Aggarwal, a renowned Senior Advocate as an “Additional Director” with effect from 26th July, 2008 and now commends the said appointment of Sh. C. S. Aggarwal as a Non Executive Independent Director, for consideration and approval of the Shareholders at the ensuing Annual General Meeting of the Company. Brief Resume of Sh. C. S. Aggarwal is given in the Corporate Governance Report.

Disclosures regarding re-appointment of Directors In terms of Section 256 of the Companies Act, 1956, Sh. Shital K Jain and Smt. Pooja Kapur, Directors will retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Your Directors recommend their re-appointments for a further term from the conclusion of the ensuing Annual General Meeting in the larger business interests of your Company. The abbreviated resumes of Sh. Shital K Jain and Smt. Pooja Kapur, the Directors seeking re-appointment / appointment are as under:

Sh. Shital K JainSh. Shital K. Jain was inducted as an Additional Director on the Board of Directors of the Company w.e.f. 7th July, 2005. Since then, he is playing a crucial advisory role in various matters involving Company’s financial policies, Banking and its implementation. Sh. Shital K. Jain, is an M.A., B.A. (Hons.) with Distinction from Punjab University and MBA from Indiana University, U.S.A. Sh. Jain is a seasoned banker, having more than 31 years of rich experience of working with Citibank, where he has been Senior Credit Officer for more than 18 years and has spent many years in Hong Kong, Taiwan, Phillipines, Thailand and Canada during his service. He is also a Director on the Boards of M/s. R. S. Software Ltd., Kolkata and one of the Board of Trustees of Lotus Asset Management Trustee Company Pvt. Ltd., Mumbai. Sh. Jain

DIRECTORS’ REPORT

4

is a member of the Audit Committee of the Company.

Smt. Pooja Kapur Smt Pooja Kapur is an MA from the Delhi University. Smt. Kapur was inducted as an Additional Director w.e.f. 24.02.2006 and possess wide experience in Automotive Industry. She is a relative of the “Chairman & Managing Director” and ‘Executive Director” of the Company and the Proprietor of M/s. Kanav Engineering, a Faridabad based engineering company engaged in manufacturing of Automobile parts and has a considerable experience in manufacturing of Auto parts and general management. Smt. Kapur is the member of the Audit Committee and Shares Servicing & Shareholders’ Grievance Committee of the Company.

Management Discussion & AnalysisThe Board presents Management Discussion and Analysis as Annexure – A to this Report.

Corporate Governance ReportYour Company has been complying with good Corporate governance in terms of Listing Agreement by maintaining highest level of transparency, accountability and fairness in all facets of its operations. To achieve highest internal standards in corporate governance, the Company believes in attaining the best business interests to enhance overall shareholders’ value by adopting good business practices. Annexure - B on Company’s Corporate Governance is annexed herewith.A separate statement on Corporate Governance is included as a part of the Annual Report along with the Practicing Company Secretary’s Certificate on its compliance as Annexure – C.

AuditorsM/s. B. Aggarwal & Co., Chartered Accountants, New Delhi the Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Your Directors recommend their re-appointment, subject to approval of the shareholders of the company, for a further term at such remuneration as may mutually be agreed between the Board and the Auditors.Regarding queries relating to Auditors’ Report for the year ended 31st March, 2008, Management has submitted clarification in the Notes on Accounts to the Annual Report, wherever applicable.

Directors’ Responsibility StatementPursuant to Section 217(2AA) of the Companies Act, 1956 with respect to Directors’ Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the annual accounts for the financial year ended 31st March, 2008, the applicable accounting standards have been followed along with appropriate explanation relating to material departures;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

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

(iv) that the Directors have prepared the accounts for the financial year ended 31st March, 2008 on a “going concern” basis.

EmployeesDuring the year under report, the Employees relations throughout the year continued to be cordial and harmonious and on behalf of your Board, I would like to express appreciation of the good work done and co-operation extended by employees at all levels in accomplishing Company’s tasks and goals.The information required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 and forming part of the Report is placed as Annexure - D.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & OutgoA Statement as required under the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988 as part of the Directors’ Report for the year ended 31st March, 2008 is submitted in Annexure - E.

AcknowledgementYour Directors place on record their thanks for the assistance, guidance and cooperation extended from time to time by our revered Customers, Financial Institutions, Banks, Central & State Governments and our dear Shareholders during the year under report. They also wish to convey deep appreciation of the loyal and devoted services rendered by the employees at all levels.

For and on behalf of the Board of DirectorsNew Delhi V K Mehta26th, July, 2008 Chairman & Managing Director

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I. INDUSTRY STRUCTURE & OPPORTUNITIESAfter witnessing consistent growth in the previous five years, our Country could achieve a growth of 7.5% against a projection of 8.5%. Global real GDP growth also slowed down at 3.7% compared to 4.9% year before. Current year Economy is expected to grow @ 8.1%, however due to inflationary pressure, it could slide to 7.0 to 7.50%. Automotive Industry, a prominent segment of the national economy was also affected and had to face flat growth during the 2nd half of the year. Hardening of interest rates coupled with higher inflationary pressures and industrial slowdown affected the input costs and availability of essential raw materials very adversely resulting in both bottom and top lines in the Automotive industry. However, on global platform, key Indian Automotive Companies continued the momentum in mergers & acquisitions. Joint Ventures by foreign companies with Indian counterparts and opening of IPO’s by MNC’s, would help the Industry to take lead in years ahead. Some of the products launched by Indian Companies have created new segments of competition in the Industry, giving a good preface and foundation to achieve the notified 10 year “Automotive Mission Plan” targeted to make Indian Automotive Industry as a global Hub for small Cars and a favourite destination for sourcing of components.

Ancillary and Allied industries supporting and depending on Automotive Industry are contributing substantially to the higher economic growth. Automotive Industry witnessed marginal growth across all segments especially in the heavy vehicle segment, the thrust sector for the Company.

[Source – ACMA]During the later part of the year, Automobile, Heavy Duty Commercial Vehicle and Motor Cycle Industries witnessed demand recession leading to dislocation in the growth of these sectors. The overall demand in commercial vehicle industry dropped by 0.8% during 2007-08 as against growth of 25.3% in the previous year. Other segments viz. three wheelers, tractors and LCV’s showed marginal growth in 2007-08. The year continued with the sustained spending

on infrastructure by Govt. of India, downtrend in the growth platform is a part of general economic cycle. Clutch Auto is catering to three sectors viz. OEM, Replacement Market and Exports. The Company was able to make good the shortfall in OEM sales by supplying to aftermarket segment. At Exports front, Clutch Auto has made long term commitments to OEMs’ in Commercial Vehicle & Tractor segments including a Co-Manufacturing Agreement with a MNC Clutch Manufacturer.

II. FINANCIAL PERFORMANCE OF THE COMPANYClutch Auto has maintained a constant growth rate snapshot as under:

There was downfall in Company’s financial performance during this Financial Year due to slowdown in heavy-duty segment, coupled with sharp increase in the raw material prices and increase in administrative costs. The Company has struggled to maintain margins, mainly by cost reduction and improvement of internal efficiencies. Turnover, net of excise duties, at Rs. 216.98 Cr. vs. Rs. 235.07 Cr. in 2006-07 was lower by 7.7% due to sluggish demand both in Indian heavy duty segment and as deliberate withdrawal from the US market for a short duration. Raw Material consumption i.e. to Rs. 134.96 Cr (62.20%) in 2007-08 was Rs. 143.38 Cr (60.99%) in 2006-07. This was largely a result of unchecked high steel & Pig Iron prices during the last two quarters of the year. However, the Company has continued its VA & VE exercises as part of an on going cost reduction program and initiated global sourcing of key inputs at lower costs, maintaining stringent Quality norms as per customer needs. Major initiatives have been taken towards vendor rationalization and value engineering during the year.Employee Cost increased to Rs. 18.86 Cr. (8.69%) from Rs. 15.80 Cr. (6.72%) last year due to inflation and other employee welfare initiatives taken during the year. The Company maintained the number of employees at its previous year’s level. However, increase in productivity of the employees was neutralized by the decrease in turnover.

ANNEXURE - A TO DIRECTORS’ REPORT

MANAGEMENT DISCUSSION & ANALYSIS

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Profit Before Depreciation, Interest, Exceptional items and Tax decreased to Rs. 33.46 Cr. (15.42%) from Rs. 40.55 Cr. (17.25%) in 2006-07. Depreciation for the year 2007-08 increased to Rs. 5.86 Cr. (2.70%) from Rs. 5.17 Cr. (2.20%) in 2006-07. Interest Cost increased to Rs. 11.49 Cr. (5.29%) in 2007-08 from Rs. 8.89 Cr. (3.78%) in 2006-07 due to increase in PLR coupled with additional short term borrowings. Profit Before Tax (PBT) stood at Rs. 16.05 Cr. from Rs. 25.20 Cr. in 2006-07. The tax provision for current year is at Rs. 2.58 Cr. as compared to Rs. 4.24 Cr. in 2006-07.Profit After Tax (PAT) stood at Rs. 13.47 Cr. vs. Rs. 20.96 Cr. in 2006-07 resulting in decline in Earning Per Share (EPS) at Rs. 8.26 compared to Rs.13.51 last year.

Balance Sheet As on March 31, 2008, the Ordinary Share Capital stood at Rs. 16.31 Cr. vs. Rs. 15.52 Cr. as on March 31, 2007, due to conversion of 8,00,000 Share Warrants to promoters on Preferential basis.Gross Secured Debt stood at Rs. 83.48 Cr. as on March 31, 2008 as compared to Rs. 80.27 Cr. as on March 31, 2007. Current Assets of the Company increased to Rs. 192.31 Cr. in 2007-08 from Rs. 183.62 Cr. in 2006-07, mainly due to increase in Inventories at Rs. 44.68 Cr. in 2007-08 from Rs. 38.06 Cr. in 2006-07 to support enhanced turnover. Current Liabilities of the Company increased at Rs. 47.24 Cr. in 2007-08 from Rs.40.61 Cr. in 2006-07.

III. SWOT ANALYSIS1. Initiatives taken during last couple of years give a long term edge to CAL in the Industry. Its selection by CSIR in association with distinguished Research Laboratories viz. International Advance Research Center (ARCI), Hyderabad; Central Glass and Ceramic Research Institute (CGCRI), Kolkata; National Chemical Laboratory (NCL), Pune and IIT-Delhi has opened linkages between the Company and the Research Establishments and industry leaders to develop new technologies with long term ramifications in the Clutch Industry. 2. Opportunities offered currently by leading passenger car and automotive manufacturers have opened up windows, which were so far denied to the Company has a self im-posed strategy, concentration have been on the commercial vehicle segment. 3. Steps taken during the last one year for increasing the Foundry capacity will supplement Company’s efforts to tap new opportunities in the years to come.

4. Engineering base created with the support of the Foreign Consultants and In-house development have given opportunities with the domestic truck manufacturers for a product to product technology which can offer opportunity and more extended life to the clutches.5. OEM’s target to have total control on the Aftermarket can significantly impact company’s Replacement Market operations. Competition from Chinese low cost manufacturers can be a threat to Company’s business in some segments. 6. Vertical integration exercises give a long term edge to the Company as a preferred low cost supplier in international market.7. Timely assistance from International Bankers is likely to help establish need based capacities and test capabilities to meet the Company’s International multifarious opportunities.

IV. TECHNOLOGY1. 77 new items launched during 9th International Auto Expo, 2008 (New Delhi) have opened up new vistas / opportunities with an edge in such segments where the Company has not pursued business opportunities.2. A new product “Self Adjusting Clutch” introduced in the US market has been extensively tested and proven its performance in field operations. 3. New proposals under consideration with leading Truck Manufacturers giving options of additional service life and cost reduction have given valuable opportunities for long term business. 4. Following comments from a leading International Truck Manufacturer are encouraging:“Clutches are critical components and the performance of our components is a key priority.”“Partnering with Clutch Auto will allow us to better manage performance and quality to deliver differentiation and value to our customers. Clutch Auto will help us deliver innovation in clutch design not available elsewhere.”5. New concept “Traceability Till Death” (TTD), currently under implementation, is going to have long term ramifications. 6.Fresh look at existing designs ab initio has resulted in development of Hi-Life & Extra Life Clutches, specialized CA City and universal Clutches which are giving a performance edge to the Company in the domestic market.7. Two leading truck manufacturers have already accepted Cushion Organic Clutches as standard fitment for Commercial Vehicles.

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V. IPR PORTFOLIOThe ONLY Indian Auto Component Manufacturer with domestic & overseas Patents & Trade MarksPatents Approved Pending Under filingOverseasUSA 1 - 11Mexico 1 - -Australia 1 - -Total overseas 3 - 11Domestic 2 10 11

DesignsIndia 15 - 8Trade MarksUSA 8 4 13India 9 32 13

PATENTS & TRADE MARKSPatents Trade MarksAPPROVED APPROVEDEZ N LITE - Low Pedal Pressure Clutch

EZ N LITE INTERLOCK CLUTCH

Pre-Damp High Torque Clutch discs

ECO CLUTCHPRE DAMP HIGH TORQUEWHISPERPDHTMONO

CURRENTLY FILED CURRENTLY FILEDWear Indicator Assembly (Pin Type) ROAD RAIDER Clutch Wear Adjustment Indicator NVLClutch Wear Adjustment Tool AUTO COOL N EZImproved Clutch Disc Direct/Dual Sintering SELF ALIGNING CLUTCHImproved Clutch Disc with Spot Welding ECO N AUTOBonded Disc AUTOElectronic Wear Adjustment for A Clutch AUTO N COOLClutch Adjuster TWIN N QUIKClutch Packing cum Setting Guage Hi-lifeSelf-Adjusting clutch Assembly The Clutch that thinks it does not require a Mechanic

Tiger 3X Turbo King Angle Spring Co-axial Hi-Sink Cookie Clutch Thik-Thin Gold Kits Turbo Top TTD Angle ring Universal Clutch Insulator

Vibro Kits Catcher Disc Floating Clutch Xtra Life City Bus Wavy Fulcrum Ring Million Mile Clutch Krom-Silikon Hi-Kopper

UNDER FILING Enclosed Window discs Long Life Clutches – Bonded. Dual Sintered Clutches NVL Discs. (Noise Vibration Limiters)Self aliening clutches developed by the company are gaining increasing acceptance in International Markets.

VI. RESEARCH & DEVELOPMENT 1. New products introduced, and the IPR Portfolio, VA & VE exercises and other steps mentioned in the SWOT Analysis are pillars of strengths of CAL’s R&D activities being actively supported by world renowned Consultants and Experts in the Clutch Industry.2. Company is developing ‘Virtual’ Design Development & Testing Softwares for improving its Development & Certification capabilities. 3. New products development with technology support from HAL will have long term impact in the domestic and international Truck Clutch opportunities.

VII. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACYClutch Auto has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that transaction are authorized, recorded and reported quickly.Company’s Internal control is supplemented by an extensive program of strong and independent internal audits, review by management and documented policies, guidelines and procedures.Based on the nature of business and size of operations, the Company’s internal control system has been designed to provide for:

Accurate recording of transactions with internal checks and prompt reporting.Adherence to applicable Accounting standards and policies.Review of capital investments and long term business plans.Periodic review meetings to manage effectively, all working capital elements.Compliance with applicable statutes, policies,

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listing requirements and operating guidelines of the Company.

VIII AWARDS & CERTIFICATIONS 1. IMTMA Siemens Productivity Championship

Award 2006 Out of over 100 Champions of Productivity from across

the country and different industry segments, Clutch Auto has won 2nd Productivity Championship Award instituted by Indian Machine Tool Manufacturers’ Association (IMTMA) & Siemens for Productivity related techniques in Metal working Industry. The faculty comprised Senior Executives from Bourton Group – France, Siemens AG – Germany and leading Indian Companies viz. Mahindra & Mahindra, TVS Motor company, Kirloskar Toyota, BHEL, BEL, SKF, Whirlpool, Sundaram-Clayton, Brakes India etc.

2. ACMA Technology Trophy 3. First Prize National Award for indigenization of Defence Stores from Ministry of Defence, Government of India.4. Award for Technology Development from DGTD, Ministry of Industry, Government of India for development of T-72 Cerametallic Clutches.5. Technology Innovation Award – ASRTU (Association of State Road Transport Undertaking)6. National Award for Import Substitution from Govt. of India for indigenisation of T-54/T-55 Tank Clutch.7. New Generation Ceramic Clutches for Automotive applications – By Technology Development Board (TDB), Deptt. of Science & Technology, Govt. of India on Technology Day 2001.8. Nomination by Commerce Ministry to promote “Made in India Brand in USA”9. 2000 AD Millennium Award for Excellence in category of Marketing Company (Large Scale) from Institute of Marketing & Management

CertificationsCertification By Issue Date

TS 16949:2002 TUV 15.04.2008R&D Unit Ministry of Science &

Technology05.06.2008

One Star Export House

Ministry of Commerce & Industries

01.04.2004

IX. EMPLOYMENT OF RESERVED CATEGORIESIn line with the current Policy of the Government of India to give more and more employment to the Reserved Categories

in the Private Sector, it is submitted for information that CAL employs 311 (previous year 283) persons belonging to these categories as per details given below: # of persons employed

Caste Current year Previous yearSC / ST 66 66OBC 245 217

Total 311 283According to Press reports Government of India proposes 40% of the employees should belong to reserved categories in Private Sector also. It is heartening to note Clutch Auto Ltd. is already providing employment to more than 40% employees belonging to Reserved Categories.

X. CLEAR AND PROVEN STRATEGYThe Company plans to go solo with total in-house development capabilities have stood well in the overall strategy where the technology base created has been enlist vide recognition with customer as well as clutch manufacturers alike. The Lo-cost base is serving an icing in the cake for increasing opportunities for new assignment of outsourcing and co-manufacturing. This is backed with a well established marketing base in USA has established linkages for opportunities to be addressed on the support, if required, to offer not only JIT deliveries but also locally assembled next door 24 hr. deliveries with Product Liability Insurance and Service support and to meet with the local Policies and cultural compulsions. Technical innovations and solutions have given increasing dependence in the Hi-volume sophisticated customer base.

XI. CORPORATE SOCIAL RESPONSIBILITY The management has been extending assistance in various sectors towards discharge of its Corporate Social responsibility. During the period under report, the Company has taken initiative to provide Ambulance Car to Shirdi Baba Center at Nasik. The Company provide the printing cost of UNO Sponsored Book World Perspective on HIV & AIDS Epidemic for Less Fortunate towards Strategies for Awareness and Prevention with Focus on Values Clarification, Cultural Heritage and Social Norms. The book was authored by Sh. Rajinder M. Kalra and Sh. Francis X. Sutman and Contributing Authors are Smt. Archana Uppal and Smt. Santosh Kalra. This initiative has been complemented by the Industry forum. The Company has initiated a Worthy Candidate Support facility with delivery of a Laptop/PC to a needy Engineering student of Kurukshetra University.

XII. CAUTIONARY STATEMENTStatements in this Management Discussion and Analysis describing the Company’s objectives, projections, estimates

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and expectations may be ‘forward looking statements’ within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the Company’s operations include a downtrend in the automobile industry (global or domestic or both) significant changes in political and economic environment in India or

key markets abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and other costs.

For and on behalf of the Board of Directors

New Delhi, V K Mehta26th July, 2008 Chairman & Managing Director

ANNEXURE – B TO DIRECTORS’ REPORT

CORPORATE GOVERNANCE REPORT1. COMPANY’S PHILOSOPHYClutch Auto Ltd. believes in appropriate disclosure procedures, transparent accounting policies, independent Board practices and highest levels of ethical standards towards its stakeholders for sustained corporate growth.Clutch Auto’s commitment to good corporate governance practices predicts the laws and regulations of Securities & Exchange Board of India (SEBI) and the Stock Exchanges through Clause 49 of their listing agreement.

2. BOARD OF DIRECTORS(a) Composition -The current Board of Directors consists Sh. V. K. Mehta – Chairman & Managing Director (Promoter – Executive), Sh. Anuj Mehta – Executive Director, four other Non-Executive Directors viz. Sh. K. K. Taneja, Sh. Shital K. Jain, Sh. C. S. Aggarwal and Smt. Pooja Kapur (Relative of the Promoter). Sh. K. K. Taneja, Sh. Shital K. Jain and Sh. C. S. Aggarwal are Independent Directors. Thus, Your Company’s Board has optimum combination of Executive and Non-Executive Directors as required under clause 49 of the Listing Agreement with Stock Exchanges.

(b) Board Meetings During the financial year under review, nine (9) Board meetings were held on 4th April, 2007, 21st April 2007, 20thJuly 2007, 22nd August 2007, 25th September, 2007, 26th Oct.2007, 29th Jan. 2008, 15th February, 2008 and 29th March, 2008.

(c) Directors’ Attendance records & directorships held during financial year 2007-08 None of the Directors on the Company’s Board is a member of more than ten (10) committees and Chairman of more than five committees (Committees being Audit Committee, Investor’s Grievance Committee) across all Companies in which they are a Director. All the directors have made necessary disclosures regarding the Committee positions held by them in other companies.

Name of the Director

Category ofDirectors

Board Meetingsattended

Attend-ance

at Last AGM

No. of other Directorships held in other Companies

No. of Board /Committees of which he is a Member or a

ChairmanSh. K. S. Bhatnagar*

ChairmanNEDI** 8 Yes 2 6

Sh. V. K. Mehta***

Vice Chairman & Mg. Director 9 Yes None 2

Sh. K. K. Taneja

NEDI** 9 Yes 1 4

Sh. Shital K. Jain

NEDI** 9 Yes 3 6

Sh. Anuj Mehta

Executive Director 9 Yes None None

Smt. Pooja Kapur

NED8 Yes None 2

*Shri K S Bhatnagar expired on 17th May, 2008.**NEDI – Non-Executive Director (Independent).*** Chairman with effect from 26th July, 2008.

(d ) Following matters and information have been discussed and noted by the Board of Directors - Capital Budgets and updates. - Quarterly results of the Company.

- Disclosure of interest in other Companies made by the Directors.

- Minutes of meetings of audit committees and other committees of the Board.

- Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems.-Show cause, demand, prosecution notices and penalty notices, which are materially important.

- Any material default in financial obligations to and by the Company, or substantial non-payment for goods sold by the Company.

- Any issue, which involves possible public or product liability claims of substantial nature, including any judgement or order which, may have passed strictures on the conduct of the Company or taken an adverse view regarding another enterprise that can have

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negative implications on the Company. - Transactions that involve substantial payment towards

goodwill, brand equity or intellectual property rights. - Sale of material nature, of investments, subsidiaries,

assets, which is not in normal course of business. - Significant labour problems and their proposed

solutions. Any significant development in Human Resources / Industrial Relations front like signing of wage agreement, implementation of voluntary Retirement Scheme etc.

- Non-compliance of any regulatory, statutory or listing requirements and shareholders service such as non-payment of dividend, delay in share transfer etc.

Clutch Auto has established procedures to enable its Board to periodically review compliance reports of all laws applica-ble to the Company, as well as steps taken by the Company to rectify instances of non-compliances.

(e) Directors with materially pecuniary or business relationship with the Company –All disclosures relating to financial and commercial transactions, where Director(s) may have a potential interest are provided to the Board, and the interested Directors do not participate in the discussion nor do they vote on such matters. We have made sufficient disclosures in respect of related party transactions in the notes on accounts of this annual report.There is no materially significant related party transactions or relationship between Clutch Auto Limited and its non-executive independent Directors during the year 2007-08.

(f) Shares held by Non-Executive Directors The details of shareholding of the Non–Executive Directors as on 31st March, 2008 are as under:

Sl. No. Name of the Director No. of Shares1 Sh. K. K. Taneja 10,000

(g) Remuneration of Directors paid or payable to Directors for the year ended 31st March, 2008 –

Name of Director

Relationship with other Director

Salary &Per-

quisites(Rs.)

Commi-ssion(Rs.)

Total(Rs.)

Sh. V. K. Mehta

Father of Sh. Anuj Mehta

74,05,018 NIL 74,05,018

Sh. Anuj Mehta

Son of Sh. V. K. Mehta

35,75,412 N.A. 35,75,412

Sitting Fees During the year 2007-08, the non-executive Directors were

paid a sitting fees of Rs.12,500/- for each Board Meeting and Committee Meeting attended by them.

(h) Code of Conduct –A code of conduct for all Board members and Senior Management Personnel is available on the website of the company, www.clutchauto.com. All Board members and Senior Management personnel have affirmed compliance of the Code of Conduct and the Chairman & Managing Director has confirmed the same.

3. COMMITTEE OF THE BOARD (a) Audit CommitteeAs on 31st March, 2008, the Audit Committee consisted with Sh. K. K. Taneja (Chairman), Late Sh. K. S. Bhatnagar*, Sh. Shital K Jain and Smt. Pooja Kapur. Except Smt. Pooja Kapur (a relative of Promoter Director), all are Independent directors. Late Sh. K. S. Bhatnagar, member of this Committee left for heavenly abode on 17.05.2008. The committee recognizes his long association, valuable advise and guidance to the Committee. The Committee has also recognized the services and efforts of Sh. Anuj Mehta, Executive Director in finance, functional and operational areas and has inducted him as a “Permanent Invitee” in all Audit Committee meetings.During the year under review, five (5) Audit Committee meetings were held viz. 21st April 2007, 20thJuly 2007, 22nd August 2007, 26th October 2007 and 29th January 2008. The attendance record of the Committee members at their meetings held during the year are as under:

Name of DirectorNo. of

Meetings held

No. of Meetings attended

Sh. K. K. Taneja 5 5Sh. K. S. Bhatnagar* 5 5Sh. Shital K Jain 5 5

Smt. Pooja Kapur 5 5

*Sh. K. S. Bhatnagar expired on 17th May. 2008.

The Audit Committee of Clutch Auto performs the following functions:tOversight of the Company’s financial reporting process

and the disclosures of its financial information to ensure that the financial statement is correct, sufficient and credible.

tRecommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees.

11

tApproval of payment to statutory auditors for any other services rendered by the statutory auditors.

tReviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to:

Matters required to be included in the Directors’ - Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of section 217 of the Companies Act, 1956Changes, if any, in accounting policies and - practices and reasons for the same.Major accounting entries involving estimates based - on the exercise of judgment by management.Significant adjustments made in the financial - statements arising out of audit findings.Compliance with listing and other legal - requirements relating to financial statements.Disclosure of any Related party transactions- Qualifications, if any, in the draft Audit report.-

tReviewing, with the management, the quarterly financial statements before submission to the Board for approval.

tReviewing, with the management, performance of statutory auditors, adequacy of the internal control systems.

tDiscussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post audit discussion to ascertain any area of concern.

Besides others, the Audit Committee of Clutch Auto reviews the following information:tManagement discussion and analysis of financial

condition and results of operations.tStatement of significant related party transactions

(as defined by the Audit committee) submitted by management.

The Audit Committee is also presented with the following information on Related party transactions (whenever applicable):tA statement in summary form of transactions with

related parties in the ordinary course of business.tDetails of material individual transactions with

related parties, which are not in the normal course of business.

tDetails of material individual transactions with related parties or others, which are not on an arm’s length basis along with management’s justification for the same.

The Audit Committee is empowered, pursuant to its terms of reference, to:tInvestigate any activity within its terms of reference and

to seek any information it requires from any employee.tObtain legal or other independent professional

advice and to secure the attendance of outsiders with relevant experience and expertise, when considered necessary.

The Chairman of the Audit Committee was present at the last Annual General Meeting to answer shareholders queries raised therein. The Committee was regularly apprised of the various follow up actions taken on the direction of the Audit Committee. The Audit Committee regularly invite such executive/s as it considers appropriate, including the head(s) of the Finance, Production, Marketing, and the representative(s) of the internal audit and the statutory auditors, as and when invited, were present at the meetings of the Committee. Mr. Naveen Jain, the earlier Company Secretary was the Secretary of this Committee for the part of the year. Mr. Pritam Paul, GM -Commercial & Company Secretary is Secretary to this Committee with effect from 10th September, 2007.

(b) Shares Servicing & Shareholders’ Grievance CommitteeLate Sh. K. S. Bhatnagar was the Chairman of this Committee during the year. Other members of this Committee comprised Sh. V. K. Mehta, Vice Chairman & Managing Director and Smt. Pooja Kapur, Director. Your Board of Directors will consider reconstitution of this committee in due course, if necessary.The Committee looks into redress of Shareholders’ and Investors’ complaints related to transfer/transmission of shares, non-receipt of Balance Sheet, non-receipt of declared dividend and ensures expeditious share transfer process. The status of complaints is reported to the Committee, minutes of Shareholders/Investors Grievance Committee meetings were placed before and discussed by the Board. Mr. Pritam Paul, GM – Commercial & Company Secretary, is the “Compliance Officer” of this Committee with effect from 10th September, 2007. Attendance Record of Clutch Auto’s Shareholders/Investors Grievance Committee for the year ended 31st March’ 2008 is as follows:

Name of Director PositionNumber of Meetings

held

Number of Meetings attended

Sh. K. S. Bhatnagar* Chairman 5 5

Sh. V. K. Mehta Vice Chairman & Mg. Director

5 2

Smt. Pooja Kapur Director 5 5

*Sh. K. S. Bhatnagar expired on 17th May, 2008.

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(c) Remuneration Committee Sh. K. S. Bhatnagar was the Chairman of this Committee during the year. This Committee presently comprises with two members viz. Sh. K. K. Taneja, Independent Director and Sh. V. K. Mehta, Vice Chairman & Mg. Director. Attendance record of Clutch Auto’s Remuneration Committee for the year ended 31st March’ 2008 is as under:

Name of Director Position Number of Meetings held

Number of Meetings attended

Sh.K.S. Bhatnagar* Chairman 1 1

Sh. K. K. Taneja Director 1 1Sh. V. K. Mehta Vice Chairman

& Mg. Director1 1

Your Board of Directors will consider reconstitution of this committee in due course, if necessary.*Sh. K. S. Bhatnagar expired on 17th May, 2008.

4. GENERAL BODY MEETINGSThe last three (3) General Body meetings were held on the following dates and timings:

Financial Year Date Time Location

2004-05 20.09.2005 11.30 a.m.

Gandhi Memorial Hall, Pearey Lal Bhawan, 2, Bahadur Shah Zafar Marg, New Delhi.

2005-06 25.08.2006 11.00 a.m.

Kamani Auditorium, No.1, Copernicus Marg, New Delhi.

2006-07 25.09.2007 11.00 a.m.

Gandhi Memorial Hall, Pearey Lal Bhawan, 2, Bahadur Shah Zafar Marg, New Delhi.

No Special Resolution was passed by the Sharehold-ers during the last three years, which required voting by Postal Ballot.Details of Special Resolutions passed by the shareholders in the last three Annual General Meetings:

Financial Year

Date of An-nual General

Meeting

Subject matter of Special Resolution

2005-06 20.9.2005 Issuance of 30,00,000 Equity Shares/Warrants on preferential basis to the Relatives of Promoters & Others – U/s. 81(1A) of the Companies Act, 1956

5. DISCLOSURES(i) Disclosure regarding materially significant related party transactionsAll disclosures relating to financial and commercial transactions, where Directors may have a potential interest are provided to the Board. Interested Directors, if any, do not participate in the discussion nor do they vote on such matters. The Audit Committee regularly reviews such transactions, if any.

(ii) Details of non-compliance The Company has complied with all the requirements of regulatory authorities & no penalty or strictures were imposed on the Company by any Stock Exchange or SEBI or any Statutory Authority on any matter related to Capital market in the year under review.

(iii) Code of Conduct for Directors and Senior Management The Board of Directors of the Company has adopted a Code of Conduct for the Directors and Senior Management personnel and the same is posted in Company’s web-site www.clutchauto.com. In terms of Clause 49(D), a declaration by the CEO of the Company is separately annexed after this report.

(iv) CEO/CFO Certification The CEO and the Finance head of the Company have certified to the Board with regard to the compliance made by them in terms of clause 49(V) of the Listing agreement.

(v) Non-Mandatory requirements The Company has not adopted the non-mandatory requirements as specified in Annexure ID of the Listing agreement.

6. MEANS OF COMMUNICATION Quarterly results The Company published its quarterly results regularly in leading national dailies both in English and Hindi with wide circulation viz. Economic Times (ET), Business Standard (BS), Navbharat Times (NT), Veer Arjun (VA) & Jansatta (JS). The details of such announcement of result(s) are as under:

Quarter ended

Date of Announcement

Date of Publication

Name of Newspaper

31-03- 2007 21-04-2007 23-04-2007 ET, BS, JS

30-06-2007 20-07-2007 21-07-200723-07-2007

BS, VAET

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30-09-2007 26-10-2007 28-10-200729-10-2007

NTET

31-12-2007 29-01-2008 30-01-200831-01-2008

BSET, NT, VA

31-03-2008 28-04-2008 30-04-200801-05-2008

VA, BS, ETNT

More information about the Company & its financials are available at its Website www.clutchauto.com7. GENERAL SHAREHOLDERS INFORMATION(i) 37th Annual General Meeting Day & Date : Saturday, 27th September, 2008. Time : 11.00. A.M. Venue : Pearey Lal Bhawan,

(Gandhi Memorial Hall), 2, Bahadur Shah Zafar Marg, New Delhi – 110 002.

(ii) Financial Calendar :1st April, 2007 to 31st March, 2008.(iii) Book Closure Dates :25th September, 2008 to 27th September, 2008 (both days inclusive).

(iv) Listing on Stock Exchanges & Stock CodeThe Listing particulars in respective Stock Exchanges are as under:Name of the Stock Exchange Stock Code No. /SymbolBombay Stock Exchange Limited (BSE) : 505052National Stock Exchange of India : CLUTCHAUTOLimited (NSE)Demat ISIN Number : INE779 B01019The Company further confirms that it has paid annual listing fees due to all the above Stock Exchanges for the year 2008-09.(v) Market Price Data at BSE and NSEThe details of High/Low market price and volume of shares traded at the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited during the period ended March 31, 2008 are as under:

Year & Month

2007-08

Bombay Stock Exchange Ltd. National Stock Exchange of India Ltd.

High(Rs. per

share)

Low(Rs. per

share)

Volume(No. of Shares)

High(Rs. per

share)

Low(Rs. per

share)

Volume(No. of Shares)

April’ 07 155.85 109.00 15,02,968 160.00 107.50 13,55,766May’07 170.00 146.00 10,01,169 170.00 145.00 14,60,693June’07 158.95 131.50 4,62,052 157.90 118.65 8,11,724July’07 139.00 115.10 3,56,495 136.00 102.65 4,42,178Aug’07 121.00 100.20 6,60,160 121.95 100.50 7,39,217Sept’07 144.00 102.00 8,52,405 144.40 102.00 12,51,218Oct’07 125.10 101.35 5,03,491 125.95 96.00 7,31,618Nov’07 113.00 84.90 3,23,466 114.00 97.00 6,27,547

Dec’07 133.80 99.50 13,09,044 130.90 99.50 13,30,571Jan’08 130.85 75.00 7,70,810 130.00 80.00 9,07,616Feb’08 92.95 70.05 4,13,574 100.00 65.10 3,80,582Mar’08 79.85 57.30 2,24,716 79.00 50.25 13,16,842

(vi) Registrar and Share Transfer Agents M/s. MAS Services Ltd., AB 4, Safdarjung Enclave, New Delhi – 110 029.Tel. 91-11-26104142 / 26104292 / 26104326, Fax 26181081, E-Mail: info@masserv.com

(vii) Shareholding Pattern as on 31st March, 2008The following table gives the pattern of shareholding:

S. No. Particulars No. of Shares Shareholding %

1 Promoters, their relatives, Friends & associates

43,44,385 26.63

2 Bodies Corporate 43,21,588 26.493 Banks & Financial

Institutions3,275 0.02

4 Mutual Funds 8,26,093 5.06

5 Foreign Institutional Investors

12,18,191 7.47

6 NRIs/OCBs 2,85,503 1.75

7 Public 53,14,845 32.58Total 1,63,13,880 100.00

(viii) Distribution of Shareholding as on 31st March, 2008The following table gives the distribution of shareholding:

HoldingsShareholders Shares

Number % to total

Number % to total

1 - 5,000 24,701 93.15 29,49,334 18.085,001-10,000 1,105 4.17 8,69,275 5.3310,001-20,000 414 1.56 6,13,382 3.7620,001-30,000 115 0.43 2,93,270 1.8030,001-40,000 46 0.17 1,63,874 1.0040,001-50,000 29 0.11 1,36,762 0.84

50,001-1,00,000 56 0.21 4,15,949 2.551,00,001 & above 52 0.20 1,08,72,034 66.64

Total: 26,518 100.00 1,63,13,880 100.00(ix) Dematerialization of Shares: Your Company’s shares are tradable compulsorily in electronic form and has established connectivity with both the Depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited

14

(CDSL) through its Shares Transfer Agent & Registrar; viz. M/s MAS Services Private Limited. As on 31st March 2008, 92.44% of Company’s paid-up Share Capital stood dematerialized and remaining 7.56% shares were held in Physical form.

(x) Unclaimed DividendUnder the Companies Act, 1956, dividend that remained unclaimed for a period of seven (7) years or more, are required to be transferred to the Investor Education and Protection Fund administered by the Central Government. Accordingly, an amount of Rs.2,98,064/- (Rupees Two lacs ninety eight thousand sixty four only) which became due for transfer to the said Fund, was deposited with the said fund of the Central Government on 31st October, 2007 for the dividend declared on 30th September, 2000 (F.Y.1999-2000).

(xi) Investors’ Assistance:Registered Office: Plant Location:Secretarial Department Clutch Auto LimitedClutch Auto Limited Plot No.1A, Sector 27D2E/14 (First Floor), 12/4, Mathura Road,Jhandewalan Extn., Faridabad – 121 003New Delhi – 110 055 Tel: (0129) 227 5246 Telefax: (011) 2368 3548 Fax: (0129) 227 6039e-mail – cs@clutchauto.com

For and On behalf of the Board of Directors

Place : New Delhi V K MehtaDate : 26.07.2008 Chairman & Managing Director

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DECLARATION BY THE CEO ON CODE OF CONDUCT UNDER CLAUSE 49 OF THE LISTING AGREEMENT

In accordance with Clause 49 sub-clause 1(D) of the Listing Agreement with the Stock Exchanges, I hereby confirm that, all the Directors and the Senior Management personnel of the Company have affirmed compliance to their respective Codes of Conduct, as applicable to them for the financial year ended March 31, 2008.

For CLUTCH AUTO LIMITED

V K MehtaChairman & Managing Director

ANNEXURE – C To DIRECTORS’ REPORT

CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE

Registration Number of the Company : 55-5634Nominal Capital of the Company : Rs.20 Crores

The Members of Clutch Auto LimitedNew Delhi – 110 055

We have examined all relevant records of Clutch Auto Limited (herein after called the Company) having registered office at 2E/14, First Floor, Jhandewalan Extension, New Delhi-110055 for the purpose of certifying compliance of the condition of the Corporate Governance under Clause 49 of the Listing Agreement with the Bombay Stock Exchange and National Stock Exchange for the financial year ended 31st March 2008. We have obtained all the information and explanations to the best of our knowledge and belief were necessary for the purpose of the certification.

The compliance of the conditions of the Corporate Governance is the responsibility of the management. Our examination was limited to the procedure and implementation thereof. This certificate is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

On the basis of our examination of the records produced, explanation provided/furnished, we certify that the Company has complied with the mandatory conditions of the said Clause 49 of the Listing Agreement.

For AMIT KOHLI AND COMPANY (Practicing Company Secretary) Amit KohliPlace : New Delhi LLB., F.C.S.Date : 26.07.2008 C.P.3628

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STATEMENT OF PARTICULARS UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956 READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 FOR THE YEAR ENDED 31ST MARCH, 2008 AND FORMING PART OF THE DIRECTORS’ REPORT.Employees who were employed throughout the year and were in receipt of remuneration in aggregate of not less than Rs.24,00,000 per annum.

Name of Employee

Age(Yrs)

Designation/ Nature of Duties

GrossRemuneration

(Rs.)

Qualification Experience(Years)

Date ofCommencement of

employment

PreviousName of the

Company

EmploymentPosition

Held

Sh. V K Mehta 67Vice Chairman &

Mg. Director*74,05,018 B.E. (Mech.) 43 26.05.1971 N.A. N.A.

Sh. Anuj Mehta 39

Executive Director(Since 01.07.2007)

35,75,412 MBA 15 01.07.1993 N.A. N.A.

* Chairman w.e.f. 26.07.2008.

Note: Gross remuneration comprises of Salary, Allowances, Medical reimbursement, Company’s contribution to Provident 1. Fund, taxable value of perquisites and Commission.Employment of Sh. V. K. Mehta and Sh. Anuj Mehta is contractual.2. Sh. V. K. Mehta along-with his wife and son (being director of the Company) hold more than 2% of Equity Shares of the 3. Company.

ANNEXURE – E TO DIRECTORS’ REPORTInformation pursuant to section 217(1)(e) of the Companies Act, 1956

A. Conservation of Energy: Power & Fuel Consumption 2007-08 2006-07a) Electricity purchased Units (KWH) 35,57,575 35,30,175 Total Amount (Rs.) 1,60,55,662 1,53,98,333 Rate/Unit (Rs. KWH) 4.51 4.36

b) Own Generation through Diesel Generators Units (KWH)

21,08,386 17,74,785

Total Amount (Rs.) 2,02,17,254 1,62,83,227 - Diesel oil per litre (Rs.) 30.24 31.53 - Cost per unit (Rs.) (Diesel Cost only)

9.59 9.17

c) Total Electricity consumed (units) Total Production (units) Electricity consumption (per unit)

56,65,96126,32,800

2.15

53,04,96025,86,916

2.05

B. Technology Development & AbsorptionUnder the New Millennium Indian Technology Leadership Initiative (NMITLI) Scheme, the Council of Scientific & Industrial Research (CSIR), New Delhi under the aegis of Ministry of Science & Technology, Govt. of India has approved the Company’s project titled “Design and development of Cushion Bonded/Rigid bonded Organic, Cerametallic cookie & single/duel sintered buttons (copper/iron

based), ceramic cookies & annular ring Clutch discs and matching cover assemblies” in association with distinguished National Institutes viz. National Chemical Laboratory (NCL), Pune, Central Glass & Ceramic Research Institute (CGCRI), Kolkata, International Advanced Research Centre for Powder Metallurgy and New Materials (ARCI), Hyderabad and Indian Institute of Technology (IIT), Delhi vide its office order no. 5/258/54/2007-NMITLI dated 25th March, 2008. The project has been undertaken at an estimated cost of Rs. 2164.31 lacs to be spent over a period of three years, while Rs. 1503.55 lacs have been sanctioned to the Company as unsecured soft loan @ 3% p.a., the Partnering Institutions I have been given sanctioned grant aggregating Rs. 660.76 lacs. These new range of products to be developed under this project will double the longevity of Clutch and will create altogether a different category of product both in domestic and international arena. To achieve this objective, the Com-pany has already entered into contract with National Chemi-cal Laboratory (NCL). The Company has also retained the services of Mr. Ian C Maycock and Mr. John Fitzpatrick- Ellis, Consultants who have vast experience and expertise in this line. The Company is confident to make rapid strides in technology development and absorption area in the com-ing years.

ANNEXURE – D TO DIRECTORS’ REPORT

17

C. Foreign Exchange Earnings and Outgo (Amount in Rs.)

Particulars 2007-08 2006-07

1. Foreign Exchange Earnings 18,06,37,509 47,83,98,5542. Foreign Exchange Outgo: i) Raw Materials (CIF) 10,67,49,956 12,14,85,786 ii) Travel 53,03,706 64,67,226 iii) Capital - 1,54,69,469 iv) Technical Fees 27,93,046 2,27,465

Total 11,48,46,708 14,36,49,946

For and on behalf of the Board of DirectorsV K Mehta

Chairman & Managing Director

We have audited the attached Balance Sheet of M/s. CLUTCH AUTO LIMITED, (hereinafter referred to as the ‘Company’) as at March 31, 2008 and also the Profit and Loss Account and Cash Flow Statement of the company for the year ended on that date, annexed there to. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our Audit. We have conducted our audit in accordance with 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 statements presentation. We believe that our audit provides reasonable basis for our opinion. 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 & 5 of the said Order. Further to our comments in the Annexure referred to above, and subject to the exceptions in the above paragraphs, we report that: a) 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.

b) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books.

c) The Balance Sheet and the Profit and Loss Account dealt with by this report are in agreement with the Books of Account.

d) In our opinion, the Balance Sheet and Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

e) On the basis of written representations received from the directors, as on 31

st March 2008, and taken on

record by the Board of Directors, we report that none of the directors is disqualified as on 31

st March 2008

from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 read with the Companies (Disqualification of Directors under Section 274(1) (g) of the Companies Act, 1956) Rules, 2003.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts and Notes of Accounts portrayed in Schedule XIX-B, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with accounting principles generally accepted in India :

i) In the case of the Balance Sheet of the State of Affairs of the Company as at 31st March, 2008 and;

ii) In the case of the Profit & Loss Account of profit for the year ended on that date.

iii) In case of the cash flow statement of the cash flows for the year ended on that date.

For and on behalf of B. Aggarwal & Co.

Chartered Accountants

Dolly Rohatgi

New Delhi, 26th July 2008 Partner

Auditor’s Report to the Members of CLUTCH AUTO LIMITED

18

1) a) The Company has maintained a Fixed Assets Register, showing full particulars, including quantitative details, however the register does not include details of situation of fixed assets (other than Plant and Machinery substantially). Further, in case of tools and implements quantitative details have not been indicated in most of the cases.

b) On the basis of available records and according to the information and explanations given to us, the fixed assets have been physically verified by the respective department heads once during the year, except for furniture and fitting, dyes and fixtures, testing & office equipment including those held by job work parties. No material discrepancies were noticed on such verification.

c) During the year, the Company has not disposed off any major part of the plant and machinery. According to the information and explanations given to us, we are of the opinion that the sale of other fixed assets has not affected the going concern status of the Company.

2) a) The stocks of the finished goods, stores and spare parts have been physically verified by the management at the year end. In our opinion, the frequency of such verification is reasonable having regard to the size of the Company and the nature of its business. Further we are informed that in regards to stock held by job work parties confirmations have been received by the company in many cases.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of stocks followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

c) As explained to us, there were no material discrepancies noticed on physical verification of stocks, as compared to book records.

3) a) The Company has taken loans in earlier years from companies, firms or other parties covered under the register maintained under section 301 of the Indian Companies Act, 1956. The number of parties is 1 and the year end amount aggregates to Rs. 2 Lakhs.

b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the company.

c) We are informed that there is no stipulation regarding repayment of the loan.

4) The company has not given any loans to companies, firms or other parties covered by register maintained under section 301 of the Indian Companies Act, 1956.

5) In our opinion and according to the information and explanations given to us, certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, however there is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services, except for MIS-ERP system used for tracking inventory, in which there is scope for improvement. Further, on the basis of our examination of the books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system. However there is scope for improvement in the internal control procedure in the aforesaid areas.

6) a) To the best of our knowledge and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Indian Companies Act have been entered in the register required to be maintained under that section.

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 register maintained under section 301 of the Indian Companies Act, 1956, and exceeding the value of Rupees Five Lakhs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time where such market prices are available.

7) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public during the period covered by the audit report, within the meaning of Sections 58 A and 58 AA of the Companies Act, 1956 read with Companies (Acceptance of Deposits) Rules, 1975.

8) A firm of Chartered Accountants has conducted the internal audit for the period up to 31st March 2008. The report points out areas of weakness in internal control, inventory management system, MIS-(ERP) and delays in payments of statutory dues requiring management attention. In our opinion, and to the extent of audit done, the Company has an Internal Audit system commensurate with the size and the nature of its business.

9) We have broadly reviewed the records maintained by the company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed

Annexure to the Auditors’ Report(Referred to in Paragraph (3) of the Auditors’ Report of even date to the members of CLUTCH AUTO LIMITED on the financial statements for the year ended 31-03-2008)

19

under clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained and updated till the year ended 31-03-2007. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

10) a) According to the information and explanations given to us and the records of the company examined by us, in our opinion, the company is not regular in depositing undisputed statutory dues including investor education and protection fund, employees’ provident fund, employees’ state insurance, income-tax, wealth tax, service tax, customs duty, excise duty with the appropriate authorities except dues in respect of customs duty and cess. Further the company has not provided for interest/penalties under the Micro, Small & Medium Enterprises (Development) Act, 2006. We are informed that there is no liability with the company of wealth tax. According to information and explanations given to us there are no arrears of undisputed statutory dues as at 31

st March 2008, which were outstanding for

a period of more than six months from the date they became payable. However, liability is not ascertainable in the event of penalty/interest on delayed payment.

b) According to the information and explanations given to us and the records of the company examined by us, the particulars of dues of excise duty and cess as at 31-03-2008 which have not been deposited on account of a dispute, are as follows -

Nature of dues

Amount (Rs.)

Forum where the dispute is pending

Excise Duty

421.36 Lakhs

Central Excise & Service Tax Appellate Tribunal

c) According to the information and explanations given to us and the records of the company examined by us, there are no other dues of income-tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

11) There are no accumulated losses at the end of the financial year and the company has not incurred any cash losses in the current financial year and preceding financial year. Hence the requirements of clause (x) of paragraph 4 of the Order are not applicable to the Company.

12) According to the records of the company examined by us and the information and explanation given to us, the company has not defaulted in repayment of dues to any

financial institution or bank or debenture holders as at the balance sheet.

13) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

14) The Company is not a Chit Fund, Nidhi or mutual benefit Society. Hence the requirements of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

15) The company is not a dealer or trader in shares, securities, debentures and other investments.

16) According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

17) According to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained.

18) According to the information and explanations given to us, the cash flow statements examined by us and on the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment.

19) According to the information and explanations given to us no preferential allotment of shares has been made by the company to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

20) The Company has not issued any debentures. Hence the requirements of clause (xix) of paragraph 4 of the Order are not applicable to the Company.

21) The company has not raised any money by public issues during the year.

22) During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management.

For and on behalf of B. Aggarwal & Co.

Chartered Accountants

Dolly Rohatgi New Delhi, 26th July 2008 Partner

20

BALANCE SHEET AS AT 31ST MARCH,08(Amount in Rupees)

BALANCE SHEET AS AT 31ST MARCH,2008 (Amount in Rupees)

PARTICULARS SCHEDULE AS AT 31.03.08 AS AT 31.3.07

SOURCES OF FUNDS

Shareholders' Funds Share Capital I 163,154,300 155,154,300 Reserves & Surplus II 1,206,357,902 1,369,512,202 986,253,778 1,141,408,078

Equity Share Warrants - 9,978,000

Loan Funds Secured III 834,845,710 802,746,123 Unsecured IV 128,851,212 963,696,922 126,801,948 929,548,071

Deferred Tax Liability (Net) 40,500,000 37,800,000

TOTAL 2,373,709,124 2,118,734,149 APPLICATION OF FUNDS Fixed Assets V Gross Block 1,151,254,430 946,210,713 Less : Depreciation 427,457,246 377,345,443 Net Block 723,797,184 568,865,270 Capital work-in-progress 197,858,789 921,655,973 117,749,316 686,614,586

Current Assets, Loans & Advances Inventories VI 446,835,468 380,595,160 Sundry Debtors VII 1,005,233,382 1,058,741,149 Cash & Bank Balances VIII 345,563,290 284,936,558 Loans & Advances IX 125,516,806 111,938,561

1,923,148,946 1,836,211,428 Less : Current Liabilities & Provisions X 472,440,795 406,109,365 Net Current Assets 1,450,708,151 1,430,102,063

Miscellaneous Expenditure XI 1,345,000 2,017,500 (to the extent not written off/adjusted)

TOTAL 2,373,709,124 2,118,734,149 Significant Accounting Policies XIX-A - -

Notes forming part of Accounts XIX-B

As per our Separate Audit report of even date attached for B. AGGARWAL & CO V.K.MEHTA ANUJ MEHTA Chartered Accountants Vice Chairman cum Executive Director Director

Managing Director

DOLLY ROHATGI Partner M.No. 93414 ) T.N.SINGH

Director Director GM-Commercial & Manager(Accounts)Company Secretary

PLACE : NEW DELHI DATE : 26.7.2008

CLUTCH AUTO LIMITE

K.K.TANEJA

SHITAL K JAIN POOJA KAPUR PRITAM PAUL

21

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008 (Amount in Rupees)

CLUTCH AUTO LIMITED

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH,2008 (Amount in Rupees)

PARTICULARS SCHEDULE CURRENT YEAR PREVIOUS YEAR

INCOMEIncome from operations X11 2,379,803,371 2,556,201,783 Less:Excise Duty 209,990,607 205,518,727

2,169,812,764 2,350,683,056

Other Income XIII 654,807 394,103 Increase/(Decrease) in value in XIV 48,171,307 50,518,934 finished Goods/goods in Process

TOTAL 2,218,638,878 2,401,596,093

EXPENDITURE Raw Materials & components consumed XV 1,349,593,163 1,433,780,055

Personnel Expenses XVI 188,568,937 158,033,742 Other expenses XVII 345,789,509 404,312,279 Financial Expenses XVIII 114,900,189 88,983,879 Depreciation 59,589,112 52,653,845 Less:Transfer from Revaluation Reserve 971,639 58,617,473 971,639 51,682,206 Preliminary & Deferred Revenue expenses written-off 672,500 12,791,518

TOTAL 2,058,141,771 2,149,583,679

Profit (Loss) before tax 160,497,107 252,012,414 Less : Provision for Taxation 21,501,346 50,664,575

Provision for FBT 1,620,000 1,260,000 Provision for DTL 2,700,000 25,821,346 (9,500,000) Profit after tax 134,675,761 209,587,839 Balance brought forward from last year 414,659,545 205,071,706

Balance Carried to Balance Sheet 549,335,306 414,659,545 Earning per share : Basic 8.26 13.51 Diluted - 12.84

Significant Accounting Policies XIX-A Notes forming part of Accounts XIX-B

As per our Separate Audit report of even date attachedfor B. AGGARWAL & CO V.K.MEHTA Chartered Accountants Vice Chairman cum Executive Director Director

Managing Director

DOLLY ROHATGI Partner M.No. 93414 SHITAL K JAIN POOJA KAPUR) T.N.SINGH

Director Director GM-Commercial & Manager(Accounts)Company Secretary

PLACE : NEW DELHI DATE : 26.7.2008

ANUJ MEHTA K.K.TANEJA

PRITAM PAUL

CLUTCH AUTO LIMITED

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH,2008 (Amount in Rupees)

PARTICULARS SCHEDULE CURRENT YEAR PREVIOUS YEAR

INCOMEIncome from operations X11 2,379,803,371 2,556,201,783 Less:Excise Duty 209,990,607 205,518,727

2,169,812,764 2,350,683,056

Other Income XIII 654,807 394,103 Increase/(Decrease) in value in XIV 48,171,307 50,518,934 finished Goods/goods in Process

TOTAL 2,218,638,878 2,401,596,093

EXPENDITURE Raw Materials & components consumed XV 1,349,593,163 1,433,780,055

Personnel Expenses XVI 188,568,937 158,033,742 Other expenses XVII 345,789,509 404,312,279 Financial Expenses XVIII 114,900,189 88,983,879 Depreciation 59,589,112 52,653,845 Less:Transfer from Revaluation Reserve 971,639 58,617,473 971,639 51,682,206 Preliminary & Deferred Revenue expenses written-off 672,500 12,791,518

TOTAL 2,058,141,771 2,149,583,679

Profit (Loss) before tax 160,497,107 252,012,414 Less : Provision for Taxation 21,501,346 50,664,575

Provision for FBT 1,620,000 1,260,000 Provision for DTL 2,700,000 25,821,346 (9,500,000) Profit after tax 134,675,761 209,587,839 Balance brought forward from last year 414,659,545 205,071,706

Balance Carried to Balance Sheet 549,335,306 414,659,545 Earning per share : Basic 8.26 13.51 Diluted - 12.84

Significant Accounting Policies XIX-A Notes forming part of Accounts XIX-B

As per our Separate Audit report of even date attachedfor B. AGGARWAL & CO V.K.MEHTA Chartered Accountants Vice Chairman cum Executive Director Director

Managing Director

DOLLY ROHATGI Partner M.No. 93414 SHITAL K JAIN POOJA KAPUR) T.N.SINGH

Director Director GM-Commercial & Manager(Accounts)Company Secretary

PLACE : NEW DELHI DATE : 26.7.2008

ANUJ MEHTA K.K.TANEJA

PRITAM PAUL

22

SHEDULES FORMING PART OF THE STATEMENT OF ACCOUNTS(Amount in Rupees)

CLUTCH AUTO LIMITED

SCHEDULES FORMING PART OF THE STATEMENT OF ACCOUNS (Amount in Rupees)

PARTICULARS AS AT 31.03.08 AS AT 31.3.07

SCHEDULE - ISHARE CAPITAL

AUTHORISED CAPITAL200,00,000 Equity Shares of Rs.10 each 200,000,000 200,000,000

ISSUED CAPITAL163,20,080 Equity shares of Rs.10 each, (Previous year 15520080) 163,200,800 155,200,800

SUBSCRIBED & PAID UP CAPITAL16313880 Equity shares of Rs.10 each,fully paid up (Previous year 15513880) 163,138,800 155,138,800 Add:- Shares forfeited (6200 shares) 15,500 15,500

163,154,300 155,154,300

SCHEDULE - IIRESERVES AND SURPLUS

Capital Reserve 2,250 2,250 Investment Allowance Reserve 10,731,000 10,731,000

Share Premium Account 341,310,900 - 177,150,900 Add: During the year 86,400,000 427,710,900 164,160,000 341,310,900

Profit & Loss Account-Surplus 549,335,308 414,659,545

Revaluation Reserve( Land & Building) 219,550,083 220,521,722 Less:Dep for the year adjusted 971,639 218,578,444 971,639 219,550,083

1,206,357,902 986,253,778

SCHEDULE - IIISECURED LOANS (Refer Sch.XIX-B-(1)

TERM LOANS Term loan from bank 116,125,000 159,625,000 Term loans from others 1,148,252 9,996,962 WORKING CAPITAL FROM BANKS 717,572,458 633,124,161

834,845,710 802,746,123

SCHEDULE - IVUNSECURED LOANS

Inter Corporate Deposits 68,700,000 75,200,000 India Brand Equity Fund (IBEF) Trust 1,237,333 10,431,069 Council of Science & Indl. Research 50,000,000 Deferred Sales Tax (interest free) (See note 2(b)Sch XIX-B ) 8,913,879 41,170,879

128,851,212 126,801,948

23

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24

(Amount in Rupees)CLUTCH AUTO LIMITED (Amount in Rupees)

PARTICULARS AS AT 31.03.08 AS AT 31.3.07

SCHEDULE - VIINVENTORIES (See Accounting Policy No. Sch. XIX (A) (3)As taken valued & certified by the management

Raw Materials & Components 115,649,148 99,531,679 Finished Goods 52,880,718 59,526,783 Stores & spares 27,818,783 25,867,251 Work in Progress 249,729,369 194,941,824 Scrap 757,450 727,623

446,835,468 380,595,160

SCHEDULE - VII SUNDRY DEBTORS (Unsecured,Considered good unless otherwise stated)

Debts outstanding for a period exceeding six months Considered Good 241,491,983 119,326,144 Considered doubtful 1,948,640 243,440,623 1,572,282 120,898,426

Others 761,792,759 937,842,723

1,005,233,382 1,058,741,149

SCHEDULE - VIII CASH AND BANK BALANCES

Cash in hand (including cheques/Drafts etc in hand) 302,240,208 193,107,679

Balance with scheduled banks - in Current Accounts 34,684,405 86,938,045 - in Deposits Accounts(under bank lien) 8,449,349 4,867,608

Interest accrued on Deposits 189,328 23,226

345,563,290 284,936,558

SCHEDULE - IX LOANS & ADVANCES

(Unsecured , considered good unless otherwise stated) Advance recoverable in cash or in kind or for value to be received

53,442,491 43,855,728 - Considered Doubtful 3,784,698 92,416

Security Deposits 67,996,027 67,696,827

TDS Recoverable 293,590 293,590

125,516,806 111,938,561

25

CLUTCH AUTO LIMITED (Amount in Rupees)

PARTICULARS AS AT 31.03.08 AS AT 31.3.07

SCHEDULE - X CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIES Sundry Creditors:- - Micro and Small Enterprises 43,273,525 20,388,035 - Others 287,971,329 331,244,854 259,903,657 280,291,692 Advance from Customers 5,487,294 2,225,565 Deposit from Dealers and Suppliers 11,668,001 11,461,000 Other Liabilities 46,912,875 65,157,112 Interest accrued but not due 740,042 2,216,744 Unclaimed dividend (Less than 7years) 322,778 965,251

396,375,844 362,317,364 PROVISIONS For Retirement benefits 48,809,377 38,966,116 Excise duty on Unsold Goods 3,699,499 4,123,787

Provision for FBT 1,969,293 1,285,000 Less: paid - 1,969,293 975,000 310,000

Income Tax 21,708,757 50,000,000 Less :Advance tax & tax deducted at source 121,975 21,586,782 49,607,902 392,098

76,064,951 43,792,001 472,440,795 406,109,365

SCHEDULE - XIMISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) (See Note 4)

Product/Brand development & Training Opening Balance - 12,119,018 Addition - Less: Written off - - 12,119,018 -

Other Misc Expenses 2,017,500 2,690,000 Less Written off 672,500 1,345,000 672,500 2,017,500

1,345,000 2,017,500

(Amount in Rupees)

26

(Amount in Rupees)

PARTICULARS CURRENT YEAR PREVIOUS YEAR

SCHEDULE - XIIINCOME FROM OPERATIONS

Gross sales 2,356,354,075 2,533,567,794 Sale of Scrap 23,449,296 22,633,989

- -

2,379,803,371 2,556,201,783

SCHEDULE - XIII OTHER INCOME

Interest from Banks & others (TDS- Rs/-121975., Prev. year Rs.57902) 633,462 242,984 Sundry balances written back - 26,265 Miscellaneous receipts 21,345 25,410 Profit on sale of Assets - 99,444

654,807 394,103

SCHEDULE - XIVINCREASES / (DECREASE) IN STOCKS

Closing Stock Finished Goods 53,638,168 60,254,406 Goods in process 249,729,369 303,367,537 194,941,824 255,196,230

Opening Stock: Finished goods 60,254,406 51,248,792 Goods in process 194,941,824 255,196,230 153,428,504 204,677,296

Increase / (Decrease) 48,171,307 50,518,934

SCHEDULE - XV RAW MATERIALS & COMPONENTS CONSUMED

Opening Stock 99,531,679 91,415,948 Add: Purchases 1,365,710,632 1,441,895,786

1,465,242,311 1,533,311,734 Less: Closing Stock 115,649,148 99,531,679

1,349,593,163 1,433,780,055

SCHEDULE - XVIPERSONNEL

Salaries,Wages,Bonus & Allowances 147,851,226 119,458,317 Contribution to Provident Fund & Other Funds 15,026,639 12,488,539 Gratuity 8,242,931 11,060,647 Staff benefits 16,897,247 14,686,208 Personnel Development,Recruitment & Training 550,894 340,031

188,568,937 158,033,742

27

(Amount in Rupees)PARTICULARS CURRENT YEAR PREVIOUS YEAR

SCHEDULE - XVIIOTHER EXPENSES

Stores,Spares and Tools consumed 39,362,749 42,643,469 Carriage Inward 14,001,073 5,883,379 Electricity,Water Power & Fuel 38,772,771 32,748,457 Job work charges 46,824,275 44,257,982 Repairs to Machinery 8,853,974 13,187,105 Repairs to Building 794,560 1,019,947 Research & Development 3,927,629 6,679,025 Other Factory Expenses 2,574,244 918,086 Repairs and Maintenance(others) 4,972,534 6,334,498 Rent 453,825 302,796 Rates & Taxes 185,959 135,167 Insurance 1,621,554 2,527,977 Directors Fees 837,500 541,000 Travelling & Conveyance - Directors 2,758,892 6,036,951 - Others 13,171,237 12,528,034 Bank & Finance charges 10,902,547 6,235,349 Legal & Professional Charge 6,294,083 7,550,021 Printing & Stationery 1,985,783 1,889,176 Postage & Telecommunications 5,455,226 5,066,884 Charity & Donation 158,944 113,360 Advertisement & publicity 512,506 417,652 Commission to Managing Director - 2,500,000 Commission,Rebate & Discounts 46,689,974 67,663,011 Excise duty on stocks/others 455,789 1,383,240 Sales Promotion 1,156,411 991,209 Export Expenses 28,456,784 51,705,093 Loss on sale assets 95,689 - Outward Freight & Forwarding Charges 21,983,945 22,878,273 Packing Material consumed 39,090,827 54,713,389 Miscellaneous Expenses 3,438,225 5,461,749

345,789,509 404,312,279

SCHEDULE - XVIIIFINANCIAL EXPENSES

Interest paid - Term Loan 19,064,910 21,544,409 - Others 95,835,279 67,439,470

114,900,189 88,983,879

28

XIX. (A) SIGNIFICANT ACCOUNTING POLICIES

1. ACCOUNTING CONCEPTS:The accounts are prepared on historical cost convention, on a going concern basis in accordance with the generally ac-cepted accounting principles and accounting standards ap-plicable in India, and conform to the statutory requirements and other relevant provision of the Indian Companies Act, 1956, read with The Companies (Accounting Standard ) Rules, 2006, except where otherwise stated.

2. a. FIXED ASSETS: Fixed Assets are valued at cost unless otherwise stated

and net of CENVAT credit. All significant costs incidental to acquisition and installation including interest up to the date of commissioning and adjustments arising from exchange rate variations relating to liability on capital account are capitalized.

b. DEPRECIATION i). Depreciation is provided on straight line method:- 1. On assets added up to 30th June 1987 on the basis

of rates derived from income tax rules at the time of acquisition

2. On assets added after 30th June, 1987 at the rates given(for double shifts) in Schedule XIV of the Companies Act,1956. It is calculated on pro‐rata basis on additions during the year.

3. Assets costing up to Rs.5000 are fully depreciated in the year of purchase.

4. Intangible assets are written off over a period of 10 years.

ii). Depreciation is not provided on deletion of assets, as it has no effect on the results of the year.

3. VALUATION OF INVENTORIESInventories are valued at cost except for finished goods and scrap. Finished goods are valued at lower of cost or net realizable value and scraps are valued at estimated realiz-able value. Raw materials and consumables are valued by excluding recoverable taxes and duties. Cost is determined using weighted average method. Cost of in house manufac-tured Raw material is taken at standard rate.

4. EXCISE DUTYExcise Duty on closing stock of finished goods lying in the factory is provided for.

5. EMPLOYEE BENEFITSIn the financial year ended March 31st 2008, the Company

has adopted Accounting Standard 15 (Revised 2005) issued by Institute of Chartered Accountants of India (ICAI) on ‘Ac-counting for Retirement Benefits in Financial Statements of Employers’. Accordingly the Company has provided for li-ability on account of all following employees benefits avail-able to the employees in accordance with the applicable rules, regulations, laws and employee benefit policy of the Company.a). The company is a member of a Provident Fund Scheme

under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. This is a defined contribution scheme and the contributions are charged to the Profit & Loss Account of the year when the contributions to the government funds are due.

b). Gratuity liability is defined benefit obligations and provided for on the basis of an actuarial valuation as per projected unit credit method, made at the end of each financial year. The difference between the actuarial valuation of the gratuity liability of the employees at the year end and the balance of provisioning made is provided for as liability in the books.

c). Employees are entitled for leave encashment which are provided for on the basis of actuarial valuations.

6. MISCELLANEOUS EXPENDITUREProduct development and training expenditure/Brand de-velopment /other miscellaneous expenditure are amortized over a period of six years/five years respectively.

7. REVENUE RECOGNITIONa). Sales are accounted for inclusive of excise duty and

exclusive of sales tax.b). In respect of exports made under Duty Entitlement Pass

Book Scheme (DEPB), the benefit is accounted for on receipt basis. This is subject to realization of export dues, filing and acceptance of claims and/or transfer of license for consideration.

8. RESEARCH AND DEVELOPMENT EXPENDI-TURERevenue expenses are charged off in the year in which it is incurred.

9. FOREIGN CURRENCY TRANSACTIONSTransactions in foreign currencies are recorded at the ex-change rate prevailing at the time of transaction. Current As-sets/Liabilities are restated at the year end exchange rates. The resultant gain or loss is recognized in the profit and loss account. In the case of acquisition of fixed assets, the differ-ences are adjusted to the cost of such assets.

29

10. ACCOUNTING FOR TAXESa). Provision for current tax is recognized based on the tax

payable for the year under the Income Tax Act, 1961.b). Deferred tax on timing differences between taxable

income and accounting income is accounted for, using the tax rates and the tax laws enacted or substantially enacted as on the balance sheet date. Deferred tax assets, other than on unabsorbed tax depreciation and unabsorbed tax losses, are recognized only to the extent that there is a reasonable certainty of their realization. Deferred tax assets on unabsorbed tax depreciation and unabsorbed tax losses are recognized only to the extent that there is virtual certainty of their realization supported by convincing evidence.

c). Minimum Alternate Tax is paid in accordance with the tax laws, which give rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset when it is probable that the future economic benefit associated with it will flow to the company and the asset can be measured reliably.

d). Provision for Fringe Benefit Tax is recognized based on the FBT payable as per requirements of the Income Tax Act, 1961.

11. LeasesOperating lease payments are recognized as an expense on a straight line basis over the term of the lease.

12. ProvisionsThe company makes a provision where there is a present obligation as a result of a past event where the outflow of economic resources is probable and a reliable estimate of the amount of obligation can be made.

13. Earning per shareBasic earning per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

14. Segment reportingThe Company’s operating geographical business segment is based on the locations of customers. Allocable costs are allocated to each segment in proportion to the relative sales of each segment. All the common income, expenses, assets and liabilities, which are not possible to be allocated to differ-ent segments, are treated as un-allocable items.

XIX –(B) NOTES FORMING PART OF ACCOUNTS1. SECURED LOANS a) Nature of Security i) Term Loan from AXIS BANK Secured by way of equitable mortgage / hypothecation

of fixed assets present & future of the company & guaranteed by Managing Director and secured by pari-passu second charge on current assets present & future.

ii) Term Loans from Technology Development Board / ICICI Bank Ltd.

- Secured by hypothecation of specific assets purchased there against and guaranteed by Managing Director.

- Secured by an exclusive charge by way of hypothecation on all movable properties under the Sponsored Research & Development program of World Bank (SPREAD) under the agreement dated 6th August, 2003.

iii) Working Capital Loans from banks Secured by hypothecation of stock of finished goods,

semi finished goods raw material, consumable stores and book debts of the company. These securities rank pari-passu in favour of various banks viz. Indusind Bank Ltd., Axis Bank , Canara Bank DCB Bank and DBS Bank. Secured by second charge by way of equitable mortgage of fixed assets and guaranteed by Managing Director.

b) Non fund based limits Assets charged with Bank also cover security for these

limits.

2. UNSECURED LOANS a) Ministry of Science and Technology under the aegis

of CSIR, has approved a Project under ‘NMITLI’ scheme and has sanctioned unsecured soft loan of Rs. 1503.55 lacs, out of which Rs. 500 lacs has been disbursed during the year.

b) Deferred Sales Tax Loan (Interest free) is covered by a Bank guarantee to the extent of 15% loan amount availed. This loan is repayable after a period of 5 years to the extent of amount deferred, payable in monthly instalments. The loan is guaranteed by the Managing Director.

c) In view of assurance given by India Brand Equity Foundation (IBEF) Trust, IBEF vide Communication dated 19.6.06 to consider rebate of 1.50% in the rate of interest the company has not provided

30

differential interest liquidated damages amounting to Rs. 25.21 lacs and Rs.3.20 lacs respectively up to 01.03.2007.

d) Lending from LIC Mutual Fund amounting to 25 Crores, secured by way of issuance of 250 Unsecured Redeemable Non-Convertible debentures of Rs. 10 Lac each. This was pronounced surplus on objective, being attained from internal accruals and other sources. In order to save the interest cost to profitability, lending was assigned, who took over the said debt and indemnified repayment along with interest accruing.

3. CAPITAL COMMITMENTS Estimated amount of contracts remaining to be executed

on capital account and not provided for Rs. 414.65 lacs (Rs. 66.90 lacs) relating to purchase of machinery.

4. The expenditure on product development & training and sales promotion & brand development carried in the balance sheet as deferred revenue expenditure are being amortized equally over a period of 6 and 5 years respectively. Consequently an amount of Rs.6.72 lacs (Rs. 127.91 lacs) has been written off during the current year.

5. EMPLOYEE BENEFITSDEFINED BENEFIT PLAN- GRATUITY(Projected Unit Credit Actuarial Method)

2008 Rs

Expense recognised in the Statement of Profit & Loss for the financial year ended 31st March’08 Current Service Cost 22,70,941Past Service Cost -Interest Cost 29,58,917Expected Return on plan Assets -Net Actuarial Gain/Loss recognised during the year

13,15,596

Expenses recognised in the statement of profit & loss

65,45,454

Net Assets/ Liabilities recognised in the Balance Sheet as at 31st March ‘08Present Value of obligation as at the end of the period

4,35,31,918

Fair Value of Plan Assets as at the end of the period

-

Funded Status (4,35,31,918)Excess of Actual over estimated -Unrecognised Actuarial (Gains)/Losses -

Net Assets/ (Liability) Recognised in the Balance Sheet

(4,35,31,918)

Changes in the present value of obligationPresent value of obligation as at the begin-ning of the period

3,69,86,464

Acquisition Adjustments -Interest Costs 29,58,917Past Service Costs 22,70,941Curtailment Cost/ (Credit) -Settlement Costs/ (Credit) -Actuarial (Gain)/ Loss on Obligation 13,15,596Present Value of Obligation as at the end of the period

4,35,31,918

Fair Value of Plan Assets (Funded Status) (4,35,31,918)

EARNED LEAVE AND COMPENSATED ABSENCESExpense recognised in the Statement of Profit & Loss for the financial year ended 31st March ‘08Current Service Cost 2,80,259Past Service Cost -Interest Cost 1,58,372Expected Return on plan Assets -Net Actuarial Gain/Loss recognised dur-ing the year

28,59,176

Expenses recognised in the statement of profit & loss

32,97,807

Net Assets/ Liabilities recognised in the Balance Sheet as at 31st March 2008Present Value of obligation as at the end of the period

52,77,459

Fair Value of Plan Assets as at the end of the period

-

Funded Status (52,77,459)Excess of Actual over estimated -Unrecognised Actuarial (Gains)/Losses -Net Assets/ (Liability) Recognised in the Balance Sheet

(52,77,459)

31

Changes in the present value of obligationPresent value of obligation as at the be-ginning of the period

19,79,652

Acquisition Adjustments -Interest Costs 1,58,372Past Service Costs -Current Service Costs 2,80,259Curtailment Cost/ (Credit) -Settlement Costs/ (Credit) -Actuarial (Gain)/ Loss on Obligation 28,59,176Present Value of Obligation as at the end of the period

52,77,459

Fair Value of Plan Assets (Funded Status)

(52,77,459)

ASSUMPTIONSEconomic

Discount Rate- 8.00%Increments- 5.50%Expected Rate of Return on Plan - Assets

0.00%

DemographicMortality Table- LIC(1994-96)

duly modifiedRetirement Age- 58 Years

Withdrawal Rates- Upto 30 Yearso 3.00%Up to 44 Yearso 2.00%Above 44 Yearso 1.00%

This being the first year of disclosure, previous year figures have not been furnished

6. CONTINGENT LIABILITIES 2008

Rs. in lacs

2007Rs. in lacs

i) Claims against the company not acknowledged as debts.

ii) Disputed Excise duty (inclu-ding penalty of Rs. 215.68 lacs), under appeal before Central Excise & Service Tax Appellate Tribunal (Rs.50 lacs paid as deposit and shown under loans and advances Schedule 7 (iv))

iii) Cheques discounted with Banks

iv) The Company may be liable for penalty / interest on delayed payments/arrears of certain statutory dues which are presently not quantifiable.

v) Guarantees given by Banks (excluding liabilities provided)

vi) The company is contingently liable for repayment of Rs.25 crores to LIC Mutual Fund on account of 250 Unsecured Non-convertible of Rs.10 Lac each upon transferring the lending in accordance with MOU.

vii) The company is contingently liable for payment of interest on delayed payments made beyond the appointed day during the financial year as well as on outstanding amount at the year end to Micro, Small, and Medium Enterprises under the provisions of Section 16 of The Micro, Small, and Medium Enterprises Development Act, 2006.

88.96

421.36

47.33

-

126.06

-

64.67

88.96

421.36

2.21

-

87.60

-

-

7. CURRENT ASSETS, LOANS AND ADVANCES Basis of quantitative particulars given below under

item 17 is as under; (1) Production figures have been ascertained on the

basis of production report summaries. The opening

32

and closing balances of finished goods are based on stock records and physically verified inventories. Sales quantities have been furnished on the basis of sales invoices.

(2) The quantities of different classes of raw materials and components consumed have been derived by posting in a separate ledger, the opening quantities & purchases and deducting therefrom the closing stock. The quantities for different items have not been ascertained from stock cards. The Company is still to introduce a procedure for correlation of materials consumed with production.

(3) Stock of semi - finished, raw material and finished goods includes slow moving and non-moving stock of Rs. 11.23 lacs (15.04 lacs). In the opinion of the Management, no reduction is considered necessary in the value of the stocks.

(4) Semi - finished goods have been ascertained on the basis of physical verification.

(5) Finished Goods comprise of varied specifications and include a number of components. In the absence of a scientific system of costing in vogue, value of closing stock is worked out, as in the past, by reducing from the selling price, an appropriate margin towards profit & selling expenses.

(6) In the opinion of the Board and to the best of their knowledge and belief, Value of realization of current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the balance sheet. Balance of personal accounts are subject to confirmation for the respective parties.

8. EQUITY SHARE WARRANTS During the year the company has converted 8, 00, 000

warrants in fully paid up equity share of Rs. 10/- each issued at a price of Rs. 118/- per share to promoters & others. The Company has received Rs. 8, 44, 22, 000 against allotment of above said equity shares during the year.

9. MICRO, SMALL & MEDIUM ENTERPRISES Micro, Small and Medium enterprises have been

identified by the Company on the basis of information available. Total outstanding dues of Micro, Small & Medium enterprises, which are outstanding for more that the stipulated period are given below:

(figures in Rs. Lacs)2008

a) Dues remaining unpaid as at 31st March 2008

Principali) 206.25Interestii) -

b) Interest paid in term of Section 16 of the Act

-

c) Amount of principal payments made beyond the appointed day during the year

1542.31

d) Amount of Interest due and payable for the period of delay on payments made beyond the appointed day during the year

-

e) Amount of interest accrued and re-maining unpaid as at 31st March 2008

Interest on delayed payments beyond the appointed day has been considered as a contingent liability.

10. PROFIT & LOSS ACCOUNT a) Payment to Auditors : Current year Previous year ( Rs ) ( Rs ) i) Audit Fee 225,000 225,000 ii) Reimbursement of expenses 17,520 14,890 iii) Certification of statements 10,000 16,000

iv) Service Tax 31,211 27,810

b) Sales include exchange rate fluctuation of Dr. Rs. 58.26 lacs (Previous year Cr. Rs. 10.26 lacs).

c) Remuneration to Managing and Whole time Directors: Current year Previous year

Salary & Allowances 9,044,516 6,188,361 Contribution to Provident Fund 7,23,561 450,581Perquisites 12,12,353 757,426

Commission - 2,500,000

d) Computation of commission payable to the Managing Director:- Current Year Previous Year

Net Profit before taxes as per Profit & Loss A/c 160,497,107 252,012,414Add Director fee 837,500 541,000Commission to Managing Director - 2,500,000Remuneration paid to MD & Directors 10,980,430 7,396,368Net profit for calculating MD Commission 172,315,037 262,449,782 Commission 1% on above 1,723,150 2,624,498Commission provided - 2,500,000 e) Export Promotion & Export Expenses include (1) ECGC premium 375,563 1,496,597 (2) Salary & Wages 952,721 757,982

33

11. SEGMENT REPORTINGSegment Information for the Year Ended 31st March, 2008Information about secondary Business Segments

2008 2007(Rs. in laks) (Rs.in laks)

Revenue by Geographical Market 1. India 19889.39 18496.45 2. Outside India 1808.74 5010.38

Total : 21698.13 23506.83

Segment Results Profit/(Loss) before interest and taxes 1. India 6489.29 6404.72 2. Outside India 643.51 1796.13

Total : 7132.80 8200.85Less: Interest 1149 889.84Less: Other Unallocable Expenditure 4358.38 4794.82Add: Other Unallocable Income 6.55 3.94 PROFIT BEFORE TAX 1604.97 2520.13

12. RELATED PARTY DISCLOSURES - AS-18 a) Related parties and their relationship i) Key management personnel - Mr. V.K. Mehta, Vice Chairman & Managing Director

(Promoter) - Mr. Anuj Mehta, Executive Director (Relative) - Mrs Pooja Kapur Director (Relative) ii) Enterprises over which key management personnel

are able to exercise significant influence. Purchase of goods/ServicesAmt O/s Rs in Lacs Rs in Lacsa) Macas Brakes Automotive (P)Ltd. 130.81 -b) Kanav Engineering 48.07 42.54c) Anuj Holding Pvt. Limited - - d) Gurukripa Founders & Engineers 633.82 - up to 30.06.2007e) Sterling Traders - Sole proprietor Firm of Managing Directorf) Venus Trading Co. – Sole proprietary firm of wife of the

Managing Directorg) Clutch Auto Ltd. - a company incorporated in the State of

Illinois, USA - Shri V.K. Mehta, Managing Director is the sole Shareholder as

on 31.3.2008.

b) Transactions with the above parties in the ordinary course of business.

i) Transactions with key management personnel mentioned in (i) above.

Current Year Previous year (Rs.in lacs) (Rs.in lacs) a) Remuneration (Including Commission) 109.80 98.96 b) Rent paid 1.08 1.08 c) Amounts outstanding at the year end: - Payable 2.32 0.47

ii) Transaction with above parties a) Purchase of Goods /Services 812.70 1732.82 b) Amount outstanding at the year end: - Payable 42.54 66.04

13. EARNING PER SHARENet Profit after tax attributable to shareholders.

1346.75 2095.87Weighted Average No. of equity shares Basic 16313880 15513880Diluted - 16313880EPS

Basic 8.26 13.51Diluted - 12.84

14. As per AS –22 Taxes on Income, Cumulative Deferred Tax Liability upto 31.3.2008 is Rs. 405/- lacs and for current year is Rs. 27/- lacs. Major components of Deferred Tax arising on account of Timing Difference are as follows:

Deferred Tax Liabilties (DTL) As on As on 1.4.2007 For the year 31.3.2008 Rs. in lacs Rs. in lacs Rs. in lacs Difference between book & tax depreciation 509 62 571 Total 509 62 571

Deferred Tax Assets Provision for Gratuity & Leave Encashment 131 35 166 Total 131 35 166 Net DTL 378 27 405 15. INTANGIBLE ASSETS The company incurred expenditure on design and

development of products including manufacture, testing field trials and evaluation of proto-types and samples. The Company, keeping in view the guiding principles of

34

Accounting Standard 26 (AS-26) on Intangible Assets, considers that the expenditure incurred are in the nature of self generated technical know-how and product development. As a result, the Company has been able to obtain patents for few designs in India and USA; and has applied for more in and outside India. The loan sanctioned by Ministry of Science and Technology (CSIR) under NMITLI scheme are specifically intended for meeting the aforesaid expenses. Such expenses have been reviewed by technical experts, who have confirmed that the expenses relate to product development. Consequently, the Company considers that the expenses qualify to be treated as “Intangible Assets” as envisaged in AS-26. It is expected that use of the intangible assets would generate economic benefits in future for the company. Estimated expense forming part of the Intangible Assets to be capitalized during the current year is Rs.189.70 lacs.

16. Previous year figures have been regrouped, wherever necessary to correspond to current year figures

17. Additional information pursuant to para 4C & 4D of para II of Schedule VI of the Companies Act, 1956.

a) Particulars of capacity, production, Stocks & Sales - Annexure attached

b) Particulars of Raw Materials & Components consumed.

Classes of Goods Unit Quantity Amount(Rs.)Forgings Nos. 3,388,848 67,038,866 (3,575,209) (73,336,013)

Facings Set 2,772,911 175,855,292 (3,011,615) (213,415,304)

Steel Sheets Kgs. 3,740,748 148,011,731 (5,622,675) (185,979,515)

Castings Nos. 1,074,249 246,663,712 (1,122,387) (287,496,873)

Spring Steels Kgs 1,281,736 68,284,424 (1,165,993) (62,885,763)

Springs Nos. 14,462,495 73,302,729 (13,396,155) (83,592,925)Rivets & Other Components - 570,436,409 (-) (527,073,662) Total : 1,349,593,163 (1,433,780,055)

c) Value of Imported & Indigenous raw material, spares & components consumed.

Amount Percent (Rs.) (Rs.) 1) Raw Material Imported 111,426,151 8.26 (118,462,556) (8.26) Indigenous 1,238,167,012 91.74 (1,315,317,499) (91.74) Total: 1,349,593,163 100 (1,433,780,055) (100) 2) Stores & Spares: Imported Nil Nil (Nil) (Nil) Indigenous 39,362,749 100 (42,643,469) (100)d) Earnings in foreign exchange - FOB Value of exports 180,637,509 (on accrual basis) (478,398,554) e) Expenditure in Foreign Currency on account of - Travel 5,303,706

(6,467,226) - Technical Fee 2,793,046 (227,465) - Other - (123,395)

Total : 8,096,752 (6,818,086)

f) CIF value of imports (on accrual basis) - Raw materials 106,749,956

(121,485,786) - Capital - (15,469,469)Note :- Figures in brackets are in respect of previous yearSignature to Schedules 1 to XIX - BAnnexure to our report of even date

For B. AGGARWAL & CO. V.K.MEHTA K.K. TANEJAChartered Accountants Vice-Chairman cum DirectorDOLLY ROHATGI Managing DirectorPartnerM.No. 93414

SHITAL K JAIN ANUJ MEHTA POOJA KAPURDirector Executive Director Director

PRITAM PAUL T.N. SINGH GM-Commercial Manager (Accounts) & Company Secretary

Place : New Delhi, Dated: 26.7.08

35

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Page 1

36

Cash flow Statement for the year ended 31st March,20082007-08 2006-07

A. From operating activities Net Profit before tax 160,497,107 252,012,414

Adjustments for :- Depreciation on Fixed Assets 58,617,473 51,682,206Miscellaneous expenditure written of 672,500 12,791,518 Interest income (633,462) (242,984) Interest expenses 114,900,189 88,983,879 Loss/(Profit) on sale of fixed assets 95,689 (99,444)

173,652,389 153,115,175Operating Profit before working capital changes 334,149,496 405,127,589

Adjustments for :- (Increase)/Decrease in Trade and other receivables 39,929,522 (379,773,431) (Increase)/Decrease in inventories (66,240,308) (60,579,812) (Increase)/Decrease in Current liabilities & Provision 43,477,453 17,166,667 167,914,865 (272,438,378)Cash generated from operations 351,316,163 132,689,211 Interest expenses (114,900,189) (88,983,879)Direct taxes paid(Net of refund (267,367) (73,532,664)Product Dev & Training expenses 0 0Net cash from operating activities 236,148,607 (29,827,332)

B Cash flow from investing activities Purchase of fixed assets and change in capita (295,418,735) (181,014,811) work in progress (including intangible assetsInterest income 633,462 242,984Proceeds from sale of Fixed Assets 692,547 434,955Net cash used in investing activities (294,092,726) (180,336,872)

C Cash flow from financing ActivitiesProceeds from Secured loans (Net 32,099,587 208,198,856Proceeds from Equity share fund 84,422,000 151,530,000Proceeds from Application money agst warran 0 9,978,000Poceeds from Unsecured loans(Net 2,049,264 38,511,725Net cash from financing activities 118,570,851 408,218,581Net change in cash and cash equivalents 60,626,732 198,054,377

Net increase in cash and cash equivalents:Cash & Cash equivalents as at 1st Apri 284,936,558 86,772,877Cash & Cash equivalents as at 31st March 345,563,290 284,827,254

60,626,732 198,054,377

Annexure to our report of even datefor B. AGGARWAL & COChartered Accountants V.K.MEHTA ANUJ MEHTA K.K.TANEJA

Vice Chairman cum Executive Director DirectorManaging Director

DOLLY ROHATGI PartnerM.No. 93414

POOJA KAPUR SHITAL K JAIN PRITAM PAUL T.N.SINGHDirector Director GM-Commercial Manager(Accounts)

&Company SecretaryPLACE : NEW DELHIDATE : 26.7.2008

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008

Cash flow Statement for the year ended 31st March,20082007-08 2006-07

A. From operating activities Net Profit before tax 160,497,107 252,012,414

Adjustments for :- Depreciation on Fixed Assets 58,617,473 51,682,206Miscellaneous expenditure written of 672,500 12,791,518 Interest income (633,462) (242,984) Interest expenses 114,900,189 88,983,879 Loss/(Profit) on sale of fixed assets 95,689 (99,444)

173,652,389 153,115,175Operating Profit before working capital changes 334,149,496 405,127,589

Adjustments for :- (Increase)/Decrease in Trade and other receivables 39,929,522 (379,773,431) (Increase)/Decrease in inventories (66,240,308) (60,579,812) (Increase)/Decrease in Current liabilities & Provision 43,477,453 17,166,667 167,914,865 (272,438,378)Cash generated from operations 351,316,163 132,689,211 Interest expenses (114,900,189) (88,983,879)Direct taxes paid(Net of refund (267,367) (73,532,664)Product Dev & Training expenses 0 0Net cash from operating activities 236,148,607 (29,827,332)

B Cash flow from investing activities Purchase of fixed assets and change in capita (295,418,735) (181,014,811) work in progress (including intangible assetsInterest income 633,462 242,984Proceeds from sale of Fixed Assets 692,547 434,955Net cash used in investing activities (294,092,726) (180,336,872)

C Cash flow from financing ActivitiesProceeds from Secured loans (Net 32,099,587 208,198,856Proceeds from Equity share fund 84,422,000 151,530,000Proceeds from Application money agst warran 0 9,978,000Poceeds from Unsecured loans(Net 2,049,264 38,511,725Net cash from financing activities 118,570,851 408,218,581Net change in cash and cash equivalents 60,626,732 198,054,377

Net increase in cash and cash equivalents:Cash & Cash equivalents as at 1st Apri 284,936,558 86,772,877Cash & Cash equivalents as at 31st March 345,563,290 284,827,254

60,626,732 198,054,377

Annexure to our report of even datefor B. AGGARWAL & COChartered Accountants V.K.MEHTA ANUJ MEHTA K.K.TANEJA

Vice Chairman cum Executive Director DirectorManaging Director

DOLLY ROHATGI PartnerM.No. 93414

POOJA KAPUR SHITAL K JAIN PRITAM PAUL T.N.SINGHDirector Director GM-Commercial Manager(Accounts)

&Company SecretaryPLACE : NEW DELHIDATE : 26.7.2008

2007-08

37

I. Registration Details 0 0 0 0 5 6 3 4 State Code 5 5

Balance Sheet Date 3 1 0 3 2 0 0 8 Date Month Year

II Capital Raised during the year (Amount in Rs. Thousands Public Issue Right Issue 0 0 0 0 0 0 0 N I L

Bonus Issue Private Placement N I L 8 0 0 0

III Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousand Total Liabilities Total Assets 2 8 4 6 1 5 0 2 8 4 6 1 5 0

Sources of Funds Paid-up Capital Reserve & Surplus 1 6 3 1 5 4 1 2 0 6 3 5 8

Deferred Tax Liability4 0 5 0 0

Secured Loans Unsecured Loans8 3 4 8 4 6 1 2 8 8 5 1

Application of Funds Net Fixed Assets Investments 9 2 1 6 5 6 N I L

Net Current Assets Misc. Expenditure 1 4 5 0 7 0 8 1 3 4 5

Accumulated LossesN I L

IV Performance of Company (Amount in Rs. ThousandsTurnover including Other Incomes Total Expenditure

2 3 8 0 4 5 8 2 2 1 9 9 6 1 Profit Before Tax Profit After Tax

1 6 0 4 9 7 1 3 4 6 7 6Earning Per share in Rs. Dividend Rate %

0 8 . 2 6 0 0V. Generic Names of Three Principal Product/Services of Company (As per Monetary Terms

Item Code No. 8 7 . 0 8(ITC Code)Product Description C L U T C H P L A T E

C O V E R A S S E M B L Y

Item Code No. 8 7 . 1 0(ITC Code)Product Description M E T T A L I C D I S C

V.K.MEHTA ANUJ MEHTA K.K.TANEJA SHITAL K JAIN Vice Chairman cum Executive Director Director Director Managing Director

POOJA KAPUR PRITAM PAUL T.N.SINGHDirector GM-Commercial & Manager (Accounts)

Company SecretaryPlace: New DelhiDate :26.7.2008

CLUTCH AUTO LIMITED BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE

38

NOTICE

Notice is hereby given that the THIRTY SEVENTH ANNUAL GENERAL MEETING of the Members of Clutch Auto Lim-ited will be held on Saturday, the 27th September 2008 at 11.00 A.M. at Pearey Lal Bhawan, Gandhi Memorial Hall, 2,Bahadur Shah Zafar Marg, New Delhi - 110 002 to transact the following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the audited Balance Sheet as at 31st March, 2008 and the Profit and Loss Account for the year ended on that date, together with the Reports of the Directors and Auditors thereon.

2. To appoint a Director in place of Shri Shital K Jain who retires by rotation and, being eligible, offers himself for re-appointment.

3. To appoint a Director in place of Smt. Pooja Kapur who retires by rotation and, being eligible, offers herself for re-appointment.

4. To appoint M/s. B. Aggarwal & Co., Chartered Accountants, New Delhi and consider, if thought fit, to pass with or without modification(s), the following resolution as an ordinary resolution:

“RESOLVED THAT M/s. B. Aggarwal & Co., Chartered Accountants, New Delhi, the retiring Auditors, who are eligible to be so appointed and whose consent is available, be and are hereby reappointed as the Statutory Auditors under section 224 and all other applicable provisions, if any, of the Companies Act, 1956 to hold such office from the conclusion of this meeting until the conclusion of the next Annual General Meeting on a remuneration including out of pocket expenses as may be considered fit and proper by the Board of Directors.”

SPECIAL BUSINESS

5. Appointment of Sh. Chandra Shekhar Aggarwal as Director

To consider and if thought fit, to pass with or without modification(s), the following resolution as an ordinary resolution:

“RESOLVED THAT Sh. Chandra Shekhar Aggarwal who was appointed by the Board of Directors as an Additional Director of the Company with effect from July 26, 2008 and who holds office upto the date of the forthcoming Annual General Meeting of the Company in terms of Section 260 of the Companies Act, 1956 (“the Act”) and in respect of whom the Company has received a notice in writing from a Member under Section 257 of the Act, proposing his candidature for the office of Director of the Company, be and is hereby appointed as a Director.”

Regd.Office By Order of the Board of Directors 2E/14 (1st Floor) Jhandewalan Extn. New Delhi 110 055 PRITAM PAUL Dated:26th July, 2008 GM-Commercial & Company Secretary

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NOTES:

The relative Explanatory Statement pursuant to Section 173 of the Companies Act, 1956 in respect of the business under 1. item No.5 set out above and details under Clause 49 of the Listing Agreement with the Stock Exchanges in respect of Directors seeking appointment/re-appointment at the Annual General Meeting, are annexed hereto.

Only registered members of the Company may attend and vote at the Annual General Meeting. A Member entitled to 2. attend and vote at the meeting may appoint a proxy to attend and vote instead of himself/herself. A proxy need not be a member of the Company.

The proxy in order to be effective, should be duly signed, stamped and deposited at the Registered Office of the 3. Company not less than forty eight (48) hours before the commencement of the Annual General Meeting.

The Register of Members and Transfer Books will remain closed from Thursday, 254. th September, 2008 to Saturday, 27th September, 2008 (both days inclusive).

The Company has admitted its Equity Shares in the Depository System of National Securities Depository Limited 5. (NSDL) as well as Central Depository Services (India) Ltd. and has offered investors the facility to hold shares in demat form and to carry out scripless trading of these shares as per the prescribed procedure.

The shareholders may send their requests for transfer, transmission, transposition, deletion of name, demat, remat, 6. change of address etc. at the below mentioned address of the Registrar & Share Transfer Agent (R & T Agent):

M/s. MAS Services Pvt. Ltd., AB 4, Safdarjung Enclave, New Delhi 110 029.

The requests received at the registered office will also be forwarded to the R & T Agent.

Pursuant to the provisions of Section 109A of the Companies Act, 1956, shareholders may file Nominations in respect of 7. their respective shareholdings. Any shareholder willing to avail of this facility may submit to the Company the prescribed form 2B, if not already filed.

Members are requested to bring their copies of Annual Report to the Meeting as such copies may not be available at 8. the Annual General Meeting.

Members are requested to put their signatures at the space provided in the Attendance Sheet annexed to the proxy form 9. and hand over the same at the designated counter near the entrance of the Meeting Hall.

10. Members may also kindly note that there will be no gifts/food coupons at the Annual General Meeting.

11. The documents referred to in the accompanying notice and explanatory statement are open for inspection at the Registered Office of the Company on all working days, except Holidays, between 11.00 A.M. and 1.00 P.M. upto the date of the Annual General Meeting.

Regd.Office By Order of the Board of Directors 2E/14 (1st Floor) Jhandewalan Extn. New Delhi 110 055 PRITAM PAUL Dated:26th July, 2008 GM-Commercial & Company Secretary

40

ANNEXURE TO NOTICE

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.

ITEM NO.5The Board of Directors of the Company appointed Sh. Chandra Shekhar Aggarwal as an Additional Director with effect from 26th July, 2008 pursuant to Section 260 of the Act and Article 109 of the Articles of Association of the Company. He ceases to hold office at this Annual General Meeting but is eligible for appointment as a Director. A notice under Section 257 of the Act has been received from a Member signifying his intention to propose his appointment as a Director.

Born in 1939, Sh. Chandra Shekhar Aggarwal, B.Com, LLB is a Senior Advocate in profession and in practice since 1961. Sh. Aggarwal held position of senior member in Board of Directors of many reputed Companies. Sh. Aggarwal is a member of Editorial Board of Taxation in a leading and oldest fortnightly tax journal and also a member of Editorial Board of Taxmann, another one of the oldest fortnightly tax journal, reporting orders of Tribunal.

Brief information of Sh. Chandra Shekhar Aggarwal is given in the Directors’ Report. Having regard to his vast knowledge and rich experience in Corporate taxation and other areas, the Board considers it desirable that the Company should continue to avail services of Shri Chandra Shekhar Aggarwal and accordingly commends the Resolution at item No.5 for approval by the Members.

Sh. Chandra Shekhar Aggarwal is concerned or interested in item No.5 of the Notice.Further, Sh. Aggarwal either directly or beneficially, does not own any share of the Company.

Regd.Office By Order of the Board of Directors 2E/14 (1st Floor) Jhandewalan Extn. New Delhi 110 055 PRITAM PAUL Dated:26th July, 2008 GM-Commercial & Company Secretary