IP RINGS LIMITED ANNUAL REPORT 2004-2005 CHAIRMAN'S REPORT Ladies & Gentlemen: I have great pleasure in welcoming you all to the Fourteenth Annual General Meeting of IP Rings Ltd. I extend a warm welcome to Mr. Koji Takeuchi, General Manager, Application Engineering Dept., Nippon Piston Ring Co. Ltd., Japan, and a Director on our Board, who has come from Japan specially to attend this AGM. The Notice convening this meeting and the Directors' Report, along with the audited accounts have been with you for sometime and, with your permission, I shall take them as read. The Indian economy grew at a steady pace during the financial year 2004-05 with the manufacturing and services sector driving the growth. However, the sharp rise in the international crude oil prices and steep increase in steel and other metals acted as a damper to the otherwise bullish performance by the manufacturing sector. The Automotive sector continued its buoyant growth with all the segments showing an impressive growth in production and sales. The Passenger Vehicle production (including utility vehicles) reached 1.2 Million Nos. registering a 22% growth and export of these vehicles rose by 28.70l0 over the previous year to reach 166,413 Nos. Equally impressive was the growth in Commercial Vehicles, which registered an increase of 27% over the previous year. Goods carrying three wheeler production increased by 23% and motorcycles by 19%. Turning to the Tractor industry, the year has been an outstanding one, with sales registering a 30% growth over the previous year. At the back of this impressive growth in the Automotive Sector, the Indian Auto Component Industry continued its significant growth registering 28% over the previous year, with an impressive growth of more than 30% in exports. You will be happy to know that this impressive growth, coupled with the bright prospects of India emerging as a sourcing hub for global auto majors, should help the industry to perform well in the years to come. While the upswing in the industry is resulting in increased volumes, the component manufacturers have to contend against continued pressure on price realization. The pressure on price from OEMs and competition in the after market are having a severe impact on the margins. Because of your Company's relentless drive towards improvement in productivity and cost control measures, you will be pleased to learn that during the year under review, your Company achieved a record turnover of Rs. 51.52 Crores, as compared to Rs. 47.68 Crores, earning a profit before tax of Rs. 7.34 Crores, as against Rs. 7.09 Crores in the previous year. Your Directors have recommended a dividend of 30% for the year ended 31st March 2005, which would absorb Rs. 238.87 lakhs including dividend tax. While there is a slow-down in the commercial vehicle sector during the first quarter of this financial year, the other segments have registered satisfactory levels of performance The pressure on operating profits could only be overcome by relentless drive towards improved productivity and tighter control on costs. Your Company is going all out to implement these measures to improve profitability. Your Company would strive hard and continue to retain its frontline position in the OE and the After Market segments by all round improvements in its operations. Continuing the capacity increase exercise started during the last financial year, your Company will reach a capacity of 10 Million rings during this financial year. The new Transmission Products Division commenced commercial production during the end of the last financial year. Your Directors are pleased to report that the operations of this Division are progressing satisfactorily and the Company has been able to successfully implement the technology and is in a position to achieve full levels of activity in the coming months. Your Directors are confident that the activities of this Division will substantially add to the growth in turnover and profits during the current year. I wish to place on record our appreciation of the valuable support extended by our Collaborators - Nippon Piston Ring Co. Ltd. Japan. Our sincere thanks are also due to our Promoter Company - India Pistons Ltd., for its wholehearted support in all our activities. I wish to place on record the continued support we have been receiving from our valued customers, OEMs and the After Market, including STUs. I would also like to thank my colleagues on the Board for their sincere contribution and our Bankers for their continued support. Our employees have been continuously putting in their best to improve the performance of the Company on all fronts and I wish to place on record our appreciation of their dedicated efforts. The dedication and zeal with which our Management Team has been functioning deserves a special mention. Before I conclude, I would like to convey our Special Thanks to our Shareholders who have continued to repose their confidence in the Company. Thank You N. VENKATARAMANI Vice Chairman Source : Fourteenth Annual General Meeting Source Date : Wednesday, July 27, 2005