35th Annual Report 2006-07 - SCOOTERS INDIA · VISION To grow into an environment friendly and ... ¾Apart from macro economic factors, major demand drivers ... MATERIAL CHANGES AND

35th Annual Report 2006-07

Scooters India Limited (A Government of India Enterprise)

An ISO 9001 and ISO 14001 Company

BOARD OF DIRECTORS Shri P. Muthusamy Chairman-cum-Managing Director w.e.f. 13.4.07

(Additional Charge) &

Director (Fin.) w.e.f. 12.9.06

Shri Shashank Goel Director w.e.f. 22.5.2007

Prof. S Chakraborty Director w.e.f. 31.1.2007

Shri PP Sarkar Director (Technical) w.e.f. 16.5.2007

Shri SK Tripathi Director w.e.f. 6.7.2007

Shri PK Brahma Director w.e.f. 8.2.2007

Shri PK Datta Chairman-cum-Managing Director upto 12.4.2007

Dr. Surajit Mitra Director upto 3.11.2006

Shri Arun Singhal Director upto 3.11.2006

Shri Manoj Kumar Singh Director w.e.f. 03.11.2006 to 22.5.2007

Company Secretary Shri Manoj Agrawal upto 23.7.07 (Full time Co.Secy. post is vacant w.e.f. 24.7.07)

Statutory Auditors Mittal Gupta & Company, Chartered Accountants 302, Chintels House, 16, Station Road, Lucknow-226001.

Cost Auditors Shri R.N. Tripathi, C-121, Indira Nagar, Faizabad Road, Lucknow-226016.

BankersState Bank of India Indian Overseas Bank Allahabad Bank

Delhi Sales & Liaison Office 64-65, Najafgarh Road, Industrial Area, New Delhi-110015.

Registered Office & Works Lucknow-Kanpur Road, (16th Mile Stone), Post Bag No.23(GPO), (P.O.) Sarojini Nagar, Lucknow-226008.

Internal

M/s Krishna Sharma & Co. Chartered Accountants, Avanbhai Mansion, 3,Vidhan Sabha Marg, Lucknow – 226001.

M/s Sanjay Rajiv & Company, Chartered Accountants, 1st Floor, YMCA Complex, 13, Rana Pratap Marg, Lucknow-226001.

M/s Dhirendra Tripathi & Co. Chartered Accountants, C-121, Indira Nagar, Lucknow-226016.

M/s Jayaswal Associates, Chartered Accountants, A-160, IInd Floor, Vikas Marg, Shakarpur, Delhi-110092.

Auditors

M/s Suhas S. Marathe & Co. Chartered Accountants, H- 01, Manek Nagar, Pardeshi Ali, Panvel- 410206, Raigad.

M/s A.K. Mukherjee & Co. Chartered Accountants, 58/1, Kali Banerjee Lane, Howrah – 711101.

M/s R. Balaji & Co., Chartered Accountants, New No.2, Balaji Street, Rangarajapuram, Chennai – 600024.

M/s K.S. Ramakrishna & Co., Chartered Accountants, 285 & 286, 2nd Floor, Chenoy Trade Centre, ‘C’ Block, Park Lane, Secunderabad-500003.

Registrar & Transfer Agent Skyline Financial Services Pvt. Ltd., 123, Vinoba Puri, Lajpat Nagar – II, New Delhi – 110024.

StockThe Delhi Stock Exchange Association Limited, DSE House, 3/1 Asaf Ali Road, New Delhi-110002.

ExchangesBombay Stock Exchange Ltd. 1st Floor,Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400001.

DIRECTORS’ REPORT

Dear Shareholders,

The Board of Directors of your Company is pleased to present the 35th

Annual Report on the business and operations of the Company together

with the audited Balance Sheet and Profit and Loss Account and Auditors’

Report thereon for financial year ended 31st March, 2007.

1. PRODUCTION REVIEW: The Production performance for the year is shown below in physical terms:

(Nos.)

Description 2005-06 2006-07Three Wheelers 15,632 15,162

2. SALES REVIEW: The Sales performance for the year is shown below:

2005-2006 2006-2007Description Physical

(In Nos.)Financial

(Rs. in lakhs)Physical(In Nos.)

Financial (Rs. in lakhs)

Three Wheelers 15,182 14,848.57 15,239 17,056.59Spares - 923.14 - 875.65Petrol, Diesel, Lubri- cants etc.

- 896.74 - 1,087.73

Other Sales - 84.78 - 108.83TOTAL - 16753.23 - 19,128.80

3. FINANCIAL REVIEW:

The salient features of the Company’s financial results for the year

under review are as follows:

(Rs. in lakhs)

2005-2006 2006-2007a) Profit/(Loss)before Depreciation 343.47 (836.36)b) Depreciation 153.11 202.46c) Profit /(Loss)for the Year 190.36 (1038.82)d) Prior period adjustment - (1204.18)e) Income Tax 16.03 -f) FBT 18.34 7.20

Net Profit/(Loss) (PAT) 155.99 (2250.20)

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During the year under review inspite of increase in turnover both in

terms of value and in physical numbers the company registered a loss

of Rs.22.50 crores mainly attributable to increase in input cost and

one time adjustment pertaining to the previous years.

4. CONTRIBUTION TO NATIONAL EXCHEQUER

The company has contributed a sum of Rs.4,958.46 lakhs to the

exchequer during the period under review.

5. EXPORTS

Your company has achieved exports of Rs.35.46 lakhs during the

period under review. The royalty income by way of foreign exchange

remittances amounted to be Rs.249 lakhs during the year.

6. MANAGEMENT DISCUSSION AND ANALYSIS: (A) Mission, Vision & Objective

MISSION To fulfill customers’ needs for economic and safe mode of road transport and quality engineering products through contemporary technologies.

VISION To grow into an environment friendly and globally competitive company constantly striving to meet the changing needs of customer through constantly improving existing products, adding new products and expanding customer base.

OBJECTIVE a. Providing economical and safe means of transportation with contemporary technology for movement of cargo and people.

b. Providing eco-friendly, flawless and reliable products to fulfill customer needs.

c. Achieving Customer Satisfaction by providing products at right price and at right time.

(B) MARKET

(i) The total number of 3-wheelers produced and sold in the domestic

market during the year 2006-07 as against 2005-06 is given below:

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Category Production Segment/Sub-segment Apr.-Mar.06 Apr.-Mar.07 (% Change)

Passenger Carrier 2,86,987 3,85,443 34.31

Goods Carrier 1,47,436 1,70,681 15.77

Total : 4,34,423 5,56,124 28.01

Sales

Passenger Carrier 2,12,699 2,36,788 11.32

Goods Carrier 1,47,221 1,67,121 13.51

Total : 3,59,920 4,03,909 12.22

Note : Sales excludes Export of 76,881 Nos. in 2005-06 and 143,896 Nos. in 2006-07.

Source – SIAM (ii) 3-wheeler growth drivers are as under :

Increased disposable income – more families graduating to the

threshold level required for potential two wheeler customers and

affording three wheelers

Rapid urbanization with cities becoming larger increasing need

for mobility

Need for economically viable transport solution

The domestic demand for 3-wheelers passengers version is

driven by availability of permits.

Increased demand from Semi-Urban & Rural Areas.

Wider product range/choice available to customer

Real Price of products going down

Greater Finance Options

Apart from macro economic factors, major demand drivers have

been

High product maneuverability & driveability. Ideal for

congested Indian roads and tropical conditions

Self-employment opportunity for a large segment of youth

The domestic demand of passenger version of 3-wheelers –

driven by availability of permits

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(iii) Scooters India Limited has been a pioneer in bringing out various

models of 3-wheelers running on petrol, diesel, electric and gas for

application as both passengers and load carrier versions. Company

has played an important role in popularizing of 3-wheelers of larger

capacities in the country.

The introduction of Vikram CG-1500 model of 3-wheeler has

contributed significantly to the sale in 2006-07. The company

continues to be leader in passenger carrier (6+1) segment of

vehicles and has a share of 49.94% in 2006-07 as against 31.20%

in 2005-06. With various cities legislating in favour of CNG/LPG

vehicles, the company has geared itself to introduce new products

on CNG/LPG mode during 2007-08.

It is expected that demand for 3-wheeler shall continue to be

buoyant during the year 2007-08.

(C) Resources and Liquidity:

The Cash Flow constraints due to cash losses could be managed

due to reduction of Sundry Debtors from a level of Rs.24.61 crores

as on 31.3.06 to Rs.8.66 crores as on 31.3.2007 (i.e.) a reduction

of Rs.15.95 crores. Further, enhanced working capital borrowing

was finalized with Banks to take care of increasing working capital

requirements.

(D) Quality:

Your company is an ISO 9001 and ISO 14001 company. The

company has taken several initiatives to ensure that the best

quality products are made available to its customers.

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(E) Opportunities & Threats:

E1. Opportunities:

1. GDP growth is expected to be in the range of 9% showing

development in infrastructure including roads connecting

smaller towns to cities, which would facilitate running of

smaller vehicles.

2. CNG and LPG would be fuel of choice due to low emission and

this would give opportunity for 3-wheelers run on LPG & CNG.

E.2 Threats :

1. Smaller passenger vehicle and sub 1.0 ton load carriers on 4-

wheels have been introduced/is being introduced by other

automobile companies.

2. Rise in cost of fuel and problems in issue of permits by Regional

Transport Authorities shall continue to pose problem for growth

of 3-wheeler industry.

F. Outlook:

i) Challenges faced by the Company:

1) The need for consistency in quality demands for enhanced

investment in R&D and upgradation of plant & machinery.

Existing over-lived plant & machinery is a cause of concern.

2) Manpower cost in the company is high and so is the average

age profile of the employees. While your company needs to

reduce its manpower cost at the same time it also needs to

infuse fresh blood.

3) Though 3-Wheeler as industry continue to grow but increase

in competition and introduction of 4-wheeler in 1.0 ton

category is expected to aggravate the extremely competitive

scenario and impact the volumes & margin.

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4) Emission and safety norms are getting continuously

upgraded by authorities which call for product

upgradation and investments.

(ii) Strategic Road Map:

When Auto sector in India has been showing impressive

improvement for the past few years, the performance of your

company has not been impressive enough as is evident from the

financial results. With the help of Govt. of India, a study was

undertaken to address the various issues faced by the

company. Based on the outcome of the report a short term

project proposal of product improvement, manpower training

and upgradation of facilities for testing and evaluation has been

taken up by your company at approved cost of Rs.18.63crores.

The implementation of the project is expected to bring in ‘no

problem vehicle’; modification of existing 3-wheelers to comply

with the changing emission and safety rules; introduction of 3-

wheeler upgrades to meet the market requirements;

upgradation of CAE/CAD and Testing and evaluation facilities

in addition to addressing various manufacturing and other

issues.

This is expected to result in improvement in operational

efficiency of the company and also enable the company to go for

higher volume of production and sales to sustain itself in the

long run.

7. EXPENDITURE ON ADVERTISEMENT AND PUBLICITY:

An expenditure of Rs.61.02 lakhs was incurred on account of

advertisement and publicity during the year.

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8. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED FROM 1.4.2007 TO DATE:

No material change and commitments have been made by the

company from 01.04.07 to date that has adverse effect on the financial

position of the company.

9. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:Your company is an ISO 9001: 2000 and ISO 14001 certified. While,

ISO 9001: 2000 focuses on quality management system, ISO-14001 is

applicable to Environment Management Systems to further its

objective of eco-friendly development and production of its products.

Information in accordance with provision of Section 217(1)(e) of the

Companies Act, 1956 regarding the conservation of energy, technology

absorption and foreign exchange earnings and outflow are given in

Annexure-I to this report.

10. PARTICULARS OF EMPLOYEES:

No employee of the company is getting salary more than the prescribed

limit. Accordingly information under Sec. 217(2-A) of the Companies

Act, 1956 read with the Companies (Particulars of Employees) Rules,

1975 be treated as NIL.

11. INDUSTRIAL RELATIONS:

During the year under review, the industrial relations in the Company

remained, by and large, peaceful and cordial.

12. VIGILANCE:

Vigilance Group continues to function with particular emphasis on the

aspects of preventive and corrective vigilance. In selected areas,

surprise checks and system studies were carried out and the

improvements suggested were implemented. Company also observed

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Vigilance Awareness Week from 6.11.2006 to 10.11.2006. The

employees participated in various programmes enthusiastically.

13. HUMAN RESOURCE DEVELOPMENT:

Company has been laying emphasis on the development of its

employees treating them as key resource. For upgradation of their

skills and their over all professional development, the Company

sponsors employees for external and in-house training programmes

related, in particular, to Quality Management System, Environmental

Management System, Health & Safety, Attitudinal Change, Product

upgradation etc.

14. HINDI IMPLEMENTATION:

Official Language Implementation Committee monitors and reviews the

progress of implementation of the Annual Programme issued by

Department of Official Language, Ministry of Home Affairs,

Government. of India. Hindi Divas is commemorated by observing

official language week in the month of September when various

competitions are organized for employees and winners are felicitated.

15. RESERVATION FOR SCHEDULED CASTES & SCHEDULED TRIBE:

As on 31.3.2007 the total strength of the company was 1601 including

01 deputationist. Out of these, 298 employees belong to Scheduled

Castes and 2 employees to Scheduled Tribes.

16. DIRECTORS:

Shri P. Muthusamy joined as Director (Finance) w.e.f. 12th September,

2006. He was entrusted additional charge of Chairman-cum-Managing

Director w.e.f. 13th April, 2007 in place of Shri PK Datta who demitted

office on 12th April 2007. Shri P.P. Sarkar joined as Director

(Technical) w.e.f. 16th May, 2007. Shri Shashank Goel, Director, Govt.

of India, Ministry of HI & PE, Deptt. of Heavy Industry, joined as Non

9

Executive Director on 22nd May 2007 in place of Shri Manoj Kumar

Singh. Shri S Chakraborty, Shri PK Brahma and Shri SK Tripathi

joined as Independent Directors on 31st Jan, 8th Feb & 6th July, 2007

respectively.

17. DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217(2AA) of the

Companies Act, 1956, with respect to Directors’ Responsibility

Statement, it is hereby confirmed:

a) That in the preparation of the accounts for the financial year ended

31st March 2007, the applicable accounting standards have been

followed along with proper explanation relating to material

departures;

b) That the Directors have selected such accounting policies and

applied them consistently and made judgements and estimates that

were 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;

c) 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 fraud and

other irregularities;

d) That the Directors have prepared the accounts for the financial

year ended 31st March 2007 on a ‘going concern’ basis.

18. ADEQUACY OF INTERNAL CONTROL:

SIL has proper and adequate system of internal controls to ensure

that all activities are monitored and controlled against any

unauthorized use of disposition of assets, and that the transactions

are authorized, recorded and reported correctly.

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SIL ensures adherence to all internal control policies and procedures

as well as compliance with all regulatory guidelines.

19. FIXED DEPOSITS: The Company has not accepted any deposits during the year.

20. NO DEFAULT

The company has not defaulted in payment of Interest and/or in

repayment of loans to any Financial Institution and/ or to Banks and/

or to Government of India during the period under review.

21. AUDITORS’ REPORT:

M/s Mittal Gupta & Company have been appointed by the Comptroller

and Auditor General of India, as Statutory Auditors of the Company

for the year 2006-07. The Statutory Auditors’ Report on the Accounts

of the Company for the financial year ended 31st March 2007

alongwith Management replies are enclosed at Annexure – 1.

The Accounts of the company were submitted to the Comptroller &

Auditor General of India for their report under Section 619(4) of the

Companies Act 1956 and their report is appended as annexure – 2.

22. COST AUDITOR:

Shri R.N. Tripathi, Cost Accountant, Lucknow has been appointed as

Cost Auditor of the Company vide letter No.52/412/CAB-89(CLB)

dated 13th June 2006 from the Govt. of India, Ministry of Law Justice

and Company Affairs, Deptt. Of Company Affairs, for auditing cost

records relating to manufacture of Motor Vehicles for the financial year

ending 31st March 2007.

23. CORPORATE GOVERNANCE:

A Certificate from the auditors of the Company regarding compliance

of conditions of Corporate Governance as stipulated under Clause 49

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of the Listing Agreement along with the report on Corporate

Governance is attached as Annexure – 3 to this report.

24. ACKNOWLEDGEMENT:

The Board of Directors would like to express their grateful

appreciation for the sincere support and co-operation extended by its

Bankers, Financial Institutions, Dealers and Suppliers. The Directors

would also like to express their sincere thanks for the co-operation

and advice received from Govt. of India, particularly, Deptt. Of Heavy

Industry, the State Govt. and the local authorities for their continued

support, co-operation and guidance.

Your Directors wish to place on record their deep sense of appreciation

for the devoted services of employees and to you, our Shareholders,

the Directors are deeply grateful for the confidence and faith reposed

in us.

For and on behalf of the Board

Sd/-

P. Muthusamy Chairman-cum-Managing Director

Place : LucknowDate : 24th August 2007

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Annexure-I.

I. CONSERVATION OF ENERGY: (a) Measures being taken

Compressors Stopping wastage of compressed air. Periodic servicing of suction filters, moisture traps, unloader and delivery valves.

Water Monitoring of control of water wastage. Recycling of cooling water.

PowerControl of maximum demand in peak hours. Monitoring and control of power factor on regular basis. Monitoring and control of electricity consumption in different

sections of the plant. By using low consumption accessories and equipments. Full capacity utilization of ovens and furnaces.

(b) Additional investment and proposals Installation of power monitoring equipments at 33KV Sub station and plant.

(c&d)Impact of Energy Consumption Measures, Total energy consumption and energy consumption per unit of production as per Form ‘A’ in respect of industries specified in the scheme thereto The details are given in attached Annexure I-A.

II) TECHNOLOGY ABSORPTION: Efforts made in technology absorption as per Form-B attached as Annex.I-B.

III) FOREIGN EXCHANGE EARNINGS AND OUTGO: (a) Efforts and initiative in relation to exports:

Foreign Exchange on account of Royalty income has increased from Rs.239.56 lakhs in the previous year to Rs.248.71 lakhs in the current year. Foreign Exchange earned by way of export of goods is Rs.18.19 lakhs in 2006-07 as compared to Rs.41.85 lakhs during previous year.

(b) Earnings and Outgo (Rs. In lakhs)

2005-2006 2006-2007

Foreign Exchange Earnings 281.41 266.90

Foreign Exchange Outgo 14.43 24.06

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Annexure I-A FORM – A

Form for Disclosure of particulars with respect to Conservation of Energy.

Description 2005-2006 2006-2007 A Power and fuel consumption 1. Electricity

a) PurchasedUnit*

Total Amount (Rs.) Rate/Unit (Rs.) b) Own Generation

i) Through Diesel Generator Unit*

Units per litre of diesel oil Cost per Unit (Rs.)

ii) Through Steam Turbine/Gen Unit* Unit per litre of diesel oil Cost/Unit (Rs.)

68,87,962 3,08,40,845

4.48

1,6501.73

18.08NIL

N.A.N.A.N.A.

72,26,8103,45,24,444

4.78

2,1601.05

23.02NIL

N.A.N.A.N.A.

2. CoalQuantity (Ton) Total Cost Average rate

NILN.A.N.A.N.A.

NILN.A.N.A.N.A.

3. a) Furnace Oil Quantity (Ton) Total Amount (Rs.) Average Rate per Kg.(Rs.) b) Light Diesel Oil Quantity (Kilo litres) Total Amount (Rs.) Average Rate per Kg.(Rs.)

172.37631,86,853.65

18.49

77.14621,30,940

27.62

164.42736,14,086.46

21.98

84.0024,95,547.62

29.71 4. Others/internal generation

(Please give details) QuantityTotal Cost Rate/Unit

NIL N.A.N.A.

NILN.A.N.A.

B Consumption per unit of production

Description Standards (if any)

2005-06 2006-07

Production (in Nos.) Electricity (Unit) Furnace Oil (Ton) Light Diesel Oil (Kilo litres) Coal (specify quality) Others (specify)

------

15632 440.74 0.011 0.005

NIL NIL

15,162476.780.0110.005

NILNIL

*Unit denotes KWH

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Annexure I-B

FORM – BForm for disclosure of particulars with respect to technology absorption

Research and Development (R&D)

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

R&D was carried out by the company to develop new products like development of alternate fuel (CNG/LPG)vehicles up-gradation of the existing product to meet updated CMVR and improve reliability.

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

Vikram 1500-CG running on CNG has been introduced in market during 2006-07.

Vikram 1000-CG running on CNG being market seeded.

Vikram 1000-LG running on LPG being market seeded.

3. Future plan of action The company is working to design and improve system/sub-system for meeting future CMVR require-ments.

4. Expenditure on R&D A) Capital

B) Recurring

C) Total

D) Total R&D expenditure as a percentage of total turnover

NIL

Rs.26.28 lakhs

Rs.26.28 lakhs

0.14%

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Technology absorption, adaptation and innovation

1. Efforts, in brief, made towards technology absorption, adapta-tion and innovation

Officers and staff of R&D have been sponsored for different training programmes relating to technology absorption and innovation.

Collaborative R&D has been carried out with different research organizations for improvement, development and product innovation.

2. Benefits derived as a result of the above efforts e.g. product, improvement, cost reduction, product development, import substitution etc.

Development of Alternate fuel vehicle & improvement in reliability and performance of existing products.

3. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year), following information may be furnished:

A) Technology imported. B) Year of import. C) Has technology been

fully absorbed? D) If not fully absorbed,

areas where this has not taken place, reasons therefore and future plans of action.

NIL

ACCOUNTING POLICIES

Annexed to and forming part of the Accounts

1. SYSTEM OF ACCOUNTING: (i) Basic assumptions:

The accounts have been prepared under historical cost convention on accrual basis and as per applicable Mandatory Accounting Standards.

(ii) Going concern: Accounts have been prepared on the principle applicable to a going concern.

(iii) Use of Estimates: The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statement and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialize.

2. DEPRECIATION: Premium on leasehold land is amortised over the period of lease.

Depreciation on other fixed assets is charged on straightline method in accordance with rates prescribed in Schedule XIV to the Companies Act, 1956 as amended from time to time , except (a) Plant, Machinery, Equipment, and Jigs & Fixtures costing individually

Rs. 5000 and below are depreciated fully in the year of purchase. (b) In case of tools where estimated useful life is greater than five years but

less than ten years, depreciation is charged @ 20% as was being done prior to introduction of Schedule XIV.

Depreciation is not provided on assets which have been declared surplus and are not in use. These are distinctively shown under other Current Assets at net realisable value.

3. INVENTORIES: (i) Raw materials, components, stores & spares, tools, consumables and

other stocks are valued at cost (net of CENVAT) determined on FIFO Basis. Scrap and disposable goods are valued at estimated realisable value.

(ii) Stock-in-trade is valued at lower of cost or realisable value. (iii) Work-in-progress is valued at cost. Where the jobs are in progress their

conversion cost is taken at 50% of the standard cost regardless of the stage of completion. Completed jobs pending inspection are valued at cost or realisable value whichever is less.

(iv) Customs duty on bonded material is allocated to the cost of goods and equipment.

(v) Expenditure on stationery, uniform, medicine etc. are charged off to revenue at the time of receipt. But the stock remaining at the year end are credited to the revenue account at cost and shown as closing stock.

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4. FIXED ASSETS:

(i) Fixed Assets are stated at original cost and are inclusive of all expenses to bring them to a state of use .

(ii) Land is valued at original cost. (iii) The cost of the leasehold land is amortized over the lease span . (iv) The tools manufactured departmentally costing individually Rs.5000

and below are accounted for as revenue expenditure under relevant natural heads

(v) Construction period expenses exclusively attributable to projects are capitalized.

(vi) Borrowing cost directly attributable in relation to acquisition or construction of assets that takes substantial period of time to get ready for its intended use are capitalised as part of the cost of such assets upto the date when such assets are ready for intended use. Other borrowing costs are charged as expenses in Profit & Loss Account in the year in which they are incurred.

5. INVESTMENTS:Investments are valued at cost. However, in case of permanent diminution in the value of investments, suitable provision is made in the books of accounts.

6. CENVAT Cenvat credit on eligible Revenue / Capital purchase is taken on receipt of such materials.

7. PROVISION FOR REDUNDANCY/OBSOLESCENCE: A general provision for redundancy is made at 0.5% of the value of closing inventory of raw materials and components, stores and spares excluding finished goods, W.I.P, gasoline in petrol pump, medicines, materials in bond and under inspection. Wherever necessary, additional provision for redundancy/ Obsolescence of inventory is made in individual cases keeping in view their realisable value.

8. SALES:Sales are set up as per the Sale of Goods Act. They represent value of goods sold at the ex-factory price plus incidentals like freight, insurance etc. embedded in the sale price.

9. DUTIES ON BONDED STOCK: Excise duty on finished stocks lying in bond is provided for, on the assessable value applicable for each product.

10. ACCOUNTING FOR INCOME AND EXPENDITURE: Income and expenditure are accounted for in the current year on accrual basis under natural heads of account.

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11. FOREIGN EXCHANGE VARIATION Assets and liabilities, other than the non-monetary items which are carried in terms of historical costs, relating to transactions involving foreign currency are converted at the exchange rates prevailing at the year end. Any loss or gain arising out of conversions is adjusted in the profit and loss account.

12. RETIREMENT BENEFITS: Contribution to Provident Fund is made to the company’s provident fund trust. The fund is compared to aggregate liability, is additionally contributed by the company and recognized as expenses. Gratuity and Leave Encashment liability is ascertained on actuarial valuation. However, any deficit in funds managed by LIC as compared to the actuarial liability is recognised as liability immediately. The compensation payable under Voluntary Retirement Scheme is amortised equally over a period of five financial years but not later than financial year ending on 31st March 2010.

13. DEFERRED CREDIT: In case of purchase of fixed assets on deferred credit, the purchase price of fixed assets and interest on outstanding amount accruing up to the date of erection and commissioning are capitalised.

14. RESEARCH AND DEVELOPMENT: Expenditure relating to product approvals including type approvals, consistency of production approvals from testing agencies and materials specifically procured for development of products are charged as Research & Development Expenses and other expenditure of Research and Development are charged off to the Profit and Loss Account under natural heads of accounts. Expenditure which results in creation of capital asset is taken to fixed assets and depreciation is provided as applicable. Prototype vehicles submitted to testing agencies are booked under finished goods.

15. JOBS DONE FOR INTERNAL USE: Jobs done for internal use are valued on the basis of technical estimates of material and conversion cost and are distinctly shown as a consolidated deduction from expenditures included in Profit & Loss Account.

16. CAPITAL COMMITMENTS & CONTINGENT LIABILITIES:

Show cause notices issued by various Government authorities when converted into demand only are considered as contingent liabilities if the same is not accepted and disputed by the company. Other disputed claims are provided for as liability or disclosed as contingent liability on the basis of the assessment of the management.

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17. ACCOUNTING OF GOVERNMENT GRANT:

(i) Government Grant of revenue nature are accounted for in the Profit and Loss Account under the head other income to the extent the expenditure is charged to revenue as and when incurred.

(ii) In case of any specific Government grant the treatment in the books of accounts is made on the basis of specific stipulation for the same.

18. TAXES ON INCOME: Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961. Deferred Tax on account of timing difference between taxable income and accounting income is provided considering the tax laws enacted or substantively enacted up to the Balance Sheet date.

19. IMPAIRMENT OF FIXED ASSET:The carrying values of fixed assets of the identified cash generating units (CGU) are reviewed for impairment at each Balance Sheet date. When events or changes in circumstances indicate that the carrying values may not be recoverable and the carrying amount exceeds the estimated recoverable amount, the assets of the CGU are written down to the recoverable amount and the impairment loss is recognized in the profit and loss account.

Sd/- sd/- sd/- (C.S.SundaraMurthy) (P.P. Sarkar) (P. Muthusamy) G.M.(Finance) Director(T) Chairman-cum–Managing Director

As per our separate report of even date For Mittal Gupta & Co. Chartered Accountants

Sd/- (Ajai Kumar Gupta) Partner

Place: Lucknow Date: 04 August, 2007

SCOOTERS INDIA LIMITEDBALANCE SHEET AS AT MARCH 31,2007.

SCHE- AS AT AS ATDULE 31.3.2007 31.03.2006

RS. RS.1. SOURCES OF FUNDS i) Shareholders' Funds a) Capital 1 518,838,188 492,838,188 b) Reserves & Surplus 2 926,083 162,123,507

519,764,271 654,961,695

ii) Loan Funds a) Secured Loans 3 198,592,382 313,689,026 b) Unsecured Loans 4 80,811,420 80,534,320

279,403,802 394,223,346799,168,073 1,049,185,041

2. APPLICATION OF FUNDS i) Fixed Assets a) Gross Block 5 528,554,677 519,608,836 b) Less: Depreciation 339,034,442 317,554,048 c) Net Block 189,520,235 202,054,788 d) Capital work-in-progress 6 767,569 24,702

190,287,804 202,079,490

ii) Investments 7 - 57,000 iii) Current Assets, Loans & Advances 8 a) Inventories 474,389,798 411,145,363 b) Sundry Debtors 58,419,473 242,138,640 c) Cash and Bank Balances 440,784,360 545,893,372 d) Other Current Assets 13,024,678 45,750,972 e) Loans and Advances 56,980,563 40,098,586

1,043,598,872 1,285,026,933Less :Current Liabilities and Provisions 9 a) Liabilities 382,337,079 425,519,609 b) Provisions 118,581,116 15,458,000

500,918,195 440,977,609

Net Current Assets 542,680,677 844,049,324Miscellaneous Expenditure 10Deferred Revenue Expenditure 2,376,724 2,999,227Profit & Loss Account 63,822,868 -

799,168,073 1,049,185,041Accounting Notes and Contingent Liabilities 19Schedule 1 to 10 alongwith accounting policy are integral part of the Balance-sheet.

(C.S.SundaraMurthy ) ( P.P. Sarkar) (P. Muthusamy) G.M.(Finance) Director Chairman -cum -Managing Director

As per our separate report of even date For Mittal Gupta & Co.Chartered Accountants

(Ajai Kumar Gupta)PartnerPlace: LucknowDate: 04 , August, 2007.

SCOOTERS INDIA LIMITED -PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2007.

SCHE- YEAR ENDED YEAR ENDEDDULE 31.3.2007 31.03.2006

RS. RS.INCOME Sales 11 1,901,997,087 1,666,845,688 Less : Excise 255,094,075 224,065,896 Net Sales 1,646,903,012 1,442,779,792 Other Income 12 73,437,413 89,385,141 Accretion / ( Decretion) to Work-in-progress and Finished goods 13 21,220,412 84,697,951

1,741,560,837 1,616,862,884

EXPENDITURE Materials Consumed 14 1,121,482,262 968,758,248 Cost of sales at Petrol Pump 14 107,058,136 88,372,925 Employees' Remuneration and Benefits 15 379,204,931 364,563,539 Other expenses of Manufacture,Administration, Selling & Distribution 16 192,026,468 154,786,826 Depreciation 20,246,333 15,311,203 Interest 17 32,719,889 16,188,222

1,852,738,019 1,607,980,963LESS : Expenditure included in above capitalised 7,295,285 10,154,534

1,845,442,734 1,597,826,429

Profit/(Loss) for the year -103,881,897 19,036,455 Prior Year Adjustments (Net) 18 120,418,481 - Profit/(Loss) After Prior Period Adjustments -224,300,378 19,036,455

Fringe Benefit Tax 719,914 1,834,011 Income Tax - 1,603,000 Profit/(Loss) after Tax -225,020,292 15,599,444

Balance brought forward from last year 141,197,424 125,597,980 Add : Withdrawal of Reserve for Debts* 20,000,000 - Balance carried to Balance Sheet -63,822,868 141,197,424

Basic/ Diluted Earnings Per Share (In Rs.) -5.23 0.36 Basic/ Diluted Earnings Per Share Before Prior Period Items (In Rs.) -2.43 0.36 (Note 21 of Schedule 19)

Additional Information 20

Schedule 11 to 19, alongwith accounting policy form an integral part of the Profit and Loss Account. * See Note No. 10 (c) In Notes to Account


As per our separate report of even date For Mittal Gupta & Co.Chartered Accountants

(Ajai Kumar Gupta)PartnerPlace: LucknowDate: 04 , August, 2007.

SCOOTERS INDIA LIMITEDSchedules annexed to and forming part of the Balance Sheet as at March, 31,2007.

-SCHEDULE 1Share Capital

As at As at 31.3.2007 31.03.2006

Rs. Rs.Authorised Capital @7,50,00,000 Equity Shares (Previous Year 7,50,00,000 ) 750,000,000 750,000,000of Rs. 10 each.

Issued Capital4,29,95,500 Equity Shares 429,955,000 429,955,000( Previous year 4,29,95,500 ) of Rs. 10 each

Subscribed and Paid up Capital4,29,92,255 Equity Shares* 429,922,550 429,922,550( Previous year 4,29,92,255 ) of Rs. 10 each

Forfeited Shares 15,638 15,638

Advance against Share Capital 88,900,000 62,900,000

518,838,188 492,838,188

`@ Refer note no 17 of Schedule 19 .*Of the subscribed and paid up capital 9,05,000 shares(Previous year 9,05,000 shares) of Rs.10 each allotted to theGovernment of India during 1972-73 &1975-76 as fully paid pursuant to a contract without payment being received in cash.

SCHEDULE 2Reserves and Surplus

As at As at 31.3.2007 31.03.2006

Rs. Rs.

ReservesCapital Reserve 926,083 926,083Reserve for debts* 20,000,000 20,000,000Less : Transferred to Profit & Loss Appropriation Account 20,000,000 - -

926,083 20,926,083SurplusProfit & Loss Account (Opening Balance) 141,197,424Less : Loss during the Year (To the extent adjusted) 141,197,424 - 141,197,424

926,083 162,123,507

SCOOTERS INDIA LIMITED -SCHEDULE 3

Secured LoansAs at As at

31.3.2007 31.03.2006Rs. Rs.

Long Term Loan from : PICUP @ 5,413,334 61,800,192

Loans and advances from Banks * State Bank of India 95,670,091 53,609,296 Indian Overseas Bank 97,508,957 159,630,928 Allahabad Bank - 38,648,610

198,592,382 313,689,026

@ 1. The long term interest free loan from PICUP against deferment of U.P.Trade Tax & C.S.T as provided in Sanctioned Rehabilitation Scheme of B.I.F.R is secured by hypothecation of fixed assets. 2. Loan includes Rs. 5,413,334 due for repayment within 12 months.

* Cash Credit facility from S.B.I.& I.O.B. are secured by hypothecation of inventories / book debts. Clean Credit/ OD facility from I.O.B. & Allahabad Bank are secured by T.D.R.'s

SCHEDULE 4Unsecured Loans

As at As at 31.3.2007 31.03.2006

Rs. Rs.

Loans from Government of India 80,811,420 80,534,320

80,811,420 80,534,320

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SCOOTERS INDIA LIMITED -

SCHEDULE 6Capital Work-in-progress

As at As at31.3.2007 31.03.2006

Rs. Rs.Plant and Machinery 767,569 -Building - 24,702

767,569 24,702

SCHEDULE 7Investments

As at As at 31.3.2007 31.03.2006

Rs. Rs.Investment at cost ( Unquoted fully paid )*UP Instruments Limited 1,55,030 Equity Shares of Rs.10 each 1,550,300 1,550,300

UP Tyres & Tubes Limited5,22,800 Equity Shares of Rs. 10 each 5,228,000 5,228,000

Co-operative Electric Supply Society Limited5,700 Equity Shares of Rs.10 each 57,000 57,000

6,835,300 6,835,300Less : Provision for estimated loss in value ** 6,835,300 6,778,300

- 57,000

* All investments are long term.** Refer Note No 3 of Schedule 19 .

SCOOTERS INDIA LIMITED -SCHEDULE 8 Current Assets, Loans and Advances

As at As at31.3.2007 31.03.2006

Rs. Rs.I) Inventories Raw Materials * 123,936,405 78,138,492 Stores and Spares 21,185,838 18,402,146 Loose Tools and Consumables * 28,878,893 28,971,982 Work-in-progress * * 70,476,471 67,100,644 Finished goods 230,143,886 223,039,081 Material-in-transit 15,693,649 8,907,918 Disposal Stores 444,604 446,169 Other Stocks 1,548,045 1,539,383

492,307,791 426,545,815 Less : Provision for Inventory Obsolescence a) General Provision @ 0.5% 783,886 552,369 b) Specific Provision @ 90% 15,350,414 13,064,390 : Provision for material lying with sub Contractor doubtful of recovery 1,783,693 1,783,693

474,389,798 411,145,363

* Raw - materials, loose tools and consumables lying with sub - contractors / Licencees amount to Rs. 11,107,686 (Previous year Rs.59,08,187)* * Includes Vehicles valuing Rs 68,86,554 awaiting testing / duty paid (Previous Year Rs.108,29,716) against which 90% provision has been made .

II) Sundry Debtors ( Unsecured ) Debts outstanding for a period exceeding 6 months Considered good 27,460,066 37,067,024 Considered doubtful 28,188,054 3,952,075

55,648,120 41,019,099 Other debts considered good 30,959,407 205,071,616

86,607,527 246,090,715 Less : Provision for doubtful debts 28,188,054 3,952,075

58,419,473 242,138,640

III) Cash and Bank Balances Cash and stamps in hand 541,066 260,424 Cheques in hand 26,382,116 - Term Deposits with Scheduled Banks * 392,131,797 460,227,967 Balances with Scheduled Banks 21,729,381 85,404,981

440,784,360 545,893,372

* (a) Term Deposits for Rs. 9,83,57,904 ( Previous year Rs. 10,30,73,034 ) held against L.C.Margin . (b) Term Deposits for Rs. 15,00,00,000 ( Previous year Rs. 15,00,00,000 held against OD Limit with I.O.B., Lucknow (c) Term Deposits for Rs. 7,33,100 ( Previous year Rs. 23100 ) held against Bank Guarantee, Sales Tax Case with I.O.B. ChennaI (d) Term Deposits for Rs. 35,07,312 ( Previous year Rs. Nil ) for E.S.I Case

SCOOTERS INDIA LIMITED -SCHEDULE 8 contd.

As at As at31.3.2007 31.03.2006

Rs. Rs.iv) Other Current Assets Royalty receivable 6,890,197 3,098,823 Interest accrued on Term deposits 6,134,481 42,652,149

13,024,678 45,750,972

v) Loans and Advances (Advances recoverable in cash or kind or for value to be received ) Secured considered good 140,572 247,809 Unsecured considered good : 1) a) Amount recoverable from Workmen Housing Colony* ( Towards houses allotted in workmen's Housing Colony and unapportioned cost of land & common facilities.) - 294,893 b) Others ^ 41,735,018 25,348,955 c) Deposits 15,104,973 14,206,929 2) Considered doubtful 10,428,347 9,688,101

67,408,910 49,786,687 Less : Provision for doubtful advances 10,428,347 9,688,101

56,980,563 40,098,586

Total ( i ) to ( v ) 1,043,598,872 1,285,026,933

^ Include Due from Directors Maximum balance due from Directors at any time during the year. 17,370 18,803 Balance at the end of the year Nil Nil

* The details are Expenditure on Workmen's Housing Colony - 12,758,013 Less : Amount recovered so far from workmen - 12,463,120

- 294,893

SCOOTERS INDIA LIMITED -SCHEDULE 9Current Liabilities and Provisions

As at As at31.3.2007 31.03.2006

Rs. Rs.I) Current Liabilities Acceptances 73,118,702 73,889,369 Sundry Creditors 169,014,758 218,541,472 Advances and Deposits 38,546,926 35,973,926 Other Liabilities @ 99,113,158 94,378,739 Interest accrued but not due 2,543,534 2,736,103 Amount Recovered from Workmen* 1,908,611 -

382,337,079 425,519,609

II) Provisions Gratuity 77,469,789 15,000,000 Leave Encashment 41,111,327 - Fringe Benefit Tax - 458,000

118,581,116 15,458,000

500,918,195 440,977,609

@ Include Rs. 76,400.00 ( Previous year Rs.81,000 ) on account of advance deposited by workmen for allotment of House in Workmen's Col * The details are Amount recovered so far from workmen 12,493,670 - Less : Expenditure on Workmen's Housing Colony 10,585,059 -

1,908,611 -

SCHEDULE 10Miscellaneous expenditure(To the extent not written off or adjusted)

As at As at31.3.2007 31.03.2006

Rs. Rs.

Deferred Revenue ExpenditureOpening Balance 2,999,227 1,930,829Additions during the year 434,208 2,428,214

3,433,435 4,359,043Less; Written off & charged to Profit & Loss Account 1,056,711 1,359,816

2,376,724 2,999,227Profit & Loss AccountOpening Balance - -Loss during the year 63,822,868 -Profit & Loss Debit Balance 63,822,868 -

SCOOTERS INDIA LIMITED - Schedules annexed to & forming part of the Profit & Loss Account for the year ended March 31, 2007.SCHEDULE 11Sales

YEAR ENDED YEAR ENDED31.3.2007 31.03.2006

RS. Rs.Three-Wheeler * 1,705,659,032 1,484,857,130Spare-parts* 87,565,058 92,314,750Petrol,Diesel, Lubricants etc.* * 108,772,997 89,673,808

1,901,997,087 1,666,845,688* Includes Excise Duty amounting Rs.25,50,94,075 (Previous year Rs.22,40,65,897) ** Includes 69,094 ltrs.of petrol,diesel,oil etc.value Rs. 26,68,231 ( Previous year 64,207 ltrs. Value Rs.20,40,903 consumed for internal use .

SCHEDULE 12Other Income


RS. Rs. Miscellaneous Receipts Sale of : a ) Empties 325,010 321,569 b ) Miscellaneous Items & Scrap 10,558,222 8,156,698 Interest on : a ) Vehicle advance to employees - 39,857 b ) Advance to Suppliers / Dealers 4,971 24,422 c ) Term deposits 28,884,370 28,818,173 d) Others 76,554 - Royalty Received 24,870,921 23,955,741 Profit on sale of fixed assets - 446,016 Gain in exchange rate - 185 Excess Provision written back 317,722 1,077,169 Other receipts 8,399,643 26,545,311

TOTAL 73,437,413 89,385,141

SCOOTERS INDIA LIMITED -SCHEDULE 13Accretion / (Decretion) to Work-in-progress and Finished Goods


RS. Rs. Opening Stock Finished Goods 223,039,080 173,829,405 Work-in-progress 67,100,644 31,612,368

Less : Material Adjustment A/c* 10,739,779 279,399,945 - A 279,399,945 205,441,773

Closing Stock Finished Goods 230,143,886 223,039,080 Work-in-progress 70,476,471 67,100,644 B 300,620,357 290,139,724

Accretion / ( Decretion ) (B-A) 21,220,412 84,697,951

* Refer Note No. 23 of Notes to Account

SCHEDULE 14Consumption of Materials


RS. RS. ( I ) Consumption of Materials : a ) Raw Materials and Components Opening Stock 78,584,662 51,700,998 Add : Purchases 1,167,293,643 995,649,930

1,245,878,305 1,047,350,928

b ) Less : i ) Closing Stock 124,381,009 78,584,662 ii ) Shortages in inventory written off 15,034 8,018

124,396,043 78,592,680 c ) Consumption of Materials ( a - b ) 1,121,482,262 968,758,248

( II ) Petrol Pump a ) Opening Stock 1,116,749 868,890 Add : Purchases 107,155,975 88,633,641

108,272,724 89,502,531 b ) Less : i) Closing Stock 1,192,949 1,116,749 ii ) Shortages written off 21,639 12,857

1,214,588 1,129,606

c ) Cost of sales at Petrol Pump ( a - b ) 107,058,136 88,372,925

SCOOTERS INDIA LIMITEDSCHEDULE 15Employees' Remuneration and Benefits


RS. Rs.

Salaries , Wages and Bonus * 276,555,483 262,619,613 Leave Encashment 16,102,492 17,291,884 Contribution to PF 17,332,070 15,424,747 Employer's share of Pension Contribution 10,724,613 11,112,414 Interest Subsidy on House Building Loan 345,629 367,956 Contribution to ESI scheme 173,267 59,613 Contribution to Employees' Group Insurance 1,210,520 1,163,275 Medical benefits 13,431,748 12,409,434 Canteen expenses 5,028,803 4,647,545 Transport expenses 8,133,784 7,865,721 Rent ( Leasehold accommodation ) 10,140 81,140 Gratuity 23,811,086 25,130,598 Leave travel assistance 4,297,879 4,452,500 Uniform 183,711 149,192 Benevolent expenses 830,750 684,150 Children education allowance 343,041 442,193 Other expenses 689,915 661,564 Total 379,204,931 364,563,539

* Includes stipend paid to the trainees / apprentices Rs. 15,08,726.75 ( Previous year Rs. 19,94,569). The above schedule includes payments to wholetime Directors ( Including Chairman-cum-Managing Director). The details of salaries etc. are as under

2006-2007 2005-2006 No Of Directors 2 1

Rs Rs ( I ) Salaries 995,745 613,821 ( ii ) Contribution to PF 103,499 61,573 ( iii ) Gratuity 64,191 57,549 ( iv ) Others ( L.T.A. , Leave Encashment, Group Insurance ) 144,848 32,310

SCOOTERS INDIA LIMITEDSCHEDULE 16Other expenses of Manufacture, Administration, Selling and Distribution


RS. Rs.Manufacturing expenses :Stores,Spares and Tools 34,799,653 31,188,437Power & fuel 36,604,485 33,432,872Repairs : a) Plant and Machinery 5,875,349 5,146,012 b) Factory Building 1,524,428 1,427,556 c) Non-Factory Building 14,154 64,161 d) Others 2,817,454 2,044,918Research and Development 2,628,491 5,342,626Fabrication Charges - 414,489Excise Duty (Net) 3,424,344 5,726,705National Calamity Contingency Duty - 873,983

87,688,358 85,661,759Administrative expenses :Rent 1,659,114 1,624,662Postage, Telegram and Telephone 2,741,597 2,756,702Directors' Sitting Fees - 7,000Directors' Travelling Expenses 539,367 575,042Travelling Expenses 5,524,213 6,141,503Printing and Stationery 1,738,138 1,648,071Board Meeting Expenses 1,171 9,808Legal Expenses 3,387,288 893,621Consultancy Charges 729,213 828,095Rates and Taxes 392,948 661,633Vehicle Running and Maintenance 303,959 271,052Bank Charges 1,786,977 1,519,596Insurance 471,995 279,773Miscellaneous Expenses 1,336,670 1,858,652

20,612,650 19,075,210Selling and Distribution expenses :Demands and Interest on Taxes 1,458,451 57,128Advertisement 6,102,086 9,418,853Sales Promotion Expenses 3,410 141,753Freight & Packing Expenses 15,835,936 18,559,339Service Expenses ( Free Coupon/After Sales Service ) 12,456,084 8,035,450Cash Discount & Incentives 16,477,244 12,388,365Service Tax 2,261,342 -Loss in Exchange Rate due to Fluctuation 245,923 -Others 54,840,476 48,600,888Bad and Doubtful Debts, Advances and others written off 234,353 87,968Deferred Revenue Expenditure Written Off 1,056,711 1,359,816Provision for doubtful debts /advances 25,321,464 1,185Provision for Inventory obsolescence 2,215,456 -Loss in Value of Investment 57,000 -

28,884,984 1,448,969Total 192,026,468 154,786,826

SCOOTERS INDIA LIMITED 00/01/1900SCHEDULE 17Interest


RS. Rs.Interest on Loans and advances from : Government of India 9,024,220 3,302,481 Banks 23,695,669 12,885,741

32,719,889 16,188,222

SCHEDULE 18Prior Period Adjustments


RS. Rs.Provision For Gratuity 79,641,289 - Leave Encashment 27,580,804 -Income Tax Expense for F.Y. 2004-05 1,223,927 -Depreciation 1,234,061 -Expenditure on Repairs & Maintenance (Building) 24,702 -Interest & Penalties on Taxes 1,082,942 -Deposit with Sales Tax Authority 5,022 -Fringe Benefit Tax -868,498 -Liability for Cess on Turnover -245,546 -Material Adjustment A/c 10,739,778 -

120,418,481 -

ACCOUNTING POLICIES

Annexed to and forming part of the Accounts

1. SYSTEM OF ACCOUNTING: (i) Basic assumptions:

The accounts have been prepared under historical cost convention on accrual basis and as per applicable Mandatory Accounting Standards.

(ii) Going concern: Accounts have been prepared on the principle applicable to a going concern.

(iii) Use of Estimates: The preparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statement and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialize.

2. DEPRECIATION: Premium on leasehold land is amortised over the period of lease.

Depreciation on other fixed assets is charged on straightline method in accordance with rates prescribed in Schedule XIV to the Companies Act, 1956 as amended from time to time , except (a) Plant, Machinery, Equipment, and Jigs & Fixtures costing individually

Rs. 5000 and below are depreciated fully in the year of purchase. (b) In case of tools where estimated useful life is greater than five years but

less than ten years, depreciation is charged @ 20% as was being done prior to introduction of Schedule XIV.

Depreciation is not provided on assets which have been declared surplus and are not in use. These are distinctively shown under other Current Assets at net realisable value.

3. INVENTORIES: (i) Raw materials, components, stores & spares, tools, consumables and

other stocks are valued at cost (net of CENVAT) determined on FIFO Basis. Scrap and disposable goods are valued at estimated realisable value.

(ii) Stock-in-trade is valued at lower of cost or realisable value. (iii) Work-in-progress is valued at cost. Where the jobs are in progress their

conversion cost is taken at 50% of the standard cost regardless of the stage of completion. Completed jobs pending inspection are valued at cost or realisable value whichever is less.

(iv) Customs duty on bonded material is allocated to the cost of goods and equipment.

(v) Expenditure on stationery, uniform, medicine etc. are charged off to revenue at the time of receipt. But the stock remaining at the year end are credited to the revenue account at cost and shown as closing stock.

….2

: 2 :

4. FIXED ASSETS:

(i) Fixed Assets are stated at original cost and are inclusive of all expenses to bring them to a state of use .

(ii) Land is valued at original cost. (iii) The cost of the leasehold land is amortized over the lease span . (iv) The tools manufactured departmentally costing individually Rs.5000

and below are accounted for as revenue expenditure under relevant natural heads

(v) Construction period expenses exclusively attributable to projects are capitalized.

(vi) Borrowing cost directly attributable in relation to acquisition or construction of assets that takes substantial period of time to get ready for its intended use are capitalised as part of the cost of such assets upto the date when such assets are ready for intended use. Other borrowing costs are charged as expenses in Profit & Loss Account in the year in which they are incurred.

5. INVESTMENTS:Investments are valued at cost. However, in case of permanent diminution in the value of investments, suitable provision is made in the books of accounts.

6. CENVAT Cenvat credit on eligible Revenue / Capital purchase is taken on receipt of such materials.

7. PROVISION FOR REDUNDANCY/OBSOLESCENCE: A general provision for redundancy is made at 0.5% of the value of closing inventory of raw materials and components, stores and spares excluding finished goods, W.I.P, gasoline in petrol pump, medicines, materials in bond and under inspection. Wherever necessary, additional provision for redundancy/ Obsolescence of inventory is made in individual cases keeping in view their realisable value.

8. SALES:Sales are set up as per the Sale of Goods Act. They represent value of goods sold at the ex-factory price plus incidentals like freight, insurance etc. embedded in the sale price.

9. DUTIES ON BONDED STOCK: Excise duty on finished stocks lying in bond is provided for, on the assessable value applicable for each product.

10. ACCOUNTING FOR INCOME AND EXPENDITURE: Income and expenditure are accounted for in the current year on accrual basis under natural heads of account.

….3

: 3 :

11. FOREIGN EXCHANGE VARIATION Assets and liabilities, other than the non-monetary items which are carried in terms of historical costs, relating to transactions involving foreign currency are converted at the exchange rates prevailing at the year end. Any loss or gain arising out of conversions is adjusted in the profit and loss account.

12. RETIREMENT BENEFITS: Contribution to Provident Fund is made to the company’s provident fund trust. The fund is compared to aggregate liability, is additionally contributed by the company and recognized as expenses. Gratuity and Leave Encashment liability is ascertained on actuarial valuation. However, any deficit in funds managed by LIC as compared to the actuarial liability is recognised as liability immediately. The compensation payable under Voluntary Retirement Scheme is amortised equally over a period of five financial years but not later than financial year ending on 31st March 2010.

13. DEFERRED CREDIT: In case of purchase of fixed assets on deferred credit, the purchase price of fixed assets and interest on outstanding amount accruing up to the date of erection and commissioning are capitalised.

14. RESEARCH AND DEVELOPMENT: Expenditure relating to product approvals including type approvals, consistency of production approvals from testing agencies and materials specifically procured for development of products are charged as Research & Development Expenses and other expenditure of Research and Development are charged off to the Profit and Loss Account under natural heads of accounts. Expenditure which results in creation of capital asset is taken to fixed assets and depreciation is provided as applicable. Prototype vehicles submitted to testing agencies are booked under finished goods.

15. JOBS DONE FOR INTERNAL USE: Jobs done for internal use are valued on the basis of technical estimates of material and conversion cost and are distinctly shown as a consolidated deduction from expenditures included in Profit & Loss Account.

16. CAPITAL COMMITMENTS & CONTINGENT LIABILITIES:

Show cause notices issued by various Government authorities when converted into demand only are considered as contingent liabilities if the same is not accepted and disputed by the company. Other disputed claims are provided for as liability or disclosed as contingent liability on the basis of the assessment of the management.

….4

: 4 :

17. ACCOUNTING OF GOVERNMENT GRANT:

(i) Government Grant of revenue nature are accounted for in the Profit and Loss Account under the head other income to the extent the expenditure is charged to revenue as and when incurred.

(ii) In case of any specific Government grant the treatment in the books of accounts is made on the basis of specific stipulation for the same.

18. TAXES ON INCOME: Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961. Deferred Tax on account of timing difference between taxable income and accounting income is provided considering the tax laws enacted or substantively enacted up to the Balance Sheet date.

19. IMPAIRMENT OF FIXED ASSET:The carrying values of fixed assets of the identified cash generating units (CGU) are reviewed for impairment at each Balance Sheet date. When events or changes in circumstances indicate that the carrying values may not be recoverable and the carrying amount exceeds the estimated recoverable amount, the assets of the CGU are written down to the recoverable amount and the impairment loss is recognized in the profit and loss account.



Sd/- (Ajai Kumar Gupta) Partner


Schedule 19

Notes annexed to and forming part of the accounts As at 31.3.2007

Rs. In Lakhs As at 31.3.2006

Rs. In Lakhs 1. Estimated amount of contracts (net of

advances) remaining to be executed on Capital Accounts and not provided for. 60.00 10.04(i) Claims against the Company not

acknowledged as debts. (a) Consumer Forum Cases (b) -Private Party Cases (3)

-One case of Private party

(c) In connection with guarantee/ Indemnity given by SIL and UPSIDC to OBC .

4.53107.28

Indeterminate

958.39

-107.28

-

-

(ii) Unfavorable Arbitration award in the matter between Ordnance Factory Board and the Company. (Refer Note 18)

131.34 86.81

(iii) Interest claimed by M/s UPSIC Indeterminate Indeterminate

(iv) Employees’ Cases pending before various Court (a) In Labour Court (b) In Others

40.18Indeterminate

-Indeterminate

(v) The Workmen Housing Colony (Refer Note No.5)

2412.00 Indeterminate

(vi) Wage revision (Refer Note No. 16) 229.00 139.00

(vii) Bank Guarantee in favour of Sales Tax Department, Chennai

7.33 7.33

2. Sales-tax assessment both under UPTT and CST have been completed up to financial year 2004-05. The Income-tax assessment has been completed up to assessment year 2004-05 (financial year ended on March 31, 2004). The company does not foresee any liability against pending assessment.

...2

: 2 :

3. INVESTMENTS: (a) The Government of India approved participation in the equity share

capital of M/s U.P. Instruments Ltd. (A State Government Undertaking) to the extent of Rs. 15.68 Lakhs, i.e., 49% of equity share capital and the Company/Nominees have so far invested Rs.15,50,300 towards equity share capital (Previous year Rs.15,50,300). The Company has been intimated that all assets including land, building and plant & machinery of UPIL has been sold through Committee constituted by U.P State Government. Accordingly, the possible loss for the entire investment of Rs.15.50 lakhs has been provided for in the Accounts.

(b) The Government of India approved participation in the equity shares of

M/s UP Tyres & Tubes Ltd.(UPTT) (A State Government Undertaking) to the extent of Rs.52.28 lakhs, i.e., 49% of their equity share capital and the Company/Nominees have so far invested Rs. 52.28 lakhs towards equity share capital (Previous year Rs. 52.28 lakhs). As the net worth of UPTT has become negative, the estimated realisable value of the shares is considered as Nil. Accordingly, possible loss in the investment (Rs.52.28 lakhs) has been provided for in the Accounts.

(c) The company invested Rs.57000 in the shares of The Co-operative Electric Supply Society Limited in the year 1984. In absence of any information regarding the net worth of the company, a provision for the same has been made.

4. The balances in the debtors/creditors accounts, claims recoverable, loans and advances, assets/materials with third parties are subject to adjustments, if any, on reconciliation, as most of the above balances have not been confirmed or are showing balances different from SIL books. Details/confirmation of various deposits relating to Electricity, Customs-duty, Port Trust, Octroi, Sales-tax, Landlord and certain parties are not available/obtained.

5. The Company is in physical possession of the land measuring 41 bigha, 3 biswa and 18 biswansi acquired for Workmen’s Housing colony under “ Own Your House Scheme” . The compensation determined by the Land Acquisition Officer of U.P Government amounting to Rs. 2,28,808.44 was paid by the Company. However, subsequently, some land owners entered into litigation for higher compensation before Nagar Mahapalika Tribunal against the State Government. The U.P State Government has filed an appeal before the Hon’ble High Court challenging the order of the Tribunal and final decision is still awaited. The Company has also been impleaded as a party to the said appeal. The additional liability on the part of the Company, if any, is not ascertainable.

….3.

: 3 :

As regards ceiling land measuring 24 bigha, 13 biswa and 16 biswansi, which is in physical possession of the Company, the Govt. of U.P issued an order dated 3rd August, 2000 giving above land to the Company for the purpose of Workmen Housing colony under “ Own Your House Scheme” on lease for 90 years in consideration @ Rs. 4000 per bigha, amounting to Rs.4.55 lakhs including premium. Payment was made but returned subsequently by U.P Government. Thereafter, U.P Government revised their earlier order vide their letter No.919 (1) 1-12/2003-9151/87-92 dated 8.5.2003 demanding market price of Rs.24.12 crores, which was contested by the Company. A recovery notice for Rs.24.12 crores in addition to collection charges was issued by Tehsildar, Lucknow.

Aggrieved by the recovery notice, Company filed writ petition in Hon’ble High Court. The Court stayed recovery notice and ordered the Company to pay a sum of Rs.4.55 lakhs to District Magistrate, Lucknow. It has been complied with. Final decision of the Court is awaited.

As regards another Forest land for Workmen Housing colony under “ Own Your House Scheme” measuring 4 bighas and 13 biswa, which is in physical possession of the Company, for 90 years lease, the execution of conveyance deed with the State Government is pending due to delay in completion of procedural formalities by the Forest Department.

The land held for Workmen Housing colony under “ Own Your House Scheme” shall be transferred to workmen after complying with legal and other procedural formalities. Accordingly, the same has not been included in our Fixed Assets Schedule.

6. The Company held no security in respect of material lying with third parties/contractors to the tune of Rs. 111.08 lakhs (Previous year Rs. 59.08 lakhs.), Fixed Asset with third party amounting to Rs.9.66 lakhs (Previous year Rs. 9.66 lakhs.) & Electric Vehicles with third party amounting to Rs. 22.85 lakhs (Previous year Rs. 22.85 lakhs.). Provision for material doubtful of recovery amounting to Rs. 17.84 lakhs (Previous year Rs.17.84 lakhs.) has been made.

7. The Company is in physical possession of property at 64-65, Najafgarh Road, New Delhi where Regional Office, North Region is located, leased out to Scooters India Limited by M/s Ganesh Flour Mills Ltd. (since nationalised and vested in H.V.O.C. Ltd.). The lease agreement with M/s Ganesh Flour Mills Ltd. has expired in 1982-83. As there is no contractual document between the two Companies and based on legal opinion, no liability towards lease rent/royalty has been provided. The Company on record offered for one time settlement of Rs.53.80 lakhs for transfer of land which has not been provided in the accounts pending clarity/decision in the matter.

8. The consumption of material is derived as a balancing figure by adding opening inventory with purchases during the year and deducting closing inventory.

….4.

: 4 :

9. A version of three wheeler Vikram which is battery operated has been developed through in-house R&D. Some of these vehicles are being run for Techno-Commercial Trial for assessing commercial viability partly by the Company itself and partly through authorised representatives to whom these have been given on rentals. The income generated through battery operated vehicles have been accounted for as “other receipts”.

10. (a) As on 31.03.2007 there is an outstanding of Rs. 115.22 lakhs (Previous year Rs.161.58 Lakhs) against M/s Amausi Motors Limited, Lucknow. Pursuant to the agreement entered into by the company for liquidating the balances, the outstanding has come down during the year by Rs. 46.36 Lakhs (Previous year Rs. 5.83 lakhs).

(b) Legal proceedings are in progress for recovery of outstanding in case of 27dealers, the amount involved as on 31-3-2007 is Rs. 274.94 Lakhs. (Previous year 27 dealers amounting to Rs. 272.11 lakhs).

(c) Adequate provisions in the account has been made for bad and doubtful debts as per the assessment of the management. On review entire amount of Rs.200 lakhs available in the reserve for debts has now been withdrawn.

11. The Company is principally engaged in the business of manufacturing and sale of motor vehicles and spare-parts (Automobile). Accordingly, there are no other reportable segments as per AS-17 issued by ICAI on segment accounting.

12. The Company does not have any related party transaction as defined in Accounting Standard-18.

13. AS per guidelines issued by ICAI under AS-26 “Impairment of Assets”, the company has assessed the recoverable amount of the relevant assets and found that no indication of impairment exists in relation to assets as on 31-03-2007

14. In absence of relevant notification by the Government of India specifying the period & applicable rate at which Cess on Turnover is payable under Section 441 A of the Companies Act 1956, the same is not determined and hence not provided. Cess provision @ .005% of the annual turnover tax amounting to Rs. 2.46 lakhs for pervious years has accordingly been written back during the current year.

15. The Government of India, Ministry of Industry & Public Enterprises, Deptt. of Heavy Industry released funds amounting to Rs.260 lakhs each towards plan loan & equity during the year. (previous year Rs.425.00 lakhs)

….5.

: 5 :

16. The proposal for the revision of wages of workmen which is to be given effect from 1.1.2002 but is to be implemented with effect from 1.8.2004, as per the agreed terms with the workmen union, has been submitted to the Administrative Ministry for the approval of Government of India. The approval is still awaited. The financial implication of the proposal is estimated at Rs.229 lakhs as on 31.3.2007. No provision has been made in the Annual Accounts pending approval from Government of India. However adhoc recoverable advance amounting to Rs.129.96 lakhs has been disbursed on this account.

17. The Company increased the authorised capital from Rs. 45 Crores to Rs. 75 Crores, in its Annual General Meeting held on 25th September 2004. The Company had filed Form 5 and Form 23 along with requisite filing fee of Rs. 15,00,500/- with Registrar of Companies, Kanpur for its registration. The Registrar of Companies has returned the filing fee and advised the Company to approach the Central Government, for exempting filing fees in view of BIFR order under Section 632 in respect of previous increase from Rs.8 crores to Rs.45 crores. The Administrative Ministry i.e. Ministry of Heavy Industries & Public Enterprise, Department of Heavy Industry, vide letter No. 3(6)/2005-PE-VI dated 16th May, 2005 has recommended Ministry of Law Justice & Company Affairs for exemption for payment of filing fees in the first instance i.e. from Rs.8 crores to Rs. 45 crores. The Company has not made provision for filing fee of Rs.15,00,500/- in the Books of Accounts, pending receipt of final approval/clarification. However, subsequent to implementation of MCA 21 the company’s authorised capital has been shown as Rs.75 crore by Registrar of Companies.

Pending allotment of share to Central Government, the money received is classified as advance against share capital.

18. An Arbitration award, awarding Rs.131.34 lakhs, in the matter between Ordinance Factory Board & the Company has been issued by the sole arbitrator vide Order Dt..23.12.2003.An appeal filed with Appellant Authority has been rejected by Order Dt.10.04.2007.

The company has been advised that the award as well as the order of the appellant authority are illegal and not sustainable in law and liable to be quashed. The company has moved an appeal before the Committee of Disputes seeking permission to challenge the order of appellant authority in a writ petition before the honorable High Court. The permission of COD is awaited. Hence no provision is made in the books of account and it is shown as a contingent liability.

…6: 6 : 19. Earnings per share (EPS):

2006-07 2005-06

Profit as per Profit & Loss Account (Rs. In Lakhs) Average number of Equity Shares (Face value Rs.10 each)

Basic and diluted EPS (in Rupees) Basic and diluted EPS without Prior period Items (in Rupees)

-2250.20

429,92,255

-5.23

-2.43

155.99

429,92,255

0.36

0.36

20. Pursuant to actuarial valuation conducted by independent actuary as on 31.03.2007, the provision of Rs. 796.41 lakhs towards Gratuity and Rs.275.81 lakhs towards Leave Encashment which were not given effect upto F.Y. 2005-06 has been provided for as prior period adjustment. An amount of Rs, 774.70 lakhs & Rs. 411.11 lakhs pertaining towards gratuity & leave encashment respectively remains unfunded as on 31.03.2007

21. In absence of information from vendors with regard to their registration (filing of memorandum) under The Micro, Small Medium Enterprises Development Act, 2006, no disclosure have been made in this regard.

22. Computation of Deferred Tax is tabulated below:

Particulars As at 31st

March, 07As at 31st

March, 06 (A) Deferred tax liability on account

of timing difference with regard to depreciation.

2,263,239 17,737,162

Total (A) 2,263,239 17,737,162(B) Deferred tax Assets on account

of timing difference: (a) Disallowance U/s 43 B of

the I.T. Act

(b) Unabsorbed depreciation, carry forward of losses

41,639,488

245,069,235

-

246,191,865

Total (B) 286,708,723 246,191,865

Deferred Tax Assets (B-A) 284,445,484 228,454,703….7

: 7 :

In consideration of prudence, the above deferred tax assets aggregating to Rs. 284,445,484 (Previous Year 228,454,703) has not been recognized by the Company in the financial statements in the current year, since it is not virtually certain whether the Company will have sufficient taxable income in near future against which such deferred tax assets can be realized. The same would be considered at appropriate time keeping in view the availability of sufficient future taxable income against which Deferred Tax Assets can be realized.

23. Consequence to quantitative reconciliation of consumption attributable to opening balance of Work-in-Progress an amount Rs.107.40 lakhs have been accounted for as material adjustment in prior period.

24. Due to change in Accounting Policy on “Employee Benefits” for treatment of Voluntary Retirement Expenditure, the VRS expenditure for the year has been deferred for 4 years i.e. up-to 31.03.2010 as against five financial years in the previous year. Due to the above change loss for the year is overstated by Rs. 20890.

25. Previous year’s figures have been regrouped, rearranged and recast, wherever necessary, to make them comparable with those of the current year.

26. Figures have been rounded off to the nearest rupee.



Sd/-

(Ajai Kumar Gupta) Partner


SCOOTERS INDIA LIMITEDSCHEDULE 20Additional information pursuant to Schedule VI part II of the Companies Act,1956Profit & Loss Account1. Licenced and Installed capacity and production ( in physical terms Unit - Nos. )

Installed capacity Production2006-2007 2005-06 2006-2007 2005-06

Three-wheeler 16,500 16,500 15,162 15,632

Installed Capacity as certified by the Management and relied upon by Auditors, being a technical matter. Production excludes Nil prototype assembled for design and development ( Previour Year - 02 )

2. Stock and Turnover for the year ended Dec 31,2007 Stocks

At Commencement At Close TurnoverNos Rs Nos Rs Nos Rs

Vikram Three Wheeler 2242 209786491 2165 216702031 15239 1705659032(1770) (162993616) (2242) (209786491) (15182) (1484857130)

Spares and Components - 13252590 - 13441656 - 87565058(-) (10835789) (-) (13252590) (-) (92314750)

Petrol Pump stock* 29817 1116749 31986 1192757 2763848 108772997( Quantity Ltrs. ) (26313) (868890) (29817) (1116749) (2475045) (89673808)

Explanatory Notes : * Includes value of empty drums, containers etc lying in Petrol Pump stock.(1) Figures in brackets relate to previous year. (2) 1 No. Vikram Three-wheeler (E.V.) was capitalised during the year amounting to Rs. 202498.(Previous year - Nil) (3) Petrol Pump turnover represents the sale of Diesel Petrol & other Oil & Lubricants . The Company purchased 27,66,574ltrs. of Diesel/ Petrol during the year (Previous Year 24,78,875 ltrs) . There has been evaporation loss of 557.80 ltrs. (Previous Year 326 ltrs.)(4) Turnover includes the following export sales

2006-2007 2005-06Nos Rs Nos Rs

Vikram Three-Wheeler - - 4 372,632Spares & components - 3,546,308 - 4,185,166

Note : Export sales includes deemed export of Rs.14,80,951 (Previous Year Rs. 21,51,086 ).

SCOOTERS INDIA LIMITEDSCHEDULE 20 CONTD.

3. C.I.F. Value of Imports, Expenditure and Earnings in foreign currencies.

2006-2007 2005-06A. C.I.F.Value of imports Spare parts /Components - 1,268,740 Capital goods - 60,241 Others - 114,493

- 1,443,474B. Expenditure in foreign currencies On account of royalty, know-how, professional , consultation fees, interest, provisions and others. 2,406,327 9,452

2,406,327 9,452C. Earnings in foreign currencies Export of goods calculated on F.O.B. Basis.* 1,819,435 4,185,352 Royalty 24,870,921 23,515,341

26,690,356 27,700,693Explanatory Notes :1. Earnings in foreign currencies includes / excludes gain / loss on exchange rate as appliccable .* Export Sales does not include Deemed Export.

4. Details of Raw Materials consumed

( I ) Raw Materials ( including spare parts) and Components .

Materials Unit Qty. Value (Rs) Qty. Value (Rs)Ferrous Kg. 4,077,465 106,795,865 3,542,426 101,765,700

Mtrs 111,887 28,405,116 103,308 25,608,017Non-ferrous Kg. 230,813 30,193,417 217,119 30,234,776B.O.S.F. - - 301,464,352 - 254,252,942Tyres & Tubes Nos 124,488 52,882,718 125,822 48,396,270Spare-parts Components - - 601,740,794 - 508,500,543

1,121,482,262 968,758,248

(ii)Value of imported and indigenous raw-materials consumed (including spare-parts and components)

Rs. % Rs. %( a ) Imported (CIF, custom duty - - 1,549,027 0.16 and other charges )

( b ) Indigenous 1,121,482,262 100.00 967,209,221 99.84

2005-062006-2007

2006-2007 2005-06

SCOOTERS INDIA LIMITEDSCHEDULE 20 CONTD.

5. Auditor's Remuneration

2006-2007 2005-06Rs. Rs.

( a ) Statutory Auditor's Audit fee 50,000 50,000( b ) Fee for Certification 35,500 7,500

85,500 57,500The above figures do not include service tax .

(C.S.SundaraMurthy ) ( P.P. Sarkar) (P. Muthusamy) G.M.(Finance) Director Chairman-cum-Managing Director

As per our seprate report of even date For Mittal Gupta & Co.Chartered Accountants

(Ajai Kumar Gupta)PartnerPlace: LucknowDate: 04 August, 2007.

SCOOTERS INDIA LIMITED LUCKNOW

CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH,2007. PURSUANT TO CLAUSE 32 OF THE LISTING AGREEMENT

Current Year Previous YearRs. Rs

Cash flow from operating activities :Net Profit/(Loss) before Tax and extra ordinary items -103,881,897 19,036,456 Adjustment for : '-Depreciation (i) For Current Year 20,246,333 14,108,546 (ii) For Prior Period 1,234,061 - '-D.R.E. (i) Written Off for The Year 1,056,711 1,359,816 (ii) Addition For the Year -434,208 -2,428,214 '-Provision for Loss in Value of Investment 57,000 - '-Provision for Doubtful Debts 25,555,816 89,152 '-Provision for Inventory Obolesence 2,215,456 - '-Interest Income -28,884,370 -28818173 '-Interest Paid 32,719,889 16188222 '-(Profit)/Loss in exchange rate change 245,923 -185 '-(Profit)/Loss on sale of fixed assets - 54,012,611 -446,016 53,148Operating profit before working capital changes -49,869,286 19,089,604Adjustment for : '-Trade receivables 158,163,350 -86,725,160 '-Inventories -65,459,891 -122,654,358 `-Other current assets 32,726,295 -24,336,542 '-Loans & advances -16,881,977 -10,191,373 '-Trade payables 59,940,586 168,488,363 18,499,218 -225,408,215Cash generated/(loss) from operations : 118,619,077 -206,318,611 Less Taxes Paid ; Income Tax - -1,603,000 Fringe Benefit Tax -719,914 -1,834,011Cash inflow/(outflow) before extra ordinaty items 117,899,163 -209,755,622Extra ordinary items: -Prior Period Adjustment -120,418,481 - '-(Loss)/Gain in exchange rate -245,923 -120,664,404 185 185Net cash from operating activities -2,765,241 -209,755,437

Cash flow from investing activities: '-Increase in fixed assets / capital expenditure -9,688,708 -18,797,739 '-Sale/ Adjustments of fixed assets - 2,316,621 '- Interest Income 28,884,370 28,818,174Net cash used in investing activities 19,195,662 12,337,056

Cash flow from financing activities ' -Interest paid -32,719,889 -16,188,222 '-Increase in share capital 26,000,000 42,500,000 '- Repayment of term loan to G.O.I -25,722,900 -17,222,850 '-Receipt of long term loan from-G.O.I. 26,000,000 42,500,000 '-Repayment of long term loan to PICUP -56,386,858 -55,015,670 '-(Decrease)/ Increase in cash credit limits -58,709,786 186,681,241Net cash used in financing activities -121,539,433 183,254,499

Net increase / (decrease) in cash and cash equivalents -105,109,012 -14,163,882Cash and cash equivalents (Opening balance) 545,893,372 560,057,254Cash and cash equivalents (Closing balance) 440,784,360 545,893,372

Particulars

Notes to the Cash Flow Statement

1. Cash and Cash Equivalents

Cash and cash equivalents consist of cash and cheques on hand and balances with banks and investment in short term deposit accounts. Cash and cash equivalents included in the Cash FlowStatement comprise the following Balance Sheet amounts:

Cash and cash equivalents as at 31st March'07/ 31st March'06 For the FY 2006-07 For the FY 2005-06Cash and stamps in hand 541066 260424Cheques in hand 26382116 0Term Deposits with Scheduled Banks 392131797 460227967Balances with Scheduled Banks 21729381 85404981Unsecured loans from scheduled banks/ICDs/CPsCash and Cash Equivalents as restated 440784360 545893372Net change in Cash and Cash equivalents -105109012 -14163882

2. Cash & Cash Equivalent includes : (a) Term Deposits for Rs. 9,83,57,904 ( Previous year Rs. 10,30,73,034 ) held against L.C.Margin . (b) Term Deposits for Rs. 15,00,00,000 ( Previous year Rs. 15,00,00,000) held against OD Limit with I.O.B., Lucknow (c) Term Deposits for Rs. 7,33,100 ( Previous year Rs. 23,100 ) held against Bank Guarantee, Sales Tax Case with I.O.B. Chennai (d) Term Deposits for Rs. 35,07,312 ( Previous year Rs. Nil ) for E.S.I Case

3. The Cash Flow Statement is prepared in accordance with the format included in Accounting Standard 3 prescribed by the Institute of Chartered Accountants of India.

4. " Non-Cash items" comprise of provisions for Inventory Obselences, Provisions for bad & Doubtful debts, depreciation, provision for loss in value of investment and write off of Deferred Revenue Expenditure.


For Mittal Gupta & Co..Chartered Accountants

Place; Lucknow (Ajai Kumar Gupta) Date : August, 2007. Partner

SCOOTERS INDIA LIMITED LUCKNOW

Additional information relating to Balance - Sheet abstract and Company's GeneralBusiness Profile as per Part IV of Schedule VI to the Companies Act,1956 Annexed.BALANCE-SHEET ABSTRACT & COMPANY'S GENERAL BUSINESS PROFILE

I Registration detailsRegistration Number 3599of 1972-73State Code 20 (Uttar-Pradesh)Balance Sheet date 31.03.2007

II Capital raised during the year -Public issue NILRights issue NILBonus issue NILPrivate placement NIL`-Advance against equity capital -G.O.I. 26,000,000

III Position of mobilisation and deployment of funds :Total liabilities 799,168,073Total assets 799,168,073

Sources of funds : a) Paid up capital 518,838,188 b) Reserves and surplus 926,083 c) Secured loans 198,592,382 d) Unsecured loans 80,811,420

Application of funds: a) Net fixed assets 190,287,804 b) Investments - c) Net current assets 542,680,677 d) Miscellaneous expenditure 2,376,724 e) Accumulated Losses 63,822,868

IV Performance of company- a) Turnover(Gross) 1,901,997,087 b) Total expenditure 1,845,442,734 c) Profit before tax -224,300,378 d) Profit after tax -225,020,292 e) Earning per share in rupees excluding advance received from Govt.of India -5.23 f) Dividend rate (%) NIL

V Generic names of two principal products of the company : Product description ITC . Code Motorised Three - wheeler Chassis 870631 Motorised Three - wheelers 870310


For Mittal Gupta & Co..Chartered Accountants

Place; Lucknow (Ajai Kumar Gupta) Date : 04 August, 2007. Partner

MITTAL GUPTA & COMPANY CHARTERED ACCOUNTANTS

14, RATAN MAHAL, 15/197, CIVIL LINES KANPUR-208001

Ph : 2303234,2303235

AUDITORS’ REPORT

TO THE MEMBERS OF SCOOTERS INDIA LIMITED, LUCKNOW

We have audited the attached Balance Sheet of Scooters India Limited, as at 31st march, 2007 and also the Profit & Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. 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.

1. We 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 management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

2. As required by the Companies (Auditor’s Report) order, 2003 as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004 (the ‘Order’) 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 Paragraph 4 and 5 of the said order.

Further to our comments in the Annexure referred to in paragraph 2 above, 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 purposes of our audit.

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

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

(d) In our opinion, the Balance Sheet and the Profit & Loss Account 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) As per Notification No. GSR 829(E) dated 21.10.2003 issued by the Department of Company Affairs, disqualification of Directors in terms of Clause (g) of Sub-section 1 of Section 274 of the Companies Act, 1956 is not applicable to the Company being a Government Company.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with Accounting Policies and Notes thereon give the information required by the Companies Act,1956 in the manner so required and subject to:

(i) Note No. 4 of schedule 19, regarding balances in debtors/creditors accounts, claims recoverable, advances, assets/material lying with third parties are subject to adjustments, if any, and details of deposits not available, (ii) Note No.16 of schedule 19, regarding non provision of Rs 229 lacs for wage revision, pending approval from government and (iii) Note No.17 of schedule 19, regarding non provision of filing fee of Rs 15.01 lacs,

iv) Overall effect of our observations at para 2(f) above:

Without considering the points above the effect of which could not be determined, had the observations made in para 2(f) (ii) & (iii) been considered the loss for the year after tax would have been Rs. 249,421,292 as against the reported figure of loss of Rs.225, 020,292

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

a) in the case of the Balance Sheet, of the state of affairs of the Company, as at 31st

March, 2007;

b) in the case of the Profit & Loss Account, of the loss for the year ended on that date; and

c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

For Mittal Gupta & Company Chartered Accountants

Sd/-

Place: Lucknow Ajai Kumar Gupta Date: 04.08.2007 (Partner)

Membership No.:70756

ANNEXURE TO THE AUDITOR’S REPORT (Referred to in paragraph 2 of our report of even date)

(i) (a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As informed, all the fixed assets have not been physically verified by the management during the year but there is a phased programme of verification which in our opinion is reasonable having regard to the size of the Company and nature of its business. No material discrepancies were noticed on such verification.

(c)As informed, the Company has not disposed of substantial part of fixed assets during the year thereby affecting the going concern status of the Company.

(ii) (a) As explained to us, the physical verification of the inventory (excluding the inventory with third parties) has been conducted by the management at year end. The frequency of physical verification should be improved.

(b) In our opinion and according to information and explanations given to us, the procedures of physical verification of inventory have been strengthened by the company during the year. Consequent to quantitative reconciliation of consumption, attributable to opening balance of Work-in-Progress, necessary effect has been accounted for as material adjustment, resulting in a charge to prior period (refer note no. 23 of schedule 19).The procedures of physical verification of the inventory, followed during the year, by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) According to the information and explanations given to us, the discrepancies noticed on physical verification of inventory conducted by the management at the year end as compared to book records were not material and have been properly dealt with in the books of accounts.

(iii)(a) According to information and explanations given to us, the Company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 in the Act.

- (2) -

(b) According to information and explanations given to us, the Company has not taken any loan, secured or unsecured, from Companies, firms and other parties covered in the register maintained under section 301 of the Act

(iv) In our opinion and according to information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and also for the sale of goods. During the course of audit, we have not observed any major weaknesses in internal control system.

(v) According to information and explanations given to us, the Company has not made any contracts or arrangements that need to be entered in register referred to in Section 301 of Act.

(vi) As informed and as per records, the Company has not accepted any deposits from the public during the year.

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

(viii) We have broadly reviewed the accounts and records maintained by the Company pursuant to the order made by the Central Government for the maintenance of Cost Records under section 209 (I) (d) of the Act and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate and complete.

(ix) (a) As per records, the Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education & Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues, to the extent applicable to it, with the appropriate authorities and as informed no undisputed amounts were outstanding as at 31st March, 2007 for a period of more than six months from the date of becoming payable, except the followings :

- (3) -

Sl.No.

Name of the Statue Nature of the dues

Period Amount(In Lacs)

1. UP Trade Tax Act Interest 77-78, 86-87 & 87-88

14.300

2. Kerala Sales Tax Act State Sales Tax

92-93, 93-94 & 94-95

4.220

3. Orissa Sales Tax Act Entry Tax 2001-02 0.002

4. Bihar State Sales Tax Act

State Sales Tax

2001-02 0.150

5. Central Sales tax Act (UP)

Interest 82-83, 86-87 & 93-94

5.830

Total 24.502

(b) The disputed statutory dues aggregating Rs.166.38 lacs that have not been deposited on account of matters pending before appropriate authorities are as under:

Sl.No.

Name of the Statue

Nature of the dues

Forum where dispute is pending

Period Amount (In

Lacs)1(a) States Sales Tax

ActsSales Tax Dy.Com.

(Appeal) 92-93, 93-94, 96-97, 98-99, 2001-02 & 2002-03

17.46

(b) States Sales Tax Acts

Sales Tax Asstt. Comm. 93-94 7.88

(c) States Sales Tax Acts

Entry Tax and Penalty

Comm. Of Commercial Taxes

97-98 to 2004-05 102.72

(d) States Sales Tax Acts

Sales Tax Joint Comm. Appeals

2001-02 2.94

2 Central Sales Tax Act

Central Sales Tax

Dy.Com.(Appeal)

92-93 & 93-94 5.46

3 Employees State Insurance Act

ESI Employees Contribution & interest

Director ESIC, Kanpur

86-87 to 90-91 92-93 to 94-95

29.92

Total: 166.38

(x) The Company has an accumulated loss of Rs.638.23 Lacs at the end of the financial year and has incurred cash losses in the financial year under report and not in the immediately preceding financial year.

- (4) -

(xi) In our opinion and according to information and explanations given to us, the company has not defaulted in repayment of dues to financial institution or banks.

(xii) According to information and explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

(xiii) In our opinion Company is not a Chit Fund or a Nidhi/Mutual Benefit Fund/Society. Therefore, the provisions of clause 4 (xiii) of the Order are not applicable to the company.

(xiv) In our opinion and according to information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Accordingly the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the company has not given any guarantee for the loans taken by others from bank or financial institution.

(xvi) According to information and explanations given to us, the company has obtained a new term loan amounting to Rs. 260 lacs from Government of India, during the year. The Plan Loan from Government of India has been earmarked for capital expenditure and has been invested in Fixed Deposit for the time being.

(xvii) According to information and explanations given to us and on an overall examination of the Balance Sheet, we are of the opinion that funds raised on short term basis have, prima facie, not been used during the year for long term investment.

(xviii) According to information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act.

- (5) -

(xix) According to the information and explanations given to us, as the company has not issued any debentures, therefore, the question of creation of securities or charge in respect of debentures issued is not applicable.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) Based upon the audit procedures performed and the information and explanations given by the management , we report that no fraud on or by the company has been noticed or reported during the year.


Sd/- Ajai Kumar Gupta

Place: Lucknow (Partner) Dated: 04.08.2007 Membership No:70756

AUDITORS’ REPORT

COMMENTS MANAGEMENT REPLIES

TO THE MEMBERS,

SCOOTERS INDIA LIMITED, LUCKNOW

We have audited the attached Balance Sheet of Scooters India Limited, as at 31st march, 2007 and also the Profit & Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. 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.

1. We 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 management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

2. As required by the Companies (Auditor’s Report) order, 2003 as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004 (the ‘Order’) 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 Paragraph 4 and 5 of the said order.

Further to our comments in the annexure referred to in paragraph 2 above, 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 purposes of our audit.

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

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

(d) In our opinion, the Balance Sheet and the Profit & Loss Account 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) As per Notification No. GSR 829(E) dated 21.10.2003 issued by the Department of Company Affairs, disqualification of Directors in terms of Clause (g) of Sub-section 1 of Section 274 of the Companies Act, 1956 is not applicable to the Company being a Government Company.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with Accounting Policies and Notes thereon give the information required by the Companies Act,1956 in the manner so required and subject to:

(i) Note No. 4 of schedule 19, regarding balances in debtors/creditors accounts, claims recoverable, advances, assets/material lying with third parties are subject to adjustments, if any, and details of deposits not available,

(ii) Note No.16 of schedule 19, regarding non provision of Rs 229 lacs for wage revision, pending approval from government and

(iii) Note No.17 of schedule 19, regarding non provision of filing fee of Rs 15.01 lacs,

Overall effect of our observations at para 2 (f) above:

Without considering the points above the effect of which could not be determined, had the observations

Appropriate disclosure has been made vide Note No. 4 in Schedule 19 under Notes to Account.



made in para 2 (f) (ii) & (iii) been considered the loss for the year after tax would have been Rs. 249,421,292 as against the reported figure of loss of Rs.225, 020,292 give a true and fair view in conformity with accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company, as at 31st March, 2007;

b) in the case of the Profit & Loss Account, of the loss for the year ended on that date; and

c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.


Sd/- Ajai Kumar Gupta Place: Lucknow (Partner) Date: 04.08.2007 Membership No.:70756

For and on behalf of Board of Directors

Sd/- (P. Muthusamy) Chairman cum Managing Director Place: Lucknow Date: 04.08.2007

ANNEXURE – 2

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 619(4) OF THE COMPANIES ACT, 1956, ON THE ACCOUNTS OF SCOOTERS INDIA LIMITED, LUCKNOW FOR THE YEAR ENDED 31ST MARCH, 2007

The preparation of financial statements of Scooters India Limited, Lucknow for the year ended at 31st March, 2007 in accordance with the financial reporting framework prescribed under the Companies Act, 1956 is the responsibility of the management of the Company. The statutory auditor appointed by the Comptroller and Auditor General of India under 619(2) of the Companies Act, 1956 is responsible for expressing opinion on these financial statements under section 227 of the Companies Act, 1956 based on independent audit in accordance with auditing and assurance standards prescribed by their professional body the Institute of Chartered Accountants of India. This stated to have been done by them vide their Audit report dated 4th August, 2007.

I on behalf of the Comptroller & Auditor General of India have decided not to review the report of the statutory auditors on the accounts of Scooters India Limited, Lucknow for the year ended 31st March, 2007 and as such have no comments to make under section 619(4) of the Companies Act, 1956.

For and on the behalf of the Comptroller & Auditor General of India

Sd/-Saroj Punhani Principal Director of Commercial Audit Ex-officio Member, Audit Board

Place: New Delhi Date: 23.08.2007

ANNEXURE - 3 CERTIFICATE

TO THE MEMBERS OF SCOOTERS INDIA LIMITED ON CORPORATE GOVERNANCE

We have examined the compliance of conditions of Corporate Governance by Scooters India Limited for the year ended at 31st March, 2007 as stipulated in the Clause 49 of the Listing agreement of the said company with the Stock Exchanges.

The Compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to review of procedures and implementation thereof, adopted by the company for ensuring the compliances of conditions of Corporate Governance as stipulated in the said clause. It is neither an audit nor an expression of opinion on the financial statements of the company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement(s).

As required by the Guidance Note issued by the Institute of Chartered Accountants of India, we have to state that no investor grievances were pending for a period exceeding one month as at 31st March 2007 against the company as per records maintained by the company.

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


Sd/-(Ajai Kumar Gupta)

Place: Kanpur PartnerDate: 18.08.2007 C.P. No. 070756

Annexure II

CORPORATE GOVERNANCE

The company’s philosophy of Corporate Governance is aimed at safeguarding and adding value to the interest of its various stakeholders including that of shareholders, lenders, employees and public at large. SIL is committed to good Corporate Governance to ensure that all functions of the Company are discharged in professionally sound and competent manner.

1.A) SIL’S PHILOSOPHY ON CORPORATE GOVERNANCE Over the past few years, the transition in the Indian business environment, coupled with liberalization and changing market conditions, has led to a fundamental shift in the Management’s approach to enhancing shareholder value. In this context corporate governance has attained paramount importance for ensuring fairness, transparency, accountability & responsibility to all stakeholders. Company believes that all its operations and actions must serve the underlying goal of enhancing overall shareholder value over a sustained period of time.

B. Code of Business Conduct & Ethics The Board of Directors of the company have adopted a Code of Conduct and Ethics for Directors and Senior Management incorporating best practices in Corporate Governance. The Code is also available on website of the company www.scootersindia.com. In terms of Clause 49 of the Listing Agreement a confirmation from the CMD/CEO and CFO regarding compliance with the code by all the Directors and Senior Management is given in Annexure.

C. Whistle Blower Policy Scooters India Limited has formulated a Whistle Blower Policy to establish procedures for the submission of complaints or concerns regarding financial statement disclosures, accounting, internal accounting controls, auditing matters or unethical behavior, actual or suspected fraud or violations of the Company’s Code of Conduct.

D. CEO/CFO Certification In terms of Clause 49 of the Listing Agreement the Certification by CMD/ CEO and CFO of the financial statement has been obtained and attached as Annexure.

E. Compliance Certificate of the Auditors Scooters India Limited has annexed to this report a Certificate obtained from the Statutory Auditors M/s Mittal Gupta & Co. regarding compliance of conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement.

2

2. BOARD OF DIRECTORS The Board of Directors of the Company as on 31.3.2007 is comprised of one Non-Executive Directors who is the nominee of Govt. of India, one Executive Director and two Independent Directors.

A) List of Directors

Name of Director Tenure No. of other

Director ship

No. of other committeeship

Member Chairman Wholetime Functional DirectorShri P K Datta, CMD 15.3.02 to 12.4.07 *7 1 2 Shri P. Muthusamy, Dir (Fin.) (CMD w.e.f. 13.04.2007)

12.9.06 till date - 1** 2

Shri P P Sarkar, Dir (Tech.) 16.5.07 till date - 1 - Part-time Non Executive Director (Govt. Nominee) Dr. Surajit Mitra 23.9.05 to 3.11.06 7 - - Shri Arun Singhal 29.3.06 to 3.11.06 - - - Shri Manoj Kumar Singh 3.11.06 to 22.5.07 2 1 - Shri Shashank Goel 22.5.07 till date - 1 - Part time Independent Director Shri S. Chakraborty 31.1.07 till date - 2 1 Shri P K Brahma 8.2.07 till date - 1 - Shri S K Tripathi 6.7.07 till date - - - * w.e.f. 11.9.2006 Directorship in other Companies - NIL

** w.e.f. 31.7.2007 Membership in other Committees is Nil

The matter of inclusion of independent directors on the Board was taken up with the Govt. of India and accordingly Independent Directors have been inducted.

B) Presence of Directors in Board Meetings and Annual General Meeting held during the year

Sl.No.

Name of Directors

*BMdated

27.4.06

BMdated

07.07.06

BMdated

30.10.06

BMdated

31.1.07

AGMdated

27.9.06Total Strength 3 3 4 4 4 1. Shri P K Datta P P P P P 2. Dr. Surajit Mitra P A P NA A 3. Shri Arun Singhal A P A NA A 4. Shri P. Muthusamy NA NA P P P 5. Shri Manoj Kumar

SinghNA NA NA A NA

6. Shri S. Chakraborty NA NA NA A NA

P : Present, A : Absent, NA : Not Applicable

*Adjourned meeting of 24.1.2006 was also held on 27.4.2006.

3

There has not been a gap of over four months between two Board Meetings and at least one Board Meeting was held in each quarter of the financial year.

C. Information supplied to the Board

The board is presented with all the relevant information on various vital matters affecting the working of the company, as well as those that require deliberation at the highest level. Extensive information is provided on various critical items such as:

Production, sales and capital expenditure budgets and updates,

sales, investments and financial performance statistics,

review of zone-wise business,

quarterly Results of the company,

staff matters, including senior officers appointments and extensions,

legal proceedings by or against the company including show cause, demands, notices etc.,

share transfer and demat compliance,

minutes of Meetings of Audit Committee and other Committee of the Directors

R&D efforts of the company,

labour matters and human resources issues,

any material default in financial obligation to and by the company or substantial non-payment for goods sold by the company,

vigilance and related matters,

write-off and disposal of capital items,

legal compliance reporting system and other such matters,

fatal or serious accidents, dangerous occurrence, any material effluent or pollution problems

transactions involving payment towards goodwill, brand equity or intellectual property

Parliamentary Questions.

4

3. COMMITTEES OF THE BOARD A. Audit Committee Terms of reference The audit committee provides direction to the audit and risk management

function in the company and monitors the quality of internal audit. The responsibilities of the audit committee include overseeing the financial reporting process to ensure proper disclosure of financial statements, recommending appointment/ removal of external auditors and fixing their remuneration, reviewing the quarterly and annual financial statements before submission to the board, reviewing findings of internal investigations, discussing the scope of audit with external auditors and looking into reasons of substantial defaults, if any, of non-payment to stakeholders. Apart from above, the Audit Committee functions in accordance with Clause 49 of the Listing Agreement.

Composition of Audit Committee

Sl.No. Name of Director Tenure

1. Dr. Surajit Mitra, 27.4.06 to 3.11.2006

2. Shri P K Datta 15.3.2002 to 12.4.2007

3. Shri Arun Singhal 27.4.2006 to 3.11.2006

4. Shri P. Muthusamy 12.9.2006 to 31.7.2007

5. Shri S. Chakraborty 31.1.2007 till date

6. Shri P K Brahma 30.4.2007 till date

7. Shri Shashank Goel 31.7.2007 till date

Company secretary as secretary to the committee

Meetings and Attendance Sl.No Name of Director 27.4.06 7.7.06 27.9.06 31.1.07

1. Shri S. Chakraborty - - - A

2. Shri Surajit Mitra P A A NA

3. Shri P.K. Datta P P P P

4. Shri P. Muthusamy NA NA P P

5. Shri Arun Singhal A P P NA

P : Present, A : Absent, NA : Not Applicable

5

B. Shareholders/Investors Grievance Committee: The company has constituted a shareholders/investors grievance committee comprising of : Shri P. Muthusamy : Chairman of the Committee

Shri P.K. Brahma : Member

Prof. S. Chakraborty : Member

Company Secretary as Secretary to the Committee.

Details Of Shareholders Complaints

ComplaintsReceived

Complaintspending

19 NIL

C. Share Transfer Committee

The Company has constituted a Share Transfer Committee comprising of:

Shri P. Muthusamy : Chairman of the Committee

Shri P.P. Sarkar : Member

Prof. S. Chakraborty : Member

Company Secretary as Secretary to the Committee.

4. GENERAL BODY MEETINGS: The last three Annual General Meetings of the company were held as under:- Year Location Date Time

2003-2004 Sahakarita Bhawan, Lucknow. 25th Sept.,2004 3.00p.m

2004-2005 Sahakarita Bhawan, Lucknow 27th Sept.,2005 3.00p.m

2005-2006 Sahakarita Bhawan, Lucknow 27th Sept.,2006 3.00p.m

Special Resolution (if any) & Postal Ballot: AGM Date Special

Resolution Whether Put Through Postal Ballot

Details of voting pattern

Person Who Conducted Postal Ballot

25.9.2004 TWO No N.A. N.A.

27.9.2005 ONE No N.A. N.A.

27.9.2006 ONE No N.A. N.A.

- Procedure for Postal Ballot is as per the guidelines.

- No Special Resolution is proposed to be conducted through Postal Ballot.

6

5. REMUNERATION POLICY: The following are the details of the remuneration paid to Directors for the year 2006-07:

Amount in Rs.

Name Desig-Nation

&Period

SittingFee Salary

Benefits & contribution

to PF/ ension/ Others

Total

Sri P.K. Datta CMD - 6,69,491.00 2,77,859.67 9,47,350.67

Sri P Muthusamy Director(Fin.)w.e.f 12.9.06

- 3,26,254.10 34,679.00 3,60,933.10

Total 9,95,745.10 3,12,538.67 13,08,283.77

Apart from the Sitting Fees which is paid in accordance with the Articles of Association of the company, all other remuneration paid to Directors are in compliance with Govt. orders issued from time to time.

6. GENERAL SHAREHOLDER INFORMATION: Annual General Meeting: Date and Time : 26th Sept.2007 at 3.00 p.m.

Financial Calendar : 1st April, 2006 to 31st March, 2007

Venue : Sahakarita Bhawan Auditorium, Lucknow-1.

Book Closure date : 11th Sept.07 to 26th Sept.07

Listing of Equity : BSE, DSE

Stock code : 505141

Registrar & transfer Agent : Sky Line Financial Services Limited 123, Vinoba Puri, Lajpat Nagar-II,

New Delhi – 110024

Dematerialization of Shares : CDSL – 329841 as on 31.3.07 NSDL – 818899

Outstanding GDR/ADRs/ : NIL Warrants or any Convertible Instruments, Conversion Date and likely impact on Equity Plant Location : Lucknow- Kanpur Road (16th Mile Stone), Post Bag No.23(G.P.O) P.O. Sarojini Nagar, Lucknow-226008. Address for Investor : Lucknow- Kanpur Road Correspondence (16th Mile Stone), Post Bag No.23(G.P.O) P.O. Sarojini Nagar, Lucknow-226008

7

Stock Prices

Scrip Code:505141 Co. Name:SCOOTERS INDIA LTD. For the period: April 06 to March 07* Spread (Rs.)

Date Open(Rs.)

High(Rs.)

Low (Rs.)

Close(Rs.)

No. of Shares

No. ofTrades Net T/O (Rs.)

H - L C - O

April 06 27.00 31.20 26.00 28.65 75199 601 2,152,621.00 5.20 1.65May 06 28.10 31.85 23.05 24.70 106325 598 2,998,339.00 8.80 -3.40June 06 24.25 24.90 19.05 23.50 36254 235 811,420.00 5.85 -0.75July 06 23.15 24.20 19.35 21.60 16182 119 345,770.00 4.85 -1.55Aug.06 22.10 27.75 21.00 24.85 60949 413 1,484,311.00 6.75 2.75Sept.06 24.05 33.70 22.45 24.15 412414 1346 11,954,513.00 11.25 0.10Oct. 06 24.50 30.90 22.80 24.60 282800 1287 7,696,508.00 8.10 0.10Nov.06 25.00 28.30 22.00 23.40 73573 463 1,724,231.00 6.30 -1.60Dec.06 23.05 23.95 20.00 21.75 67421 338 1,494,566.00 3.95 -1.30Jan.07 22.50 40.80 22.00 26.50 1109201 3492 38,638,166.00 18.80 4.00Feb.07 27.50 27.90 23.00 24.20 92266 541 2,379,163.00 4.90 -3.30Mar.07 23.00 24.50 20.15 21.30 53422 383 1,176,562.00 4.35 -1.70

* Spread H - L -> High – Low C - 0 -> Close - Open7. DISCLOSURES:

a. Disclosures on materially significant related party transactions i.e. transactions of the Company of material nature, with its promoters, the directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of the company at large.

Company had no related party tran-saction.

b. Details of non-compliance by the Company, penalties, structures imposed on the Company by Stock Exchanges or SEBI, or any statutory authority, on any matter

related to capital markets, during the last 3 years.

None

c. No person has been denied access to Audit Committee

8. MEANS OF COMMUNICATION: a) Quarterly Results

(Approved in the meetings held on 27.4.06, 7.7.06, 30.10.06 & 31.1.07)

The Company has published quarterlyresults in The Financial Express (English)and Swatantra Bharat/Jansatta (Hindi).

b) Management Discussion and Analysis

This forms part of the Directors’ Report, which is posted to the Shareholders of the Company.

c) Web Site www.scootersindia.com

8

9. SHARE TRANSFER SYSTEM The Company has signed agreement with both NSDL and CDSL on 18th

Jan.2002 and 25th Feb.2002 respectively. The company has been allotted ISIN Code No. INE 959E01011 and since then the trading of company’s shares is being done in dematerialized form. The company has appointed M/s Skyline Financial Services Pvt. Ltd. 123, Vinoba Puri, Lajpat Nagar-II, New Delhi-110024, as its Registrar and Transfer Agent (RTA).

10. DISTRIBUTION OF SHAREHOLDING AS ON MARCH 31, 2007 Shareholding of

Nominal Value of Rs.

Share Holders Share Amount in Rupees

Category Number % Physical NSDL CDSL TOTAL Upto 5000 8622 94.56 645275.00 265316.00 77847.00 988438.00

5001 - 10000 289 3.17 75100.00 142113.00 34617.00 251830.0010001 - 20000 120 1.32 47050.00 92127.00 48210.00 187387.0020001 - 30000 26 0.29 13600.00 38485.00 13481.00 65566.0030001 - 40000 14 0.15 3700.00 31975.00 14871.00 50546.0040001 - 50000 14 0.15 9400.00 52008.00 5000.00 66408.0050001 - 100000 22 0.24 35800.00 117496.00 18100.00 171396.00100001 and above 11 0.12 41005490.0

079379.00 117715.00 41202584.00

TOTAL 9118 100.00 41835415.00 818899.00 329841.00 429922550.00

Category Percentage 1. Central Government 95.382. Nationalized Banks & Financial Institutions 0.063. Corporate Bodies 0.414. Indian Public and Others 4.15

Total 100.00

11. ANY QUERY ON ANNUAL REPORT : Secretarial Department, Scooters India Limited, Lucknow- Kanpur Road (16th Mile Stone), Post Bag No.23(G.P.O) P.O. Sarojini Nagar, Lucknow-226008.

Sd/- P. Muthusamy Chairman-cum-Managing Director Scooters India Limited Lucknow- 226008

9

Certification in terms of clause 49 of the Listing Agreement

1. We have reviewed financial statements and the cash flow statement for the year 2006-07 and that to the best of our knowledge and belief:

i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

ii) These statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations

2. There are, to the best of our knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violative of the company’s code of conduct.

3. We accept responsibility for establishing and maintaining controls and that we have evaluated the effectiveness of the internal control systems of the company and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies.

4. We have indicated to the auditors and the Audit Committee:

(i) significant changes in internal control during the year; (ii) significant changes in accounting policies during the year and that the

same have been disclosed in the notes to the financial statements; and (iii) instances of significant fraud of which we have become aware and the

involvement therein, if any, of the management or and employee having a significant role in the company’s internal control system.

5. We confirm that all Directors and Members of the Senior Management have affirmed compliance with SIL’s Code of Business Conduct & Ethics.

(C.S. Sundaramurthy) (P Muthusamy) G M (Finance) /CFO C M D/CEO

Place: Lucknow

Dated : 4th August, 2007

NOTICE

Notice is hereby given that the 35th Annual General Meeting of the members of Scooters India Limited will be held at 3.00 p.m. on Wednesday, the 26th Sept. 2007 atSahakarita Bhawan Auditorium, 14 Vidhan Sabha Marg, Lucknow to transact the following business:

ORDINARY BUSINESS :

1. To receive, consider and adopt the Directors’ Report, the Auditors’ Report and the Audited Balance Sheet and Profit & Loss Account of the Company for the year ended 31.3.2007.

2. To consider and, if thought fit, to pass, with or without modification, the following resolutions as a Special Resolution:

“RESOLVED that pursuant to Section 224(8) (aa) of the Companies Act 1956, and other applicable provisions, if any, of the Companies Act, 1956 and on the basis of the recommendation of the Audit Committee, the remuneration of the Statutory Auditors to be appointed by Comptroller & Auditor General of India (C & AG) under section 619(2) of the said act, be and is hereby approved to be fixed at Rs. 50,000/- for the year 2007-2008.”

SPECIAL BUSINESS

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

“Resolved that Shri P Muthusamy be and is hereby appointed as a director.”

“RESOLVED that appointment of Shri P. Muthusamy as the Director (Finance) of the company in the pay scale of Rs. 22500-600-27300 as per the order of the Govt. of India, Ministry of Heavy Industries & Public Enterprises, Deptt. Of Heavy Industries vide order No. 3-36/2005- PE VI dated on 8th August 2006 for a term of 5 years or till the date of his superannuation or until further orders whichever earlier be and is hereby approved."

“Resolved further that Shri P Muthusamy, Director (Finance), shall hold the additional charge of Chairman–cum-Managing Director as per the order of the Govt. of India, Ministry of Heavy Industries & Public Enterprises, Deptt. Of Heavy Industries vide Order No.3 (32) 2005-PE VI dated 13th April 2007 & 12th July 2007 until further orders.”

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

“Resolved that Shri P P Sarkar be and is hereby appointed as a director.”

“Resolved Further that appointment of Shri PP Sarkar as the Director (Tech.) of the company in the pay scale of Rs. 22500-600-27300 as per the order of the Govt. of India, Ministry of Heavy Industries & Public Enterprises, Deptt. Of Heavy Industries vide order no. 3-20/2005- PE VI dated on 17th April 2007 for a term of 5 years or till the date of his superannuation or until further orders whichever earlier be and is hereby approved."

5. To consider and, if thought fit, to pass with or without modifications, the following as Ordinary Resolution:

“Resolved that Shri S Chakraborty be and is hereby appointed as a director.”


“Resolved that Shri P K Brahma be and is hereby appointed as a director.”


“Resolved that Shri Shashank Goel be and is hereby appointed as a director.”


“Resolved that Shri S K Tripathi be and is hereby appointed as a director.”


“RESOLVED that consent be and is hereby accorded to the Board of Directors of the Company in terms of Section 293(1)(a) and other applicable provisions, if any, of the Companies Act 1956 to mortgage and/or charge whole or part of all the moveable and immoveable properties of the company, wherever situated, present and future or in favour of the following lenders to secure the financial assistance(s) lent and advanced/agreed to be lent and advanced to the company

(a) Pari-pasu first charge on the entire fixed assets of the company in favour of State Bank of India for their cash credit facility of Rs.12.00 crores.”

“RESOLVED further that the mortgage/charge created/ to be created and/or all agreements/ documents executed/to be executed and all acts done in terms of the above resolution by and with the authority of the Board be and are hereby confirmed and satisfied.”

By order of the Board of Directors

Sd/- (P Muthusamy)

Chairman –cum-Managing Director

Place : Lucknow Date : 24th August, 2007

NOTES:

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY, TO ATTEND AND VOTE INSTEAD OF HIMSELF. SUCH PROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES IN ORDER TO BE EFFECTIVE MUST BE RECEIVED BY THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE COMMENCEMENT OF THE MEETING. THE PROXY FORM IS ENCLOSED AT THE END OF ANNUAL REPORT.

2. Only members carrying the attendance slips or holders of valid proxies registered with the company will be permitted to attend the meeting. In case of shares held in joint names or shares held under different registered folios wherein the name of the sole holder/first holder is same, only the first joint holder/sole holder or any proxy appointed by such holder, as the case may be, will be permitted to attend the meeting.

3. The Register of Members and the Share Transfer Books of the company will remain closed from 11.9.2007 to 26.9.2007 (both days inclusive).

4. Members seeking further information on Accounts or any matter contained in the Notice, are requested to write to the company at least 10 days before the meeting so that relevant information can be kept ready at the meeting.

5. Members/Proxies attending the meeting are requested to bring their copy of Annual Report and exchange, the duly filled attendance slip attached, with entry slip for entrance to the meeting hall.

6. Members should notify change in their addresses, if any, specifying full address with PIN CODE to the company’s registered office quoting their registered Folio No.

7. If shares are held under more than one folio, the same may kindly be consolidated for convenient reference.

8. Entry to the Auditorium will be strictly against Entry slip available at the counters at the venue and against exchange of Attendance Slip.

9. Member can avail of nomination facility by filling Form 2B, as prescribed under Companies (Central Governments) General Rules & Forms, 1956, with the Company. Blank forms will be supplied on request.

********

EXPLANATORY STATEMENT UNDER SEC.173(2) OF COMPANIES ACT 1956 ATTACHED TO THE NOTICE CONVENING THE 35TH ANNUAL GENERAL MEETING TO BE HELD ON 26TH SEPT. 2007

Item No. 3 - Shri P. Muthusamy has been appointed as Director (Finance) of the company as per the order of Govt. of India, Ministry of Heavy Industries & Public Enterprises, Deptt. of Heavy Industry, vide order No.3-36/2005-PE VI dated 8.8.06. The terms and conditions of his appointment are given below:

i) Period – The period of his appointment will be 5 years w.e.f.12.9.2006 (F.N.) in the first instance or till the date of his superannuation or until further orders, whichever event occurs earlier and in accordance with the provisions of the Companies Act.

ii) Pay – Shri Muthusamy will draw remuneration in the existing scale of Rs.22500-600-27300 (Schedule C) from the date of his assumption of office as Director (Finance).

iii) Other Terms & Conditions – as per letter No.3-36/2005-PE VI dated 2.3.07 from Ministry of Heavy Industries & Public Enterprises, Deptt. of Heavy Industry.

Shri Muthusamy has also been given additional charge of Chairman-cum-Managing Director in place of Shri P K Datta who demitted office on 12th April 2007.

Notice in writing under section 257 of the Companies Act, 1956 alongwith a deposit of Rs. 500/- has been received from a member signifying his intention of Proposing Shri P Muthusamy as candidate for the office of Director.

The Boards commends the resolution set out in the item No.3 of the notice for your approval as an ordinary resolution. None of the Director except Shri P. Muthusamy is interested in the above resolution.

Item No. 4 - Shri P.P. Sarkar has been appointed as Director (Technical) of the company as per the order of Govt. of India, Ministry of Heavy Industries & Public Enterprises, Deptt. of Heavy Industry, vide order No.3-20/2005-PE VI dated 17.4.2007 on the terms and conditions to be decided by Govt. of India, Ministry of Heavy Industries & Public Enterprises, Deptt. of Heavy Industry. Notice in writing under section 257 of the Companies Act, 1956 alongwith a deposit of Rs. 500/- has been received from a member signifying his intention of Proposing Shri P P Sarkar as candidate for the office of Director.

The Boards commends the resolution set out in the item No.4 of the notice for your approval as an ordinary resolution. None of the Director except Shri P.P. Sarkar is interested in the above resolution.

Item No. 5 – Shri S Chakraborty was appointed as a Director of the company, under article 112 of the Articles of Association of the Company, vide letter no. 26(13) 2001 –PE –VI dated 08.01.2007 from Government of India, Ministry of Heavy Industries & Public Enterprise, Department of Heavy Industry. Notice in writing under section 257 of the Companies Act, 1956 alongwith a deposit of Rs. 500/- has been received from a member signifying his intention of Proposing Shri S Chakraborty as candidate for the office of Director.

The Boards commends the resolution set out in the item No.5 of the notice for your approval as an ordinary resolution. None of the Director except Shri S Chakraborty is interested in the above resolution.

Item No. 6 – Shri P K Brahma was appointed as a Director of the company, under article 112 of the Articles of Association of the Company, vide letter no. 26(13) 2001 –PE –VI dated 08.02.2007 from Government of India, Ministry of Heavy Industries & Public Enterprise, Department of Heavy Industry. Notice in writing under section 257 of the Companies Act, 1956 alongwith a deposit of Rs. 500/- has been received from a member signifying his intention of Proposing Shri P K Brahma as candidate for the office of Director.

The Boards commends the resolution set out in the item No.6 of the notice for your approval as an ordinary resolution. None of the Director except Shri P K Brahma is interested in the above resolution.

Item No. 7 – Shri Shashank Goel was appointed as a Director of the company, under article 112 of the Articles of Association of the Company, vide letter no. 26(13) 2001 –PE –VI dated 22.05.2007 from Government of India, Ministry of Heavy Industries & Public Enterprise, Department of Heavy Industry. Notice in writing under section 257 of the Companies Act, 1956 alongwith a deposit of Rs. 500/- has been received from a member signifying his intention of Proposing Shri Shashank Goel as candidate for the office of Director.

The Boards commends the resolution set out in the item No.7 of the notice for your approval as an ordinary resolution. None of the Director except Shri Shashank Goel is interested in the above resolution.

Item No. 8 – Shri S K Tripathi was appointed as a Director of the company, under article 112 of the Articles of Association of the Company, vide letter no. 26(13) 2001 –PE –VI dated 06.07.2007 from Government of India, Ministry of Heavy Industries & Public Enterprise, Department of Heavy Industry. Notice in writing under section 257 of the Companies Act, 1956 alongwith a deposit of Rs. 500/- has been received from a member signifying his intention of Proposing Shri S K Tripathi as candidate for the office of Director.

The Boards commends the resolution set out in the item No.8 of the notice for your approval as an ordinary resolution. None of the Director except Shri S K Tripathi is interested in the above resolution.

Item No. 9 – The Company has been sanctioned the cash credit facility of Rs.12.00 crores from State Bank of India, Commercial Branch, Lucknow. As per the sanction letter No.MCG/RM-Lko/06-07/456 dated 20th March 2007 these credit facilities are required to be secured by way of collateral security by way of pari-pasu first charge on the entire fixed asset of the company (present and future). Pursuant to the provisions of Section 293(1)(a) of the Companies Act 1956 consent of shareholders is required for creation of such charge.

The Board commends passing of resolution set out in Item No.9 as an Ordinary Resolution.

None of the Directors concerned or interested in the above resolution.

By order of the Board of Directors

Sd/- (P Muthusamy)

Chairman-cum-Managing Director

Place : Lucknow Date : 24th August 2007.

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, following information is furnished about the Directors

Shri P. Muthusamy, B.Com, AICWA, started his career with Indian Oil Corporation Limited and served in various positions in finance function. Prior to joining this organization he was working as Chief Manager (Fin) in Numaligarh Refinery Ltd., a subsidiary of Bharat Petroleum Corporation Limited. He has joined the company as Director (Finance) w.e.f. 12.9.2006 and is also holding additional charge of CMD w.e.f. 13.4.2007.

Shri P.P. Sarkar – holds a B.Tech (Mech.) degree from Indian Institute Of Technology, Kanpur and PGDBM degree from Indian Institute of Management, Kolkata. Prior to joining the organisation he has worked as Superintending Engineer in ONGC. He has joined the company as Director (Tech.) w.e.f. 16th May 2007.

Shri Shashank Goel, B.Tech (Electricals) from Indian Institute of Technology, Kanpur, joined Indian Administrative Services in Andhra Pradesh Cadre in the year 1990. Presently he holds the post of Director in Government of India, Ministry of Heavy Industries & Public Enterprise, Department of Heavy Industry. He is a Govt. nominee Director on the Board. He has joined the company as Director w.e.f. 22.5.2007.

Shri S. Chakraborty – holds a M. Stats. degree from ISI, Kolkata. He is the Director of Jaipuria Institute of Management; Lucknow. He has been engaged in teaching, research, training and consultancy activities for nearly 35 years. He has joined the company as Independent Director w.e.f. 31.1.2007.

Shri P.K. Brahma – holds M.A. (Eco.) from Presidency College (Calcutta University), Specialty in Banking and currency, Masters diploma in Public Administration (IIPA), M.Phil from JNU, PHD(incomplete) Lecturer in Economics in Vidyasagar College, Kolkata before joining Indian Audit and Accounts Service. He has joined the company as Independent Director w.e.f. 8.2.2007.

Shri S.K. Tripathi – holds a post graduate degree in physics from Lucknow University, joined the IAS- UP Cadre in 1966 and rose to senior positions during a career span of almost 38 years. He was also the MD/Chairman of several Public Sector Undertakings and was recruited to the position of Secretary in various departments of the Govt. Of UP. He retired from IAS on 31st March, 2004 on attaining the age of superannuation. He has joined the company as Independent Director w.e.f. 6.7.2007.

SCOOTERS INDIA LIMITED (A Govt. of India Enterprise)

Registered Office : Lucknow-Kanpur Road, (16th Mile Stone), Post Bag No. 23 (GPO) P.O. Sarojininagar, Lucknow-226008.

ATTENDANCE CARD

I/We hereby record my/our presence at the 35th Annual General Meeting of the Company held on Wednesday, 26th September 2007 at 3.00 p.m. at Sahakarita Bhawan Auditorium, 14, Vidhan Sabha Marg, Lucknow-226001.

Name of the Shareholder (In Block Letters) _________________________________________

Signature of theShareholder _________________________________________

Name of the Proxy (In Block Letters) _________________________________________

Signature of the Proxy _________________________________________

NOTES1. You are requested to sign and hand this over at the entrance. 2. If you are attending the meeting in person or by proxy, your copy

of the Annual Report may please be brought by you/your proxy for reference at the meeting.

Regd.Folio/Client ID No.

No. of Shares held

SCOOTERS INDIA LIMITED (A Govt. of India Enterprise)

Registered Office : Lucknow-Kanpur Road, (16th Mile Stone), Post Bag No. 23 (GPO) P.O. Sarojininagar, Lucknow-226008.

FORM OF PROXY

I/We …………………………………of ……………………………in the district of

…………………………… being a member/members of the abovenamed

Company hereby appoint ……………………………………of …………………

in the district of …………………………as my/our proxy to vote for me/us

on my/our behalf at the 35th Annual General Meeting of the Company to

be held on 26th Sept.2007 and at any adjournment thereof.

Signature

Signed this …………day of ……………..2007.

NOTE : This Proxy Form duly filled in must be deposited at the Registered Office of the Company at Scooters India Limited, Post Box No.23, Sarojininagar P.O., Lucknow-226008 not less than 48 hours before the time for holding the meeting.

Regd.Folio/Client ID No.

No. of Shares held

AffixRe.1

Revenue Stamp

35th Annual Report 2006-07 - SCOOTERS INDIA · VISION To grow into an environment friendly and ... ¾Apart from macro economic factors, major demand drivers ... MATERIAL CHANGES AND

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