MIRA INFORM REPORT

Report Date :

12.09.2008

IDENTIFICATION DETAILS

Name :	STONE INDIA LIMITED
Formerly Known As :	STONE PLATT
Registered Office :	16, Taratalla Road, Kolkata-700088, West Bengal
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	15.01.1931
Com. Reg. No.:	6996
CIN No.: [Company Identification No.]	L35201WB1931PLC006996
TAN No.: [Tax Deduction & Collection Account No.]	CALS00533B
Legal Form :	A Public Limited Liability Company. The company’s shares are listed on the stock exchange.
Line of Business :	Manufactures of various equipment for the railways like alternators, air brakes and brake regulators. The company also manufactures colour monitors and secondary components for the defense sector.

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	USD 1500000
Status :	Satisfactory
Payment Behaviour :	Usually Correct
Litigation :	Clear
Comments :	Subject is an old established company having satisfactory track. Trade relations are fair. Financial position is satisfactory. Payments are usually correct and as per commitments. The company considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office/ Corporate Office/ Factory :	16, Taratalla Road, Kolkata-700088, West Bengal, India
Tel. No.:	91-33-24014661(8 lines)
Fax No.:	91-33-24014886
E-Mail :	info@stoneindia.co.in purchase@stoneindia.co.in , systems@stoneindia.co.in info@stoneindia.co.in , jobs@stoneindia.co.in
Website :	http://www.stoneindia.co.in
Factory	Mauza Gurumajra 182, Sargana Dharampur, Tehsil Nalagarh, Dist. Solan, Himachal Pradesh, India
E-Mail :	works.nalagarh@stoneindia.co.in
Regional Office :	Located At:- Chennai Mumbai New Delhi
Resident Office :	Located at:- Trichy Hyderabad Jaipur Kaputhala Secundarabad Chittaranjan Lucknow Gorakhpur Guwahati Hooghly

DIRECTORS

Name :	Mr. G P Goenka
Designation :	Chairman
Name :	Mr. A Mondal
Designation :	Managing Director and Chief Executive Officer
Name :	Mr. A Mondal
Designation :	Managing Director and Chief Executive Officer
Name :	Mr. S Ray
Designation :	Director
Name :	Mr. I Sen
Designation :	Director
Name :	Mr. A Agarwal
Designation :	Director
Name :	Mr. S Gupta
Designation :	Director
Name :	Mr. Shivardhan Goenka
Designation :	Whole-time Director
Name :	Mr. P N Singh
Designation :	Director

KEY EXECUTIVES

Name :	Mr. P Sircar
Designation :	CFO and Company Secretary
Name :	Mr. J Biswas
Designation :	Company Secretary
Audit Committee :	Mr. S.Ray (Chairman) Mr. I.Sen (Member) Mr. S.Gupta (Member) Mrs. Pinaki Sircar (Secy to Audit Committee) Mr. A.Mondal (Permanent Invitee)
Remuneration/ Compensation committee:	Mr. I.Sen (Chairman) Mr. S Ray ( Member) Mr. A Agarwal ( Member)
Shareholders’/ Investors’ Grievance Committee:	Mr. S Ray (Chairman) Mr. I Sen ( Member) Mr. A Mondal ( Member)
Management Committee:	Mr. A Mondal ( Managing Director and Chief Executive Officer) Mr. Pinaki Sircar ( Vice President- Finance, CFO Mr. G Ghosh ( Senior Vice President- Marketing) Mr. U Palit ( Senior Vice President – Operation, Kolkata) Mr. R K Ganeshan (Vice President- Business Development)
Operating Management:	Mr. G Ghatak (General Manager- Technical) Mr. Manoj Burman ( General Manager- Technical Services) Mr. Manoj Chakravorty ( Deputy General Manager- Technical) Mr. N. K. Kutty ( Deputy General Manager – Works Engineering) Mr. M K Basu ( Deputy General Manager- Project Mr. D Kundu ( Deputy General Manager- Manufacturing) Mr. Sudipta Narain Bhowmil ( Deputy General Manager- Finance and Accounts) Mr. Debnath Kundu ( Deputy Genral Manager- Technical Railway Electronics) Mr. Sukumar Biswas ( Assistant General Manager- Technical Railway Electronics) Mr. Amitava Das ( Assistant General Manager- HR and Administration) Mr. Paresh Mathur ( Assistant General Manager- Brake Systems Mr. J.S. Das ( Assistant Genral Manager- QA and Projects)

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 30.06.2008

Names of Shareholders	No. Of Shares	Percentage of Holdings
Promoter’s Holding
Promoers
Indian Promoters	2735054	36.01
Foreign Promoters	--	--
Persons acting in concent	95000	1.25
Non-promoters holdings
Institutional investors
Mutual fund and UTI	252162	3.32
Banks, Financial Institutions, Insurance Companies (Central/ State Government Institutions/ Non-Government Institutions)	203665	2.68
Foreign Institutional Investors	217000	2.86
Others
Private Corporate Bodies	6124848	8.09
Indian Public	3262997	42.95
NRIs/ OCBs	102900	1.35
Any other Specify: Clearing Members	112873	1.498
Total	7596499	100.00

BUSINESS DETAILS

Line of Business :

Manufactures of various equipment for the railways like alternators, air brakes and brake regulators. The company also manufactures colour monitors and secondary components for the defense sector.

GENERAL INFORMATION

No. of Employees :	355
Bankers :	Not Available

Banking Relations :	--
Auditors :
Name :	Lodha and company Chartered Accountant
Associates/Subsidiaries :	Skylark Rubber Products Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
10000000	Equity Shares	Rs. 10/- each	Rs. 100.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
7540000	Equity Shares	Rs. 10/- each	Rs. 75.400 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2006	31.03.2005	31.03.2004
SHAREHOLDERS FUNDS
1] Share Capital		75.400	75.400	75.400
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		228.800	156.500	162.100
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		304.200	231.900	237.500
LOAN FUNDS
1] Secured Loans		168.100	147.900	160.300
2] Unsecured Loans		0.000	4.500	0.000
TOTAL BORROWING		168.100	152.400	160.300
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		472.300	384.300	397.800
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		118.300	110.400	143.200
Capital work-in-progress		3.800	1.100	0.000
INVESTMENT		79.700	66.600	48.300
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	100.900	86.300	56.900
	Sundry Debtors	189.900	117.600	119.900
	Cash & Bank Balances	12.500	7.200	13.200
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	232.100	215.300	201.800
Total Current Assets		535.400	426.400	391.800
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	194.900	153.300	122.600
	Provisions	70.000	66.900	62.900
Total Current Liabilities		264.900	220.200	185.500
Net Current Assets		270.500	206.200	206.300
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		472.300	384.300	397.800

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2006	31.03.2005	31.03.2004
Sales Turnover		612.600	465.100	344.500
Other Income		64.200	32.400	9.200
Total Income		676.800	497.500	353.700
Profit/(Loss) Before Tax		87.100	23.900	[89.600]
Provision for Taxation		3.700	1.000	0.000
Profit/(Loss) After Tax		83.400	22.900	[89.600]
Expenditures :
	Manufacturing Expenses	13.800	15.000	9.900
	Employee Cost	53.700	55.900	63.700
	Raw Material Consumed	335.400	250.700	178.400
	Excise Duty	82.500	62.000	44.400
	Selling and Administration Expenses	35.000	33.500	27.700
	Increase/(Decrease) in Finished Goods	[11.500]	[3.600]	[0.600]
	Miscellaneous Expenses	51.600	28.700	79.200
	Interest and Financial Charges	17.000	18.800	24.000
	Power & Fuel	7.000	7.700	8.500
	Depreciation & Amortization	5.200	4.900	6.900
Total Expenditure		589.700	473.600	443.300

SUMMARISED RESULTS

PARTICULARS	31.03.2008 Full Yearly	31.03.2007 Full Year
Sales Turnover	791.100	706.800
Other Income	101.600	16.700
Total Income	892.700	723.500
Total Expenditure	751.500	616.800
Operating Profit	141.200	106.700
Interest	23.900	16.500
Gross Profit	117.300	90.200
Depreciation	9.700	7.900
Tax	13.000	13.900
Reported PAT	90.600	79.600
Dividend (%)	0.000	0.000

QUARTERLY RESULTS

PARTICULARS	30.06.2008 1^st Quarter
Sales Turnover	214.800
Other Income	0.400
Total Income	215.200
Total Expenditure	208.000
Operating Profit	7.200
Interest	6.200
Gross Profit	1.000
Depreciation	3.300
Tax	0.400
Reported PAT	[2.700]

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt-Equity Ratio	0.84	1.06	0.83
Long Term Debt-Equity Ratio	0.52	0.72	0.53
Current Ratio	1.58	1.62	1.78
TURNOVER RATIOS
Fixed Assets	2.93	2.40	1.85
Inventory	6.54	6.50	6.21
Debtors	3.98	3.92	2.62
Interest Cover Ratio	5.35	1.30	[0.39]
Operating Profit Margin(%)	15.70	6.32	[0.70]
Profit Before Interest And Tax Margin(%)	14.85	5.27	[2.70]
Cash Profit Margin(%)	12.39	2.24	[7.66]
Adjusted Net Profit Margin(%)	11.54	1.18	[9.67]
Return On Capital Employed(%)	25.01	7.72	0.00
Return On Net Worth(%)	34.72	3.42	0.00

LOCAL AGENCY FURTHER INFORMATION

HISTORY:

Stone India(SIL), formerly known as Stone Platt, is part of Duncan Goenka group of companies. It manufactures various equipment for the railways like alternators, air brakes and brake regulators. Apart from this the company also manufactures colour monitors and secondary components for the defence sector.

Originally the company was incorporated on Jan 15, 1931 as a private limited company and converted into a public limited company on Oct 25, 1972. SIL took over the business (Selling Agencies) of erstwhile J Stone & Company (incorporated in the UK), which carried on business at Kolkata, Chennai, Mumbai & other places in India and Srilanka as a going concern.

The company has established a workshop in Calcutta to manufacture various items of train lighting equipment, such as bent couplers, junction boxes, light fittings and carriage fans. Since then, the company has grown into a large organisation and manufactures, among other things, a complete range of lighting and railway oriented equipment. Its name was changed from J Stone & Co (India) to Stone-Platt Electrical (India), in 1976. It was again changed to Stone India in 1986-87. 

SIL before comming into the folds of Duncan Goenka group in 1990s was a subsidiary of Stone-Platt Overseas, UK, a Stone-Platt group company. The Stone-Platt group is the one which is providing technical assistance to the company for manufacturing train lighting and air-conditioning equipment. SIL had a proposal to enter into new agreements with the Stone-Platt group to manufacture submersible pumps, rotary switches and systems relays.

 SIL has technical collaboration agreement with Svenska Aktiebolagest Bromsregulator to manufacutre brake regulating equipment for railway rolling stock and with L F Aively, France for manufacture of pantographs for electric locomotives and electric multiple unit coaches. The technology was fully absorbed by the company.

SIL's railway component business contributes around 90% of its topline. It products range is wide and includes train lighting equipment(it's sales & Services) and other related equipments including dynamos, switchgears and alternators, pantograph for electric locomotives and electrical multiple units, superheater elements for locomotive boilers, ball and joints, return bends and brake regulating equipment for railway rolling stocks, fractional horsepower motors, complete air-conditioning / refrigeration equipment for railway and buses, control panels, rotors and traction motors and secondary components for defence sectors. 

In May 1994 the company came out with a public-cum-rights issue of debentures to part-finance its brake block, computer colour monitor and rubber project and modernisation of it's Taratalla works.

On June 1, 1999 the company sold its rubber components manufacturing business to its subsidiary Skylark Rubber Products Limited for Rs.3.600 Millions

The company has decided to divest from its raiway components business. In this regard it has held talks with the US-based Westinghouse Air Brake Technologies Corporation Inc (WABTEC), one of the leading railway equipment suppliers. The US company has also completed due diligence exercise through KPMG. It is expected that the US company will pick up the majority stake in the divested unit and the minority stake will be held by the Duncan Goenka group.

Offloading of railway business to WABTEC would leave SIL with its defence, rubber and Colour Monitor business only. The company has decided to focus on defence equipment and housing and infra-structure related products. As part of this diversification programme the company has entered into an agreement with the group company Bakelite Hylam Limited(BHL). for acquiring its Heritage Surface Textures Division. This division of BHL manufactures surface textures which is used as a base prior to painting of buildings. The company has offloaded 49% of the stake of Pioneer Friction Limited a JV Company to Futuris Industrial Products Pty Limited,Australia(FIP)

Operations 

The operational results during the financial year posted a Profit after tax to the tune of Rs. 83361 Millions as against Rs.22.885 Millions of last year, an increase of 264%. Gross Turnover grew by over 31% to Rs. 612.572 Millions from Rs. 465.139 Millions last year. Earnings per share for the year stands at Rs.11.07 against Rs.3.04 in the previous year. Cash flow from Operations was Rs.9.087 Millions during the year. The factors contributing to this significant performance are primarily attributable to substantial growth in turnover which surpassed all previous records of the Company albeit steep competition and series of measures initiated during the year comprising productivity improvement, cost rationalization and aggressive market share acquisition. Major efforts were undertaken to give full thrust to existing products and also to expand the product range within the existing business. Stringent controls on quality and timely delivery have resulted in customer satisfaction which would eventually lead to growth in the market share and profitability of the Company. 

During the year, the Company launched VAPORID Air Dryers in the domestic market which was manufactured as per license agreement with WABTEC Corporation, USA. This facility has been set-up with World Class Manufacturing practices & Just-In-Time business systems with a view to service the International Market through WABTEC buy-backs. 

The Company also commenced series manufacturing of C3W2 based high value Air Brake System and has initiated supply to Wagon Builders for supply to CONCOR Flat Bed Container Wagons. The future demand for this product will increase significantly in view of massive expansion plan of freight movement by Indian Railways through private freight train operators. 

The Company is in the process of setting up a green field facility in Himachal Pradesh to manufacture a number of existing and a slew of new products from this plant. The plant will commence commercial production during the financial year 2006-07 and will enjoy various direct and indirect tax benefits. 

The Company, of late, has entered into a technical collaboration agreement with MZT HEPOS AD, Macedonia, a subsidiary company of Poli Costruzione Materiali Trazione SPA of Italy for design, development, engineering, construction and manufacturing of advanced Union Internationale Des Chemins Der Fer (International Union of Railways -UIC) compliant C3W/REL 10 for Coaching Air Brake System. 

 Defence business during the year registered marginal improvement over the last year. The Company is actively pursuing with the Defence authorities for development of several new high value import substitute products for T-90 Tanks and accordingly has ramped up its facilities to emerge as a major supplier of various sophisticated components to Defence factories in the near future. 

The Company continues to lay significant emphasis to upgrade its technology and improve its volume to accelerate further growth of turnover in coming years. 

MANAGEMENT DISCUSSION AND ANALYSIS REPORT 

Industry Structure and Developments: 

During the Financial Year 2005-06 the market demand for products of the Company remained stagnant compared to 2004-05. During the year the company was able to convert a larger number of tenders comprising of Air Dryers, Air Brake for Freight and Coaching Stock, Slack Adjusters, Alternators, Loco Brake Equipment, Panel Mounted Brake System and Pantographs floated by Zonal Railways as well as the Production Units. The Company bagged orders worth Rs. 620.000 Millions during the year which surpassed all previous records of the Company. 

During the year the Company received price increase, commensurate with raw material cost increase in respect of Air Brakes for Wagons, Slack Adjusters, but the same was not true for the rest of the products. 

 Requirement of Defence Products were on the rise once again. 

Opportunities: 

The conclusion of technology agreement with WABTEC Corporation, USA for manufacture of 'VAPORID' Air Dryers and subsequent indigenization and approval of the product within a short span of 9 months led to a substantial business growth of Air Dryers for both Diesel and Electric Locomotives. The Company booked orders of 569 Nos Air Dryers in the Financial Year 2005-06. In the second phase of retro fitment of Air Dryers a large No. of EMU motor coaches will be provided with Air Dryers and the Company has been able to get the approval and registration for the same from Indian Railways which will contribute good business opportunity in the next financial year. 

Further sample Air Dryer was sent to the collaborator, WABTEC Corporation, USA for the purpose of buyback of 'VAPORID' Air Dryers from the Company. On product approval the company expects sizeable regular buy back order from the collaborator. 

During the year the Company also entered the high value market for supply of Air brake system for Container Flat Wagons for CONCOR. Considering the privatization of container business as per the policy decision of Railway Ministry it is expected that substantial bulk demand of container flat wagons will emerge within next 3/4 financial years. This will help the Company to consolidate the business share of container wagon brake system business in the next 3/4 years.

During the year Railway Board floated the tender of Bogie Mounted Brake

System for Wagons where the Company has been technically qualified and a development order from Railway Board is expected shortly. Consequent upon approval of the product after exhaustive field trials, Railways have plans for retro fitment of such brake systems in the existing wagon fleet, the population of which is above 2,00,0000. 

The Company could execute the first trial export order of DRV2A type Slack Adjusters for Vietnam in the current financial year. The Company is in process of consolidating its position in this and range of other Air Brake Products in this market.

The Company has now entered into a technical collaboration for the technology transfer of Relay Valve for Passenger Distributor Valve with MZT HEPOS AD, Macedonia a subsidiary of POLI Construzione Materiali Trazione S.P.A., Italy. The Company expects to receive the approval of the Passenger Coach Distributor Valve with this technology transfer which will permit the Company to improve share of Passenger Coach Air Brakes business. This will also allow the Company to obtain the first development order for high value Disc Brakes meant for High Speed Rajdhani & Satabdi Trains run by Indian Railways.

The Company could also develop and obtain approval of Electronic Rectifier Regulator Units for 4.5 KW Train Lighting Alternators for non-air conditioned coaches. There will be large retrofitment demand for the same in future. The Company is also in the process of obtaining approval for similar unit for 25 KW Train Lighting Alternators for air conditioned coaches.

During the year company also ventured into the high value Tread Break Unit for High Speed Electric Locomotive in collaboration with MZT Hepos AD. The company expects to execute the first trial order in the next financial year. 

With on going major restructuring of Indian Railways and large capacity expansion of its network the Company is well poised to take on all the future opportunities in line with its strength & core competencies. Indian Railways are planning an investment of over Rs 5000000.000 Millions in next 5 years, out of which Rs 100000

0000 Millions is meant for Rolling Stock & Rs 2000000.000 Millions in Private-Public Partnership Projects. The company will extensively benefit from these sectors.

In Defence the company has ramped up its facilities to become a major supplier of a number of sophisticated components & systems to different defence establishments. As Ministry of Defenece has planned a major investments in these area the company is poised to take full advantage of the same. 

Outlook:

The demand of Railway products of the Company for the next two years is expected to step up considerably with the increased purchase of Wagons, Coaches as well as Locomotives by Indian Railways. The privatization of Container services as well as establishment of Freight Corridor will further push up the requirement of Wagons and Locomotives which will eventually generate bulk requirement of Wagon Air Brakes, Loco Brake Equipment, Alternators, Pantographs as well as Slack Adjusters. Indian Railways are also expected to increase the coach production both at ICF, Chennai as well as at RCF, Kapurthala 

Sufficient fund has also been earmarked in the SRSF (Special Railway Safety Fund), Railway Modernization Plan. Indian Railways have also rolled out its five year Rs 5000000 Millions Railway Expansion Program. All these help the company to not only sustain but increase the current growth rate.

For Defence business, discussions have been carried out with the appropriate authorities for development of several new high value import substitute products for T-90 Tanks which will now be indigenously manufactured by Defence factories. They are various stages of assessment by Defence Establishments. Once approved this would be major revenue earner for the company in future. 

However, the Company is also aggressively pursuing to develop several new Electrical as well as Electronic products particularly for Railways as a part of its diversification activity.

Apart from consolidating the business in the domestic market the Company is aggressively persuing the export business of its products as well as turnkey projects in South East Asia & Africa. 

AS PER WEBSITE

Profile:

Subject is a multi-product engineering company located in Kolkata, has been serving the Indian rail road industry for over seven decades.

A pioneer in brake systems and train lighting alternators, today Stone India is the undisputed leader in locomotive brake systems and has a wide range of mechanical and electrical products for the rail road industry.

Over the years, the company has grown from strength to strength. Today, stone India is part of multi billion INR Duncan Goenka Group and employs 320 people. It is an ISO 9001 accredited company that can boast of cutting-edge manufacturing facilities, systems and practices. The company is committed to achieving international standards of performance in quality, costs and delivery. Stone India takes pride in its values and ethical business practices and is environment friendly.

Other than the corporate office and the manufacturing facilities in Kolkata, Stone India has branches and service Centres located at all major towns and cities of India.

The journey of Stone India in the recent past has been one of meteoric growth, fuelled by the quest for excellence. In the process, the company has made an indelible mark in the industry – the mark of a leader.

Corporate Profile:

The company follows a well laid out code of ethics. All employees of the company adheres to these principles and have agreed to abide by them by agreeing to affix there signature on the same.

Salient points of our Code of Business Conduct and Ethics are:

· Policy on Business Relationships

· Conflict of Interest Policy

· Controllership Policy

· Policy against insider trading

· Policy on fradulent and unfair trade practices in the securities market

· Intellectual Property Policy

· Competition Policy

· Electronic Resource usage Policy

· Privacy and Confidentiality Policy

· Stone's equal opportunity, employment policy and policy prohibiting discrimination and harrasment

· Media Policy

· Advertisement Policy

· Environment, Health and Safety Policy

· Policy of separation and non-competing post separation

· Maintaining and Managing Records

· Records on Legal Hold

· Export Controls

· Confidential Information

· Selecting Suppliers

· Lobbying

· Government Contracts

· Elimination of Child Labour

· Free and fair competition / antitrus

· Antiboycott

· Freedom Association

· Industrial Espionage

· Abolition of Forced Labour

· General

· Reporting procedure for a query / concern

Corporate/ Computing and Communication Policy

The company follows coded guidelines for acceptable use of all Electronic resources. These guidelines constitute the Computing & Communication Policy. The Corporate Computing & Communication Policy is guided and framed based on the “Electronic resource usage policy” as laid down in the Code of Business Conduct and Ethics. All employees of the company are required to follow and adhere to the Corporate Computing and Communication policy as far as use of Electronic resources is concerned.

SCOPE:

This policy applies to all Stone India employees, including part time, temporary and contract employees.

PURPOSE:

Stone India Limited is committed to the highest possible standards of ethical, moral and legal business conduct. This has been defined in details in “Code of Business Conduct & Ethics” document. In line with this commitment, this policy aims to provide an avenue for employees to raise concerns and reassurance that they will be protected from reprisals or victimization for whistleblowing in good faith.

POLICY:

The whistleblower policy is intended to cover serious concerns that could have a large impact on Stone India Limited, such as actions that:

•  May lead to incorrect financial reporting;
•  Are unlawful;
•  Are not in line with company policy, including the Code of Conduct;
•  Otherwise amount to serious improper conduct.

SAFEGUARDS:

Harassment or Victimization
Harassment or victimization of the complainant will not be tolerated.

Confidentiality
Every effort will be made to protect the complainant's identity.

Anonymous Allegations
The policy encourages employees to put their names to allegations because appropriate follow-up questions and investigation may not be possible unless the source of the information is identified. Concerns expressed anonymously will be investigated, but consideration will be given to:

•  The seriousness of the issue raised.
•  The credibility of the concern; and
•  The likelihood of confirming the allegation from attributable sources.

Malicious Allegations
Malicious allegations may result in disciplinary action.

PROCEDURE:

Process Raising a Concern

Reporting

The whistleblowing procedure is intended to be used for serious and sensitive issues.

Serious concerns relating to financial reporting, unethical or illegal conduct, should be reported in either of the following ways:

Directly to Mr. A. Mondal, Managing Director at 033-2401 4661/68 (8 Lines) or by e-mail at mondalamit@stoneindia.co.in . Mailing address alternative for written documents:

Stone India Limited

16, Taratalla Road Kolkata – 700088Employment-related concern should continue be reported through the normal channels such as the supervisor or the Manager - H.R. & Administration.

Timing

The earlier a concern is expressed, the easier it is to take action.

Evidence

Although the employee is not expected to prove the truth of an allegation, the employee needs to demonstrate to the person contacted that there are sufficient grounds for concern.

How the Complaint will be Handled

The action taken will depend on the nature of the concern. The Audit Committee of the Board of Directors of Stone India Limited receives a report on each complaint and a follow-up report on actions taken.

Initial Inquiries

Initial inquiries will be made to determine whether an investigation is appropriate, and the form that it should take. Some concerns may be resolved by agreed action without the need for investigation.

Report to Complainant

The complainants will be given the opportunity to receive follow-up on their concern in two weeks:

•  Acknowledging that the concern was received;
•  Indicating how the matter will be dealt with;
•  Giving an estimate of the time that it will take for a final response;
•  Telling them whether initial inquiries have been made;
•  Telling them whether further investigations will follow, and if not, why not.

Further Information

The amount of contact between the complainant and the body investigating the concern will depend on the nature of the issue and the clarity of information provided. Further information may be sought from the complainant.

Information

Subject to legal constraints the complainant will receive information about the outcome of any investigations.

Stone India Limited reserves the right to modify or amend this policy at any time as it may deem necessary.

Every Stone India employee is trained to fully understand and to completely satisfy the customer’s requirements.

Stone India is committed to deliver technology, products, services, and information that meet or exceed customer needs and expectations.

Stone India Quality Management Process (which utilizes actual performance data to drive continuous improvement), enable employees to fulfill these objectives.

Collaborators:

Stone India has collaborated with various global industry leaders for its high technology products.Among them are:

· Faiveley S.A. of France for Pantographs.

· SAB, Sweden for Slack Adjusters.

· Wabco Westinghouse, USA (also known as WABTEC Corporation) for Brake System and Air Dryer of Diesel and Electric locomotives.

· SAB WABCO France for Freight Brake system and Tread Brake Units for Diesel and Electric Locomotives.

· MZT Hepos Ad, Macedonia for Brake Control Relay Valves for Passenger Coach Brake System and Tread Brake Units for High Speed Locomotives

CARRIAGE BUSINESS GROUP

The Carriage Business Group deals with pneumatic Brake Systems for Carriage & Freight stock for Railway rolling stock operation.

Stone India Limited has been a pioneer supplier of Air Brake systems since the introduction of Air Brakes for Indian Railways in 1980's.

Distributor Valve type C3W to SAB WABCO design for Carriage & Freight operation is manufactured in Aluminium body for Carriage and Cast Iron body for Freight wagons.

The other important equipments like Brake Cylinders, Angle Cocks, Dirt Collectors, Hoses, etc. are manufactured either as per Stone India's in-house design or as per customer requirements.

In addition to Distributor Valves and pneumatic equipments, Stone India has been supplying Slack Adjuster - type DRV2 to Indian Railways since its introduction in 1960's. Stone India produces both DRV2 and DRV2A Slack Adjusters with LCF4 Empty Load Box to SAB, Sweeden design.

Apart from supply of equipment, Stone India has a team of experienced engineers and skilled persons to undertake installation as well as retro-fitment contracts for the carriage brake equipment.

Stone India recently has developed its own patented Beam Mounted Brake System for all types for Freight agons.

Infrastructure and facilities

• Well equipped CNC machine shop with feeder shop for precision machining.
• Supported by well equipped assembly shops with skilled manpower for assembly and testing.
• All India presence at all major metro and state capitals with well trained marketing and after     sales service team .
• In house well equipped Design and Product Development facilities for mechanical,     electromechanical and solid-state products with Unigraphics & CAD/CAM facilities.
• Dedicated team of vast experienced engineers in Rail industry.

CARRIAGE BUSINESS GROUP

The Carriage Business Group deals with pneumatic Brake Systems for Carriage & Freight stock for Railway rolling stock operation.

Stone India Limited has been a pioneer supplier of Air Brake systems since the introduction of Air Brakes for Indian Railways in 1980's.

Distributor Valve type C3W to SAB WABCO design for Carriage & Freight operation is manufactured in Aluminium body for Carriage and Cast Iron body for Freight wagons.

The other important equipments like Brake Cylinders, Angle Cocks, Dirt Collectors, Hoses, etc. are manufactured either as per Stone India's in-house design or as per customer requirements.

In addition to Distributor Valves and pneumatic equipments, Stone India has been supplying Slack Adjuster - type DRV2 to Indian Railways since its introduction in 1960's. Stone India produces both DRV2 and DRV2A Slack Adjusters with LCF4 Empty Load Box to SAB, Sweeden design.

Apart from supply of equipment, Stone India has a team of experienced engineers and skilled persons to undertake installation as well as retro-fitment contracts for the carriage brake equipment.

Stone India recently has developed its own patented Beam Mounted Brake System for all types for Freight Wagons.

LOCOMOTIVE BUSINESS GROUP

The Locomotive Business Group deals with Locomotive Brake Systems for Diesel and Electric Locomotives.

Subject has been the first Indian Company to indigenously manufacture and supply Pneumatic Brake System - type 28LAV-1 for Indian Railways as per the license agreement with WABCO-USA ( now known as Wabtec Corporation).

Apart from manufacturing critical brake valves as required for the Brake System, Modular Panel Mounted Brake Systems are also manufactured in both Bi-plate as well as in Tri-plate version for both Diesel & Electric Loco application.

Heatless, regenerative "VAPORID" Air Dryers are manufactured as per the license agreement with Wabtec Corporation, USA for both Locomotive, Metro Motor Unit and Electric/Diesel multiple units.

Installation & commissioning work are also undertaken on the locomotives for Brake Systems as well as for Air Dryers. In addition the company specializes in conversion of Vacuum to Air Brake System in Locomotives.

TRAIN POWER BUSINESS GROUP

The Train Power Business Group deals with Electro-Mechanical, Electrical & Electronic products used in Indian Railways. The products include Brushless Alternators, Electronic Regulators and Pantographs.

Brushless Alternators are power generators used in the coaches. Stone India manufactures and supplies 3, 4.5, 18 and 25KW Brushless Alternators to Indian Railways. Electronic Rectifier cum Regulator convert and maintains the supply at a steady 110V DC. 25 KW Alternators are used in the Air-conditioned coaches in Indian Railways. The Electronic Rectifier Regulator has inbuilt data recorder & data storage device. It also has a PC interface for data manipulation.

Stone India also manufactures Rectifier Regulator of 4.5KW and 25KW capacities in the Magnetic Amplifier design.

Pantographs are used in the Electric Locomotives& Electric Multiple Units to draw power from the overhead traction. Stone India manufactures AM-12, AM-92, AM-18 B2 Pantographs as per Faiveley-France design for AC Locomotives and AC/DC EMU coaches. AM-92 Pantographs are used in high speed Passenger Locomotives.

Stone India undertakes to install all the above products on behalf of the client.

UNAUDITED FINANCIAL RESULTS (PROVISIONAL) FOR THE

QUARTER ENDED 30^TH JUNE 2008

(Rs. In Millions)

Particulars	3 Month Ended		Year Ended 31.03.2008 (Audited)
	30.03.2008 (Unaudited)	30.06.2007 (Unaudited)
Gross Sales/ Income from Operations	245.171	237.798		898.483
Less : Excise Duty	30.342	26.935		107.366
Net Sales / Income from Operations	214.829	210.863		791.117
Other Income	0.325	0.025		101.595
Total Income	215.154	210.888		892.712
Expenditure :
a) (Increase)/decrease in stock in trade & WIP	0.056	[13.546]		22.611
b) Consumption of raw materials	156.671	135.103		520.069
c) Staff cost	22.553	20.196		86.514
d) Depreciation	3.247	2.107		9.683
e) Other expenditure	28.706	24.083		122.359
f) Prior Period Income	--	0.140		--
g) Total	211.233	168.053		761.236
Interest (Net)	6.225	4.746		23.861
Exceptional Items - - -	--	--		--
Profit/(Loss) from Ordinary Activities before tax	[2.304]	38.089		107.616
Tax Expenses - Current year	--	--		12.700
Deferred tax	--	--		4.014
Fringe Benefit Tax	0.373	0.293		1.307
Income Tax Related to Earlier Year	--	--		[0.970]
Net Profit/(Loss) from Ordinary Activities after tax	[2.677]	37.796		90.564
Extraordinary Items (net of tax expense)
Net Profit/(Loss) for the period	[2.677]	37.796		90.564
Paid-up Equity Share Capital (Face Value Rs. 10/- each)	76.033	76.033		76.033
Reserves excluding Revaluation Reserve	--	--		318.420
a) Basic EPS for the period (in Rs)	[0.35]	4.96		11.92
b) Diluted EPS for the period (in Rs)	[0.35]	4.96		11.92
Public Shareholding
Number of Shares	4781445	4781445		4781445
Percentage of Shareholding	62.94	62.94		62.94

NOTES :

1. The above results have been taken on record by the Board of Directors at its Meeting held on 29th July '2008. The financial statements for the quarter ended 30th June 2008 are un-audited and subject to Limited Review by the Statutory Auditors of the Company.

2. The Auditors have commented on status of liability for rental to Kolkata Port Trust amounting to Rs. 22..497 Millions. The matter and demand is sub judice at the Hon'ble Surpeme Court. However, since August 2005, the Company has been paying rental as per the directive of theHon'ble Supreme Court.

3. Provision has been made in respect of Employee Benefits ( AS-15) on estimated basis. Resultant adjustments, as required shall be carried out at the year end.

4. There was no pending investor complaint at the beginning of the quarter ended 30th June, 2008. During the quarter the Company received no investor complaint

5. The figures for the previous periods have been re-grouped or re-arranged wherever necessary

PRESS RELEASE:

STONE INDIA’S UNIQUE PANTOGRAPH ENABLES INDIAN RAILWAYS

Stone India enabled Indian Railways to achieve this unique feat and plans to get the product certified by the Guinness Book of World Records. The Company’s high reach pantograph (current collection device) in place of conventional pantograph was fitted in two of their conventional electric locomotives to fulfil this. The new generation pantograph allows an increase in the highest of the overhead wires (catenary height) from the standard 6 meters to 7.5 meters, the high-test in the world and thereby setting a record. Such a device is suitable for locomotives to be used for running double-stack containers as envisaged in the upcoming dedicated freight corridors being implemented by Indian Railways. This will also enable Indian Railways to introduce double-decker passenger trains in high density suburban passenger route.

The pantographs have already been commissioned successfully after extensive test by Indian Railways. Stone India’s innovation makes Indian Railway achieve this unprecedented feat to become the only railway in the world to run a train under a 7.5 meter-high contact wire.

The new-design pantograph, developed completely in-house, has many other added features, such as twin catenary height of 6 & 7.5 meters, auto upward-force adjustment to improve effective current collection in adverse conditions, thereby enabling reduction in energy consumption and allowing trains to run at much higher speeds. The new design overcomes the traditional challenge of balancing a high-reach pantograph in double-stack container trains moving at a high speed in adverse wind conditions, hitherto faced by all global suppliers of pantographs.

Stone India Limited has not only successfully designed and developed the improved pantograph in a record time but did it completely indigenously using its own expertise and with its own R& D setup using cutting edge simulation tools. The patented new series named as “Omniversal Intelipanto™” has been supplied when other multinational companies failed to do so before commencement of the trial by Indian Railway in East Coast Railways which was witnessed by Japanese technical delegation.

The success of this design will not only help saving foreign currency but will benefit Indian Railways by enabling locomotives to run on electricity instead of costly diesel. Additionally this opens up the possibility of Indian Railways even running double-decker passenger trains in high density passenger routes through further increase of catenary height.

The company plans to adopt this design in all its pantograph and plans to export such pantographs to countries, which propose to use electric traction for running double-stack container trains as well as double-decker passenger trains.

Stone India Limited, a Kolkata based company, which has been serving Indian Railways for more than 77 years has pioneered the introduction of several systems to Indian Railways, including pantographs, used by the electric locomotives and EMUs. So far all these introductions have been through technical collaborations with overseas companies. This marks the beginning of Stone India’s major self-initiative & achievement to arrive at breakthrough innovative solutions for customers, which are generally fraught with scepticism of unachievable goals.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.45.44
UK Pound	1	Rs.79.62
Euro	1	Rs.63.48

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	5
--CREDIT LINES	1~10	5
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		46

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions