MIRA INFORM REPORT

Report Date :

19.05.2011

IDENTIFICATION DETAILS

Name :	KINETIC ENGINEERING LIMITED

Registered Office :	D-1 Block, Plot No.18/2, MIDC, Chinchwad, Pune – 411 019, Maharashtra

Country :	India

Financials (as on) :	30.09.2005

Date of Incorporation :	08.10.1970

Com. Reg. No.:	11-14819

Capital Investment / Paid-up Capital :	Rs.319.630 Millions

CIN No.: [Company Identification No.]	L35912MH1970PLC014819

TAN No.: [Tax Deduction & Collection Account No.]	PNEK05173A

Legal Form :	A public limited liability company. The Company’s shares are listed on the Stock Exchanges.

Line of Business :	Manufacturer of Scooter, Motor Cycles and Mopeds

No. of Employees :	600 [Approximately]

RATING & COMMENTS

MIRA’s Rating :

Ba [46]

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

Maximum Credit Limit :	USD 3020000

Status :	Satisfactory

Payment Behaviour :	Usually correct

Litigation :	Clear

Comments :	Subject is a well established manufacturer and exporter of two wheelers having satisfactory track records. There appears some accumulated losses being recorded by the company. However, trade relations are fair. Business is active. Payments are reported to be usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

INFORMATION PARTED BY

Name :	Mr. Vinay Shirode
Designation :	Finance Controller
Contact No.:	91-20-66142049
Date :	17.05.2011

LOCATIONS

Registered Office/ Factory :	Kinetic Innovation Park, D-1 Block, Plot No.18/2, MIDC, Chinchwad, Pune – 411 019, Maharashtra, India
Tel. No.:	91-20-66142049 / 27474301 - 5
Fax No.:	91-20-66142088 / 89 / 27475 842 - 3
E-Mail :	kel.mktg@globalnet.ems.vsnl.net.in, bharat@kineticindia.com, jane@kineticindia.com vinay.shirode@kineticindia.com
Website :	http://www.kineticindia.com
Area :	10,000 Sq.ft.
Location :	Owned

Works :	Daund Road, Ahmednagar - 414001

DIRECTORS

As on 17.09.2010

Name :	Mr. Arun H. Firodia
Designation :	Chairman

Name :	Mr. Ajinkya A. Firodia
Designation :	Managing Director

Name :	Dr. N. A. Kalyani
Designation :	Director
Date of Birth/Age :	20.08.1928 [82 Years]
Date of Appointment :	29.04.1978
Qualification :	Doctorate in Science
Experience :	Promoted a sugal factory; pioneering work in co-op. movement
Other Directorship :	Kalyani Forge Limited HCC Limited Kirloskar Oil Eng. Limited Sudarshan Chem. Ind. Limited
Chairmanship/ Membership of Committees of public companies :	HCC Limited Sudarshan Chem. Ind. Limited

Name :	Mr. Santosh Senapati
Designation :	Director
Date of Birth/Age :	30.07.1962 [48 Years]
Date of Appointment :	14.02.2008
Qualification :	BTech (Minning Machinery, Indian School of Mines, Dhanbad) and MBA (IIM, Ahmedabad)
Experience :	Over 20 years in investment, project movement finance and cross border, advisory services, including in pharmaceutical and healthcare sectors, oil and exploration sectors; in corporate and structured finance
Other Directorship :	Avasarala Technologies Limited Skil Infrastructure Limited

Name :	Dr. K. H. Sancheti
Designation :	Director

Name :	Mr. S. R. Sanghi
Designation :	Director

Name :	Mr. S. R. Kotecha
Designation :	Director

Name :	Mr. Ashish Kumar
Designation :	Director
Date of Birth/Age :	06.03.1972 [38 Years]
Date of Appointment :	14.02.2008
Qualification :	B-Tech. (Comp. Sci. and Engg.), PGDM (IIM Ahmedabad)
Experience :	Over 10 years in financial services
Other Directorship :	Uniparts India Limited
Chairmanship/ Membership of Committees of public companies :	Member of Audit committee of Uniparts (India) Limited

Name :	Mrs. Sulajja Firodia Motwani
Designation :	Director

KEY EXECUTIVES

Name :	Mr. Anil Kale
Designation :	Company Secretary

Name :	Mr. Vinay Shirode
Designation :	Finance Controller

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2011

Names of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of promoters and Promoter Group
1. Indian
Individuals / Hindu Undivided Family
Bodies Corporate	2657773	25.62
Directors / Promoters and their Relatives and Friends	2900501	27.96
ESOP / ESOS	206700	1.99
Sub Total (A) (1)	5764974	55.58

2. Foreign
Individual [Non resident individuals / foreign individuals]	90000	0.87
Sub Total (A) (2)	90000	0.87
Sub Total (A) (1) + (A) (2)	5854974	56.45

(B) Public Shareholding
1. Institutions
Mutual Funds / UTI	700	0.01
Financial Institutions / Banks	1585	0.02
Insurance Companies	140454	1.35
Foreign Institutional Investors	3388	0.03
Sub Total (B) (1)	146127	1.41

2. Non Institutions
Bodies Corporate	871710	8.40
Individual shareholders holding nominal share capital up to Rs. 0.100 million	958936	9.25
Individual shareholders holding nominal share capital in excess of Rs. 0.100 million	660948	6.37

Any Other [Specify]
Clearing Members	9686	0.09
NRI	41638	0.40
OCB	1554381	14.99
Trusts	268	0.00
Employees	273300	2.63
Sub Total (B) (2)	1879273	18.12
(B) = (B) (1) + (B) (2)	4516994	43.55

Shares held by custodians and against which depository receipts have been issued (C)	--	--

Total (A) + (B) +(C)	10371968	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer of Scooter, Motor Cycles and Mopeds

Products :

Item Code No. (ITC Code)

87.11

Product Description

Auto Components

Exports :

Products :

Parts

Countries :

China
USA

Imports :

Products :

Spares

Countries :

Korea
Japan

Terms :

Selling :

L/C / Cash / Credit [30 / 60 / 90 days]

Purchasing :

L/C / Cash / Credit [30 / 60 / 90 days]

PRODUCTION STATUS As on 31.03.2010

Particulars	Unit	Actual Production

Steering Arm / Slip Yoke	Nos.	23275
Gear Box / Shaft Drive	Nos.	463802
I C Engines	Nos.	12836
Variators	Nos.	73483

* The installed capacity being of a generic nature is interchangeable between Auto component product groups and as such individual product group capacities cannot be ascertained

GENERAL INFORMATION

Customers :

End users
OEM’s

No. of Employees :

600 [Approximately]

Bankers :

State Bank of India
State Bank of Indore
ICICI Bank Limited
Punjab National Bank
Bank of Baroda
IDBI Bank Limited
Canara Bank
HDFC Bank, Chinchwad, Pune, Maharashtra, India

Facilities :

Secured Loan [Rs. in million]	31.03.2010	31.03.2009
Debentures
75,00,000 - 11.50% Non Convertible Debentures of Rs. 100 each [Rs. 77.08 (Rs.40) per Debenture have been redeemed] [Repayable within one year Rs. 121.922 millions (Rs. 200.000 millions)]	171.922	450.000
Interest accrued and due on above	3.343	9.973
Total

From Others
Term Loan from Others [Repayable within one year Rs. Nil (Nil)	80.000	250.000
Interest accrued and due on above	0.801	2.381
Total	256.066	712.354
NOTES : 1.Non Convertible Debentures are secured by a first pari-passu charge on Immoveable properties of the Company both present and future and are also secured by first pari - passu charge on moveable fixed assets. In addition to above, first and exclusive charge on the receivables from Tata Motors Limited, second charge by way of hypothecation on the current assets of the Company (both present and future, tangible and intangible) and pledge of 45,79,500 shares held in Kinetic Motor Company Limited. Debentures are redeemable in 15 quarterly installments starting from 31st December, 2007. Debenture redemption premium @ 12.73% is payable on non happening of certain events stipulated in the Debenture subscription agreement. In the event of waiver of debenture redemption premium, rate of interest would be revised at GOISEC yield plus a spread of 4.25%. 2. Term Loan from others is secured by a first pari-passu mortgage and charge on all immoveable properties of the Company both present and future and are also secured by first pari-passu charge on moveable fixed assets. In addition to above second pari passu charge on the current assets of the Company both present and future.

Unsecured Loan [Rs. in million]	31.03.2010	31.03.2009
Interest Free Sales Tax Loan From Govt. of Maharashtra through SICOM [Including Rs.1.144 millions (Nil) due in next 12 months]	17.501	18.614
Short Term Loan : Others	7.9637	18.540
Interest accrued and due on above	0.094	0.085
Other Loans : a) Foreign Currency Convertible Bonds	829.440	853.380
b) From Others [Including Rs.Nil (Nil) due in next 12 months]	160.940	151.862
c) From Directors	32.417	32.660
Total	1048.359	1075.141
* Optionally Convertible into Equity Shares up to 5th Feb 2013


Banking Relations :	--

Auditors :
Name :	P. G. Bhagwat Chartered Accountants
Address :	Pune, Maharashtra, India

Cost Auditor :	Dhananjay V. Joshi and Company Cost Accountants
Address :	Pune, Maharashtra, India

Related parties	Kinetic Motor Company Limited, Athena Financial Services Limited, Jaya Hind Sciaky Limited, Kinetic Communications Limited, Kinetic Marketing and Services Limited, Ajinkya Holdings Private Limited, Microage Instruments Private Limited, Ajinkya Auto Fab Limited, Kinetic Hundai Elevator and Movement Technologies Private Limited, Chrysalis Castings Private Limited, Chrysalis Financial Services Private Limited, Ravindra Software Private Limited, JHS Taigene Electrical Company Private Limited, Ducati Energia Private Limited

Associates/Subsidiaries :	Kinetic Communications Limited Address : Kinetic Innovation Park, D-1 Block, Plot No.18/2, MIDC, Chinchwad, Pune – 411 019, Maharashtra, India Activity : Engineering design and Electronics Manufacturing Services Kinetic Tools Services Address : Kinetic Innovation Park, D-1 Block, Plot No.18/2, MIDC, Chinchwad, Pune – 411 019, Maharashtra, India Activity : Tools and Die Manufacturing

CAPITAL STRUCTURE

As on 31.03.2010

Authorised Capital :

No. of Shares	Type	Value	Amount

1,93,60,202	Equity Shares	Rs.10/-each	Rs.193.602 millions
1,50,00,000	Redeemable Non Convertible Non Cumulative Preference Shares	Rs.10/-each	Rs.150.000 millions
15,07,400	Optionally Convertible Cumulative Preference Shares	Rs 156/- each	Rs.235.154 millions
3,20,500	Redeemable Cumulative Preference Shares	Rs 156/- each	Rs.49.998 millions
19,23,080	Compulsorily Convertible Cumulative Preference	Rs 156/- each	Rs.300.000 millions
5,24,560	Unclassified Shares	Rs.10/-each	Rs.5.246 millions
	Total		Rs.934.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount

10371968	Equity Shares	Rs.10/-each	Rs.103.720 millions
15000000	Redeemable Non Convertible Non Cumulative Preference Shares	Rs.10/-each	Rs.150.000 millions
102000	Optionally Convertible Cumulative Preference Shares	Rs 156/- each	Rs.15.912 millions
320500	Redeemable Cumulative Preference Shares	Rs 156/- each	Rs.49.998 millions
	Total		Rs.319.630 millions

Notes :

1. Out of above Equity shares 18,85,450 (18,85,450) Equity Shares allotted as fully paid up Bonus Shares on Capitalisation of the General

2. Out of above Equity Shares 36,700 (36,700) Equity Shares allotted under Employee Stock Option Scheme

3. Redeemable Non Convertible Non Cumulative Preference Shares shall be Redeemable at the end of 18 months from the date of their allotment, i.e. 13.11.2007. Redemption premium @ 14.00 % p.a. is payable at the time of redemption. These shares have become due for Redemption.

4. Each Optionally Convertible Cumulative Preference Share (OCCPS ) is convertible into one fully paid up equity share of the face value of Rs. 10/- each at a premium of Rs. 146/- per share within 18 months from the date of allotment (i.e. 30.12.2006 w.r.t. 36,923 shares; and 11.1.2007 w.r.t. 65,077 shares) at the option of the allot tee. The OCCPS shall carry a preferential right to be paid a fixed rate of dividend @ 1% p.a. due and payable on the date of their conversion into equity shares or such other date(s) as may be acceptable to allot tee. If any OCCPS is not converted into equity shares, such unconverted preference shares shall carry preferential right to be paid a fixed rate of dividend @ 8.50% p.a. due and payable on the date of their redemption or such other date(s) as may be acceptable to the allot tee and will be redeemed any time after expiry of a period of 5 years from the date of allotment at the option of the Company subject to necessary consent and approval. The option to convert has lapsed.

5. Redeemable Cumulative Preference Shares shall be redeemed at the option of the Company at any time after the expiry of a period of 5 years from the date of allotment i.e. 30.12.2006, subject to necessary consent or approval. They will carry a preferential right to be paid a fixed rate of dividend @ 8.50% p.a. due and payable on the date of their redemption or other date(s) as may be acceptable to the allot tee.

6. Each Compulsorily Convertible Cumulative Preference Share (CCCPS) is convertible into one fully paid up equity share of the face value of Rs.10/- each at a premium of Rs.146/- per share any time after 90 days up to 18 months from the date of allotment at the option of the allot tee. After 18 months the same are compulsorily convertible. The CCCPS shall carry a preferential right to be paid a fixed rate of dividend @ 6% p.a. which shall become payable following declaration of any dividend with respect to Equity Shares by the Company. These shares have been converted into Equity Shares during the year

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

Particulars		31.03.2010	31.03.2009	31.03.2008
SHAREHOLDERS FUNDS
1] Share Capital		319.630	606.244	746.192
2] Convertible Warrants		0.000	0.000	92.664
3] Reserves & Surplus		695.387	479.235	243.976
4] (Accumulated Losses)		(258.936)	(269.367)	(714.321)
NETWORTH		756.081	816.112	368.511
LOAN FUNDS
1] Secured Loans		256.066	712.354	950.000
2] Unsecured Loans		1048.359	1075.141	1267.301
TOTAL BORROWING		1304.425	1787.495	2217.301
DEFERRED TAX LIABILITIES		0.000	0.000	0.000

TOTAL		2060.506	2603.607	2585.812

APPLICATION OF FUNDS

FIXED ASSETS [Net Block]		989.711	1200.527	518.779
Capital work-in-progress		45.517	158.936	5.637

INVESTMENT		768.200	882.219	1108.922
DEFERREX TAX ASSETS		0.000	0.000	70.956

CURRENT ASSETS, LOANS & ADVANCES
	Inventories	148.168	141.617	181.431
	Sundry Debtors	206.075	216.390	590.416
	Cash & Bank Balances	182.162	230.678	298.836
	Other Current Assets	0.020	0.020	0.020
	Loans & Advances	237.044	258.862	279.910
Total Current Assets		773.469	847.567	1350.613
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	359.251	310.224	297.109
	Other Current Liabilities	113.041	141.539	145.880
	Provisions	44.099	42.017	58.706
Total Current Liabilities		516.391	493.780	501.695
Net Current Assets		257.078	353.787	848.918

MISCELLANEOUS EXPENSES		0.000	8.138	32.600

TOTAL		2060.506	2603.607	2585.912

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Income	490.569	645.682	832.172
		Other Income	163.928	185.848	24.686
		Profit on sale of assets	166.072	37.245	438.800
		TOTAL (A)	820.569	868.775	1295.658

Less	EXPENSES
		Material	375.902	484.740	718.380
		Other Expenses	281.287	397.915	534.916
		Voluntary Retirement Scheme Expenses written off	16.545	47.163	32.600
		Expenses Capitalizes	(0.735)	(12.924)	(17.755)
		TOTAL (B)	672.999	916.894	1268.141

Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		147.570	(48.119)	27.517

Less	FINANCIAL EXPENSES (D)		66.138	174.638	213.563

	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		81.432	(222.757)	(186.046)

Less/ Add	DEPRECIATION/ AMORTISATION (F)		57.971	90.590	70.405

	PROFIT BEFORE TAX (E-F) (G)		23.461	(313.347)	(256.451)

Less	TAX (I)		0.000	(66.275)	(1.900)

	PROFIT AFTER TAX (G-I) (J)		23.461	(379.622)	(258.351)

	Exchange gain of previous year adjusted against fixed assets		0.000	(3.503)	0.000

	Profit of merged division from appointed date		0.000	144.629	0.000

	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		(1212.931)	(974.435)	(716.083)

	Deduct from uncommitted Reserves		930.534	943.563	260.114

	BALANCE CARRIED TO THE B/S		(258.936)	(269.368)	(714.320)

	EARNINGS IN FOREIGN CURRENCY
		Export of Goods [FOB]	58.635	213.098	161.413
		Interest	0.000	0.000	0.000
		Other Charges	1.453	7.443	5.905
	TOTAL EARNINGS		60.088	220.541	167.318

	IMPORTS
		Capital Goods	68.408	104.186	6.071
		Component and Others	20.663	17.479	29.108
	TOTAL IMPORTS		89.071	121.665	35.179

	Earnings Per Share (Rs.)		0.72	(70.46)	(49.74)

Particulars			31.03.2011

Sales Turnover [Approximately]			850.000

Expected Sales (2011-2012) : Rs.1000.000 millions

The above information has been parted by Mr. Vinay Shirode [Finance Controller]

QUARTERLY / SUMMARISED RESULTS

(Rs. In Millions)

PARTICULARS	30.06.2010	30.09.2010	31.12.2010
Type	1^st Quarter	2^nd Quarter	3^rd Quarter
Sales Turnover	248.400	245.400	210.600
Total Expenditure	236.700	237.000	232.300
PBIDT (Excl OI)	11.700	8.400	(21.700)
Other Income	0.700	0.300	1.300
Operating Profit	12.400	8.700	(20.400)
Interest	18.200	8.500	14.200
Exceptional Items	0.000	0.000	0.000
PBDT	(5.800)	0.200	(34.600)
Depreciation	19.100	20.700	19.600
Profit Before Tax	(24.900)	(20.500)	(54.200)
Tax	0.000	0.000	0.000
Reported PAT	(24.900)	(20.500)	(54.200)
Extraordinary Items	0.000	0.000	0.000
Prior Period Expenses	0.000	0.000	0.000
Other Adjustments	0.000	0.000	0.000
Net Profit	(24.900)	(20.500)	(54.200)

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	2.86	43.70	19.94

Net Profit Margin (PBT/Sales)	(%)	4.78	48.53	30.82

Return on Total Assets (PBT/Total Assets}	(%)	1.33	15.30	13.72

Return on Investment (ROI) (PBT/Networth)		0.03	0.38	0.70

Debt Equity Ratio (Total Liability/Networth)		2.41	2.79	7.38

Current Ratio (Current Asset/Current Liability)		1.50	1.72	2.69

LOCAL AGENCY FURTHER INFORMATION

Trade References :

Tata Motors Limited
Force Motors Limited
Carraro

SUNDRY CREDITORS :

(Rs. In Millions

Particulars

31.03.2010

31.03.2009

31.03.2008

Sundry Creditors

359.251

310.224

297.109

FINANCIAL HIGHLIGHTS

For the Financial Year, the gross income from operations was Rs.858.400 million, while the net profit after tax was Rs.23.500 million.

The accounts of the Company have been made for a period of 9 months ending 31st March, 2010 (the Financial Year).The results for the current Financial Year are not strictly comparable with the results for the preceding Financial Year, for the following reasons :

• The current Financial Year is a period of 9 months, whereas the preceding Financial Year was a period of 15 months.

• The preceding Financial Year results were announced incorporating the effect of the merger of the Auto Components and Investment division of erstwhile Jaya Hind Sciaky Limited, which was approved by the high court on 27.07.2009 and the Company announced audited consolidated results effective 01.04.2005

Business Overview

During the year, the company made significant progress in establishing itself as a specialized manufacturer of high technology components and assemblies with a focus on Powertrain assemblies. This year has seen a significant production ramp-up in existing programs won earlier and recorded a growth in monthly revenues from Rs. 40 million p.m. in Oct 2009 to Rs. 70 million p.m. in March 2010. The Key initiatives have been :

• Commencement of mass volume production for gear sets for Tata Nano, the lowest priced car in the world. The supply of gear-sets for Tata Nano has commenced (earlier, the project was delayed due to the last minute shifting of the project from Singur to Sanand). During 2010-2011, with the anticipated increased production of Tata Nano, they expect this programme to grow further

• Ramp up of supply of key powertrain components and assemblies for different scooter models of Mahindra Two Wheelers Limited (MTWL), a company in which Kinetic Motor Company Limited, (an entity promoted by the Company and where it holds a substantial equity) holds 20% equity stake. MTWL scooter volumes have crossed a volume of 12,000 per month, within 10 months of launch. They are confident of continued growth going forward.

• Development of Arvin Meritor program for supply of transmission components and commencement of supplies.

Continued growth in the Indian automotive industry gives a confidence to the Directors that the Company would continue to see revenue increase from existing programs, though at a pace lower than the last year.

In addition, the company won a number of prestigious new contracts strengthening its position and future potential as a specialized Powertrain manufacturer. These include orders from well established and prestigious auto companies i.e. Tata Motors, Mahindra and Mahindra, Mahindra Navistar and Piaggio, for the development and manufacture of fully assembled gear boxes and parts. These orders are expected to be productionised during 2010- 2011, and upon full ramp up, the annualised value of these orders is expected to be about Rs.500-600 million per year.

Together with continued ramp-up in existing programs, and a strong order book from present and new customers, the Company is likely to see revenues touch Rs. 100 million p.m. mark by June, 2010 and Rs.160 million p.m. by March, 2010. At this level of operations, the Directors expect the Company to report healthy cash profits and be net profit positive.

Further, the Company has also received additional order for a second engine from Tomos (a moped manufacturer in Europe), which is under development.

Auto Component Industry is looking forward to a continuous growth as it has a direct bearing on the performance of the Auto Companies. In India, automobile sales have been increasing at a rapid rate which augurs well for the future of Auto Component Industry.

With a quality system set up in tune with the requirements of ISO 9001, and with ISO/TS 16949:2002 certification, the Company plans to leverage its skills in domestic as well as international market, by further striving for total customer satisfaction through relationship building and providing superior products and technological solutions to its customers. In the coming years, the Company will focus on strengthening its technological base and customer relationships to establish its position as a leading Powertrain components and assemblies specialist.

Finance Overview

The current Financial Year has been a year of consolidation for the Company, after merging the auto components

business, as transferred from the erstwhile Jaya Hind Sciaky Limited.

Significant steps were taken by the Company to reduce debt during the current year:

During November, 2009, the Company has sold a non core asset, a property situated at Chinchwad, Pune. The proceeds from the above transaction, of Rs. 440.700 millions, have been primarily used for pre-paying a substantial part of the debt of the Company, thereby substantially reducing the interest burden of the Company. The secured debt outstanding as at the commencement of the period under review, of Rs.712.000 millions, has been substantially reduced to Rs.256.000 millions by the end of March, 2010. The Company has also divested some of its financial investments in shares, to raise funds for servicing and reduction of debt as well as to augment working capital required for its growth. During the Financial Year, the equity share capital of the Company has increased due to the conversion of 16,44,231 Compulsorily Convertible Cumulative Preference Shares, earlier allotted to the investor AIG. Also, during the Financial Year, the Company has issued and allotted 17,82,774 equity shares to the shareholders of Jaya Hind Sciaky Limited, pursuant to a Scheme of Merger, as approved by the Hon’ble Bombay High Court, a provision in respect of was already made in the financial statements of the preceding Financial Year.

As a result of the above steps taken during the year, Company’s debt-equity has reduced from 2.2 multiple to 1.7 multiple. A large proportion of this debt is unsecured debt, which is in the form of Foreign Currency Optionally Convertible Bonds that are convertible into equity of the Company up to February 2013. Conversion of these bonds into equity will further reduce debt of the company substantially.

Industry Overview

The Indian auto component industry is one of India's high growth industries with good future prospects owing to the expected growth in the Indian auto industry as well as cost competitiveness of Indian manufacturing from a global supply point of view. From a low-key supplier providing components to the domestic market alone, India has emerged as one of the key auto components centres in Asia and is today seen as a favorite destination of global auto majors. India is now a supplier of a range of high-value and critical automobile components to global auto makers such as General Motors, Toyota, Ford and Volkswagen, amongst others.

As per an Automotive Component Manufacturers Association of India (ACMA) report, the turnover of the auto component industry was estimated at over US$ 19.2 billion in 2009-10, a CAGR of 19.2 per cent since 2003-04. It is likely to touch US$ 40 billion, increasing India’s share in the global auto component market from 1 per cent to 3 percent, by 2015-16.

Future Outlook

The global automotive industry is witnessing tremendous and unprecedented changes these days. This industry is slowly and gradually shifting towards Asian countries, mainly because of saturation of automobile industry in the western world. The principal driving markets for Asian automotive industry are China, India and ASEAN nations.

Entrance of new manufacturers into the small car market and new launches of low cost vehicles namely scooters, motorcycles, mopeds and bicycles have led to the massive growth of domestic automotive industry. For focused auto component players like KINETIC, this provides an opportunity to grow revenues with multiple OEM customers. KINETIC, with its large infrastructure and strong engineering skills, is uniquely positioned to provide Powertrain solutions to the end customer. India is already the 2nd largest two-wheeler market in the world and is expected to cross annual sales of 10 million vehicles in 2011.

The company is well positioned to tap into these growth opportunities and exploit its technological as well as locational advantage and is confident to meet the increased demand. The company plans to remain diversified across various sectors including Indian as well as global industry and focus on commercial vehicles, two- wheelers, three-wheelers, small cars as well as certain non auto sectors such as recreational vehicles, to prevent cyclical swings in its growth pattern.

In this regard, Company’s execution of the auto component strategy over the past two years has started to bear fruit. It has won prestigious programs from stable and growing customers like Tata Nano, Mahindra and Mahindra, Mahindra Navistar, Arvin Meritor, etc. Some of these programs are already in production and as more of these programs go into production, the Company expects to grow rapidly going forward. In fact, revenues for April to June 2010 are up by 75% over the corresponding period in last year, reflecting the maturing of the Company’s growth plan.

The outlook of the company is promising with continuous growth in terms of value and volume.

In the coming years, the Company will focus on further strengthening of its technological base and customer relationships to establish its position as a leading Powertrain components and assemblies specialist.

Contingent Liabilities :

Contingent Liabilities in respect of

(Rs. In Millions)

Particulars	31.03.2010	31.03.2009
a. Income Tax matter under appeal, approx	10.592	(15.770)
b. Sales Tax matter under appeal	32.852	(19.580)
c. Excise Duty in dispute	40.578	(40.176)
d. Octroi Duty in dispute (High court Order received in Company's favour but the case is in appeal before Supreme Court hence shown in Contingent Liability.)	33.574	(33.574)
e. ESIC liability in dispute	0.126	(0.126)
f. Municipal Property Tax in dispute	20.496	(16.270)
g. Service Tax in dispute	6.502	(6.502)
h. Labour Cases	1.684	(2.219)
i. Custom Duty	0.682	(0.682)
j. General Surety Bond executed in favour of Excise Dept for JHS Taigene Electrical Company Private Limited	30.000	(30.000)

Note : Income Tax matter under appeal, Rs.10.592 millions (Rs. 15.770 millions) is excluding Rs. 82.115 millions (Rs. 82.115 millions) in respect of which favourable decision has been given by the Income Tax Appellate Tribunal, Pune on similar grounds in an earlier assessment year.

FIXED ASSETS :

Land
Leasehold Land
Dies Jigs and Fixtures
Freehold Land
Building
Plant and Machinery
Furniture and Fixtures
Computer
Computer Software
Office Equipments
Electrical Installations
Vehicles
Technical Know-how

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] 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.45.08
UK Pound	1	Rs.73.34
Euro	1	Rs.64.30

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
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	YES
--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	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
-	NB	New Business	-

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

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.