corporate information - motherson sumi · pdf filegurgaon 122 002, haryana, india bankers ......

Board of Directors

Mr. Vivek Chaand Sehgal, Chairman

Mr. Toshimi Shirakawa, Director

Mr. Mohinder Singh Gujral, Director

Mr. Hiroto Murai, Director

Mr. Bimal Dhar, Director

Mr. Akihiko Yamauchi, Wholetime Director

Maj. Gen. Amarjit Singh (Retd.), Director

Mr. Arjun Puri, Director

Mr. Masahiro Matsushita, Alternate Director

Mr. Pankaj K. Mital, Alternate Director

Registered office

3rd Floor, Bhageria House, 43, Community Centre

New Friends Colony, New Delhi 110 025

Registrar

Karvy Computershare Private Ltd.

‘Karvy House’, 46, Avenue 4, Street No. 1,

Hyderabad 500034, Andhra Pradesh.

Auditors

Price Waterhouse

Chartered Accountants

Building 8, 7th & 8th Floor, DLF Cyber City,

Gurgaon 122 002, Haryana, India

Bankers

State Bank of India

ICICI Bank Ltd.

UTI Bank Ltd.

Bank of Tokyo Mitsubishi Ltd.

HDFC Bank Ltd.

Citibank N.A.

Investor cell

G.N. Gauba (Company Secretary & Chief Financial Officer)

E-mail: [email protected]

Founder Chairperson

(Late) Smt. S.L. Sehgal

Chairman Emeritus

(Late) Sh. K.L. Sehgal

Corporate information

2 Motherson Sumi Systems Limited

7.47 am, Netherlands:

11.47 am, Sydney: 11.47 am, Sydney: Bertie Engelbert dumps hishousehold waste into the Aerobin.

12.47 pm, Dehra Dun: 12.47 pm, Dehra Dun: Captain Shamsher Singh joins the parade on his bike.

6.47 am, New Delhi: 6.47 am, New Delhi: S. Jayakumar switches his car onand leaves for the office.

7.47 am, Netherlands:William Dougherty moves a 10-ton loadfrom inside the cabin of his crane.

3Together we make it happen

8.47 pm, Bangalore: 8.47 pm, Bangalore:Shalini Rao undergoes anMRI scan.

2.47 pm, Mumbai: 2.47 pm, Mumbai:Sanjay Dinkar takes the elevator tothe 22nd floor.

9.47 am, London: 9.47 am, London: Rudolph Schroeder switches on hisroom heating system.

12.47 am, Italy: 12.47 am, Italy: Antonio Marino switches on his tractor todrive it back into its garage.


Motherson Sumitouches people.And those peopletouch the world.

Every minute of every hour

of every day.

The Sumi Motherson Group Motherson Sumi SystemsLimited

The Sumi Motherson GroupThe Sumi Motherson Group is a focused, dynamic

and progressive group providing customers with

value-added products, services and innovative

solutions. The combined annual revenue of the

group is Rs. 25 billion.

The Group has a diversified business portfolio

comprising electrical distribution systems (wiring

harnesses), polymer processing, injection molding

tool manufacturing, elastomer processing, modules

and systems, machined metal products, cutting

tools, IT services, design engineering, sunroofs and

cabins for off-highway vehicles. The Group has also

invested in technologies for manufacturing support

that include compressors, paint coating equipment,

auxiliary equipment for injection molding machines,

sales, installation and servicing of industrial robots

and automotive manufacturing engineering services.

The Group has forged collaborations across key

technology areas.

The Group synergises the unique competencies of its

constituent companies to provide integrated

solutions for a range of applications for customers

across different industries. Group companies play an

important role in propelling Motherson Sumi

System’s growth by providing support through their

products and services, strengthening the Company’s

position as a full system solutions provider.

Motherson Sumi SystemsLimitedMotherson Sumi Systems Limited (MSSL) is a

diversified Company providing customised solutions

to a wide spectrum of industries. MSSL, along with

its subsidiaries and joint ventures, offers a wide

range of products in the fields of electrical

distribution systems, plastic molding, elastomer

processing, tooling, metal machining, automotive

rear view mirrors and integrated modules. The

Company provides a complete range of services –

from design to manufacturing, supplies to logistics

to its customers in India and abroad.

MSSL has collaborations with global technology

leaders, bringing world-class technologies to serve

its customers. The Company is continuously

exploring new areas and niches where it can add

value with its existing expertise or by acquiring new

technologies. MSSL has moved up the supply chain,

graduating from a supplier of components and

assemblies to a full system solutions provider and a

preferred source for higher level assemblies and

complete modules.

MSSL’s network of manufacturing facilities, design

centres and representative offices as well as

collaborators’ support have facilitated competent

service to a global customer base.

MSSL focuses on organic and inorganic growth on

the one hand and concentrates on a range of value-

engineering services and products on the other. The

Company’s endeavour is to deliver sustainable and

profitable growth that enhances shareholder value.



VisionTo be a globally preferred

solutions provider

Mission • Ensure customer delight

• Involve employees as partners in

progress

• Enhance shareholder value

• Set new standards in good

corporate citizenship

Values• Be a lean, responsive and

learning organisation

• Continuously improve to achieve

world-class standards and total

customer satisfaction

• Proactively manage change

• Maintain high standards of

integrity and safety

• Ensure a common culture and a

common set of values

throughout the organisation

• Recognise individuals’

contribution

• Develop stronger leadership

skills, greater teamwork and a

global perspective

• Constantly upgrade skill levels

across the organisation through

knowledge sharing programmes

Our background… • In 1983, wiring harness

operations were started as a

single product (wiring harnesses)

business model, supplying

mainly to Japanese customers.

• In 1986, Motherson Sumi

Systems Limited was established

as a joint venture with Sumitomo

Wiring Systems Ltd. (SWS),

Japan, and Nissho Iwai

Corporation, Japan (now Sojitz

Corporation).

• First public issue of shares in

1993.

• The Motherson Sumi stock is

listed on the National, Mumbai,

Delhi and Ahmedabad stock

exchanges in India and on the

Singapore Stock Exchange for

bonds.

• The Company is headquartered

in Noida, India.

Our achievements… • The largest manufacturer of

automotive wiring harnesses in

India serving the entire cross-

section of the automotive

industry.

• One of the largest manufacturers

and suppliers of plastic

components to automotive and

consumer electronics industries.

• Largest manufacturer of rear

view mirrors for passenger cars

and MUVs in India with over

45% share of the segment.

Motherson Sumi Systems Limited is the flagship ofthe Sumi Motherson Group and a pioneer ofintegrated wiring harnesses in India.

The Company is the largest in India to be engagedin the manufacturing of wiring harnesses, serving nearly 65% of India’s passenger car market.It is also the largest manufacturer of automotivewires in the country.


Our technologypartners… • Wiring harnesses and

components: Sumitomo Wiring

Systems Ltd., Japan, and

Kyungshin Industrial Co., South

Korea.

• Door trims/IP

assemblies/bumpers (Ford Fiesta):

KE Protec, Japan (provides

engineering services).

• Fuses: Wilhelm Pudenz GmbH

and Wickmann Werke GmbH,

Germany (both part of

Littelfuse).

• Rubber components: WOCO

(Germany).

• Rear view mirrors: Schefenacker

International AG (Germany).

• Components for the infocom

sector: Balda AG, Germany.

• Environment Management

Systems: E-Compost, Australia.

Our facilities… • Wiring harness and wire

manufacturing facilities: 20

• Fuse manufacturing facility: 1

• Tube manufacturing facility: 1

• Plastic molding facilities: 14

• Rubber injection molding

facilities: 3

• Liquid silicon rubber injection

molding facility: 1

• Injection molding tool

manufacturing facility: 1

• Engineering design facilities: 3

• IP/ cockpit assembly facilities: 2

• Door trim manufacturing

facility: 2

• Automotive mirror

manufacturing facilities: 2

• Metal machining facilities: 2

Our financials, 2006-07… • Consolidated turnover (gross)

increased 51% to Rs. 17,065 million;

standalone turnover (gross)

expanded 52% to Rs. 12,385 million.

• Consolidated revenues (net)

increased 48% to Rs. 15,493 million.

• Standalone revenues (net) increased

50% to Rs. 10,997 million.

• Consolidated EBIDTA strengthened

33% to Rs. 2,507 million;

standalone EBIDTA increased 44% to

Rs. 2,042 million.

• Consolidated post-tax profit grew

21% to Rs. 1,295 million;

standalone post-tax profit increased

38% to Rs. 1,142 million.

• Market capitalisation stood at

Rs. 25,262 million as at March 31,

2007 (compared to Rs. 24,957

million as at March 31, 2006)

At Motherson Sumi SystemsLimited, we constantly strive tomeet customer expectations bysupplying more products andservices. We do this by simplyincreasing our content per car andgrowing with the customer.


At Motherson Sumi SystemsLimited, we constantly strive tomeet customer expectations bysupplying more products andservices. We do this by simplyincreasing our content per car andgrowing with the customer.

When we went public in 1993, we had 682 investors. These

people understood enough about our business and what we

were trying to do to put their hard-earned money into our

fledgling start-up. Looking back, we have served these people

well – a combined investment of Rs. 4,300 in our 1993 issue (and

subsequent 1996 rights issue), would have appreciated to 100

times in March 2007, excluding dividends, indicating that we

have served our investors well.

We created robust facilities. Extended more products and

services. Partnered with global leaders. Acquired latest

technologies. Followed a partnership approach with customers.

Evolved as per their changing needs. Lived up to our

commitments.

Our customers grew fast. We also grew with them. In doing so,

we transformed our business model with speed:

• Single product, single market.

• Single product, multiple markets.

• Multiple products, multiple markets.

• Multiple collaborations, multiple opportunities.

The results are evident in our record performance in fiscal 2007.

On a consolidated basis, our revenues crossed Rs. 15 billion in

2006-07, representing a leap of 50% over the previous fiscal.

Post-tax profit jumped 21% to Rs. 1.30 billion, while earnings per

share expanded 21% to Rs. 5.51 during the same period. V.C. Sehgal, Chairman

Motherson Sumi Systems Limited

Acquiring capabilities for rapidgrowthIn 2006-07, we strengthened our business model through a

number of initiatives that will take us ahead:

• Our new joint venture with Sumitomo Wiring Systems (SWS)

at Sharjah focuses on meeting the requirements of global

customers of SWS and SEI under buyback by collaborator.

• MSSL GB acquired ASL Systems Limited in the UK. With this,

we have added a new range of modules and entered into new

niche segments for wiring harnesses and modules.

• We acquired G&S Kunststofftechnik GmbH (Germany) in

August 2005 to consolidate our polymer business. This

acquisition gave us new technologies comprising two

component resin injection molding and post molding

processes like mirror molding and rotation welding, among

others.

• We acquired a plastic injection molding company FP

Formagrau s.r.o., in Pardubice (Czech Republic) in November

2006. This strategic decision – our third acquisition under

MSSL GmbH – helped us acquire a low-cost manufacturing

facility with high technical capabilities.

• We enhanced the injection molding tool manufacturing

capabilities of MSSL Tooling (FZE). With faster and high

precision machines, tool room capacity increased; we

identified attractive orders that could be outsourced to MTL

and going ahead, we expect to capitalise on more of such

opportunities.

• We focused on restructuring Mothersonsumi Reiner GmbH

(MSR), which has become a 100% subsidiary of MSSL

following the purchase of the remaining 20% shares from

Reiner Präzision GmbH.

• After the launch of Aerobin in Australia, market analysis and

testing was initialised to evaluate the product’s potential in

Germany as that could open up the entire European market.

New patents were submitted for the final production design,

incorporating new patentable technology in addition to the

original patents.

• MSSL Australia Pty Limited, which was incorporated in

October 2006, acquired the business of door trims from Huon

Corporation, in receivership, for direct supplies to GM Holden,

Australia. Despite the planned phase-out of this model by GM

Holden, which will end the supply of door trims in the current

year, a presence in the Australian market has enabled the

Company to acquire the businesses of Empire Rubber. Besides,

the acquisition offers ample opportunities to conduct more

business in plastic molding as well as in new acquisitions.

Thinking fastOur rapid growth over the last two decades is the result of

three big and consistent themes – people, people and people.

In one of our biggest human resource successes, we

completely decentralised the organisation in the early 90s. The

result is that my doors continue to remain wide open for our

shop floor members to share a cup of tea with me and

bounce ideas on how we can do things better and faster. We

invested in creating efficiency-enhancing training facilities,

adopting the global best practices to enrich competencies.

Besides, we are continuously devising ways to sustain

excitement, energy and enthusiasm.

I am optimistic that this powerful chemistry will accelerate

growth at Motherson Sumi over the coming years.

On the fast track Let me leave you with some numbers of what you as a

shareholder can expect: India’s car density – number of cars

per 1,000 – continues to be at about 8–10 compared to 14 in

China and 500 in the United States. Within the next quarter

century, India expects to own 140 cars per 1,000 people and

the maximum number of cars across all nations by 2050

(Goldman Sachs).

This is why I can stand in this space one more time, look at the

widening family of shareholders and repeat with reasonable

confidence what I had enunciated 20 years ago: “We are very

optimistic about our future!”


Our rapid growth over the last two decadesis the result of three big and consistentthemes – people, people and people.



Global in presence,sales and mindset

Manufacturing locations: United Kingdom, Germany, Czech

Republic, Sharjah, Sri Lanka, Australia, India (Noida, Faridabad, Gurgaon,

Manesar, Kandla, Pune, Bangalore, Chennai and Pondicherry).

Representative offices: Germany, Austria, Singapore and

Mauritius.

Design and development centres: Ireland and India (Noida).

14 businesses. 10 business partners. 9 joint ventures. 11 countries of presence.


• Exports contributed nearly 36% to the Company’s consolidated turnover in 2006-07 (33% in 2005-06).

• Strong presence in providing wiring harnesses for two-wheelers in Europe.

• Strong presence in providing wiring harnesses for material handling equipment in Europe.

• Supplies of molded plastic products and machined metal components to Europe and USA.

• Export of mirror component sub-assemblies to the United States, Australia, France, Spain and Turkey.

• Made three international business acquisitions in 2006-07.

Sharjah

Sri Lanka

Australia

Singapore

Mauritius

United Kingdom

Ireland

Germany

Czech Republic

Austria

Bangalore

Chennai

Pondicherry

Kandla

Pune

Noida/Faridabad/Gurgaon/Manesar


8.09 pm, Mumbai Rakesh Malhotra turns on theignition of his Mercedes EClass. Flicks on its lights. Rollsup its windows. Lights up itsstereo. And adjusts its rearview mirrors. All automatically.

Yet another silent victory forthe specialised wiring

harnesses running throughhis precious possession.

Yet another silent victory forthe specialised wiring

harnesses running throughhis precious possession.

What goes into most cars in India are

the best wiring harnesses from

Motherson Sumi Systems Limited.

• MSSL, along with its joint ventures,

accounts for the largest share (65%)

of wiring harnesses used in passenger

cars in India. The Company’s wiring

harness customer profile in passenger

cars and MUVs comprises Maruti

Udyog, Hyundai Motor India, Honda

Siel Cars India, Toyota Kirloskar Motor,

DaimlerChrysler India, Tata Motors

and Mahindra and Mahindra.

• MSSL exports wiring harnesses to its

collaborator, besides supplying to a

global customer base across Europe,

Australia and USA.

• MSSL possesses 20 wiring harness

and wire manufacturing facilities in

India, Europe and the Middle East

(including through its joint ventures

and subsidiaries).



11.43 pm, BrusselsHarry Balderati settles himselflightly on his Ducati. For asecond, everything is still.Then he softly turns the key…instantly, the machine roars tolife and in just four seconds –four seconds! – he touches aspeed of 120 kmph.

What carries this spark of life inthe bike is the electrical

distribution system delivered byMotherson Sumi Systems Limited.

What carries this spark of life inthe bike is the electrical

distribution system delivered byMotherson Sumi Systems Limited.

• A wiring harness is a highly engineered product comprising

a combination of wires (across sizes, grades and colours),

terminals, housings, connectors, fuses, fuse boxes, clamps,

PVC tapings, tubings, braiding, joints, junction boxes, LEDs

and circuit boards, among others.

• This product not only affects the competent functioning of

all electrical devices within a vehicle but also serves as a critical

safety product preventing sparking and potential fire through

circuit protection.

• MSSL supplies to the entire cross-section of automotive

industry including cars, MUVs, commercial vehicles and two-

wheelers. The Company’s major two-wheeler customers in

India comprise Hero Honda, Bajaj Auto, Honda Motorcycle &

Scooters India and Yamaha India.

• MSSL also enjoys a visible presence in the two-wheeler

segment in Europe, supplying products to the leading

manufacturers like Piaggio, Aprilia, Ducati, KTM, MBK and

Yamaha, among others.

•In addition to the supply of wiring harnesses to automotive

customers, MSSL also supplies wiring harnesses for use in

tractors and farm equipment, material handling equipment,

earthmoving equipment, elevators, office automation and

medical equipment, among others.


2.12 am, PanvelMohan Bhargava is cruisingdown the Mumbai–Punehighway in his Suzuki Swiftwhen he flashes the indicator toturn right. Before he turns, helooks customarily at the rear-view mirror. He sees danger.He swerves. He survives.


Rear view mirrors are avisible automotive productfrom MSSL. Helping millionsof vehicle users perceiveground realities with clarity

Rear view mirrors are avisible automotive productfrom MSSL. Helping millionsof vehicle users perceiveground realities with clarity

• Rear view mirrors are fast becoming critical safety products

on account of increasing vehicle speeds and rising vehicular

traffic. In view of these developments, mirrors have evolved

from general use to regulated use by the Automotive Research

Association of India (ARAI) and from the use of one external

mirror per car to two.

• MSSL’s joint venture with Schefenacker International

(Germany), enjoys rich technology transfer and integrated

capability – from design to commercial production to product

testing.

• The extensive product range comprises automotive interior

mirrors (flat, day/night mirrors and mirrors with reading

lamps), exterior mirrors (manual, handset, cable-controlled

and electric), interior mirrors with cabin reading lamps and

mirror component sub-assemblies.

• The Company’s client list comprises Maruti Udyog (Alto, Zen

Estillo, Swift, Wagon R, Esteem and Versa), Hyundai Motor

India (all existing models), Ford India (Ikon, Fiesta and Fusion),

General Motors (Optra, Tavera, Uva, Aveo and Spark) and

Toyota Corolla. SML also exports mirror component sub-

assemblies to the United States, Australia, France, Spain and

Turkey.

• SML has the highest market share of over 45% in the rear

view mirror segment for passenger cars and SUVs in India

today.


7.43 pm, ChennaiJaya Iyengar recently bought aFord Fiesta. Making heads turn.For the indescribable grandnessof her car’s frontage. The stateliness. The aura.


Bumpers, door trims, IPand console modules arepartnered for design,prototype andmanufacture by MSSL.

Bumpers, door trims, IPand console modules arepartnered for design,prototype andmanufacture by MSSL.

• MSSL is also the exclusive supplier of complete cockpit

modules for Mercedes E and C class cars in India, one of the

most technologically-advanced, comprising sophisticated

panelling and advanced safety equipment.

• The Company enjoys the flexibility to produce a range of

molded components through a robust blow-molding and

injection-molding infrastructure. The Company also possesses

a comprehensive range of post-molding processes comprising

ultrasonic welding, vibration welding, hot foiling, printing,

body colour painting, fabric upholstery and assembly.

• The Company provides a range of plastic assemblies and

integrated modules that go inside a vehicle – outside and

inside handles, deck lid handle, louvers, front grill, windshield

washer systems, bottles and reservoirs, HVAC ducts, body side

molding, spoiler, roof rail, scuff plates, interior pillar trims,

floor console, wheel arch liners, front and rear bumper, door

trims and instrument panel/ cockpit modules, among others.


Our Principal PartnerSumitomo Wiring Systems, Ltd.,Japan

Background• A subsidiary of Sumitomo Electric Industries (Japan).

• A global supplier engaged in the manufacture and sale of wire harnesses, components and wires.

•118 group companies across 31 countries.

• Enjoys the second-highest market share in wire harnesses in Japan and the third-highest share

worldwide.

Collaboration• Provided technical assistance for manufacturing wiring harnesses in 1983.

• Entered into a joint venture to form Motherson Sumi Systems Limited (MSSL) in 1986.

• Joint venture comprised the manufacture of wiring harness catering mainly to the needs of JapaneseOEMs.

• Engaged as the principal partner of MSSL, initially providing an access to the latest technologies formanufacturing wiring harnesses and wires and gradually providing technical support for wiring harnesscomponents, injection molded parts, mold manufacturing (through group companies) engineeringdesign and software development (through joint ventures).

Support• Pivotal in providing technical support to MSSL in the form of resident technical advisors, training

of engineers and production personnel, manufacturing methodologies, Japanese manufacturing

techniques, quality circle activities, Kaizen and collaborative design and development.

• Instrumental in the Company’s staying abreast with state-of-the-art technologies, enhancing

product quality at competitive costs.

• Buyback of wiring harnesses to SWS locations in Japan and Europe.


Customer recognitionMaruti

Vendor Performance Award forOverall Commendation 2005-06

Vendor Performance Award forDesign Capability 2005-06

Vendor Performance Award forVA VE 2005-06

Toyota

Honda SIEL

Best Quality Supplier 2006

Award for outstandingperformance in Delivery 2006

JCB India

Best Supplier Award 2006

New Holland

Award for Best Supplier 2006

Yamaha, Europe

QCD Award 2006

5S Gold Award - HSCI Suppliers Club - 2007

Hyundai

Award for QualityExcellence 2006

Quality 5 Star Award

Award for Zero Defect Supplies 2006

Award for Best Logistics SupplierTop Runner - 2006

Denso India

Sumitomo Wiring Systems

Excellence in Cost Reduction 2006-07

Best Supplier AwardDelivery 2005

Global Quality Award2006


Consolidated(Rs. in million)

Parameters 2006-07 2005-06 % change

Sales - Net of excise

Domestic 9,751.45 6,787.74 43.7

Export 5,524.29 3,367.65 64.0

Total sales 15,275.74 10,155.39 50.4

EBIDTA 2,507.34 1,880.35 33.3

Profit before tax (PBT) 1,624.71 1,260.93 28.9

Profit after tax (PAT) 1,295.19 1,071.45 20.9

Earning per share (EPS) - Rs. per share 5.51 4.56 20.8

Reserves and surplus (as on March 31, of respective year) 3,561.26 2,704.38 31.7

Loan funds (as on March 31, of respective year) 1,687.80 1,549.78 8.9

Foreign Currency Convertible Bonds (FCCBs) 2,914.08 2,714.69 7.3

Financial highlights

18000

16000

14000

12000

10000

8000

6000

4000

2000

0

1400

1200

1000

800

600

400

200

02002-03 2003-04 2004-05 2005-06 2006-07

4188

5899

7812

10155

15276

312

652

1071

1295

840

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

2002-03 2003-04 2004-05 2005-06 2006-07

742

1138

955

1609

1549

2715

37962939

1688

2914

2200

1238

Sales profileNet sales & PAT

Total capital employed & ROCE Sales break-up

PAT

(Rs.

mill

ion)

Net

sal

es (R

s. m

illio

n)

ROCE

(%)

Capi

tal e

mpl

oyed

(Rs.

mill

ion)

Net worth Total loans ROCEFCCB

Net sales PAT


Standalone (Rs. in million)

Parameters 2006-07 2005-06 % change

Domestic sales 8,376.36 5,601.30 49.5

Exports 2,435.83 1,532.99 58.9

Total sales (net of excise) 10,812.19 7,134.29 51.6

EBIDTA 2,041.95 1,421.17 43.7

PBT 1,416.58 939.03 50.9

PAT 1,141.77 826.70 38.1

Equity capital 234.89 234.89 0.0

Reserves and surplus (as on March 31, of respective year) 2,774.92 2,045.36 35.7

Loan funds (as on 31st March of respective year) 1,065.96 1,074.84 -0.8

Foreign Currency Convertible Bonds (FCCBs) 2,914.08 2,714.69 7.3

Earnings per share (Rs.) 4.86 3.52 38.1

Dividend (%) 150 115 30.4

Maruti (25%)

Ford (8%)

HSCIL (7%)

M&M (5%)TATA (5%)

SWS (4%)

Others (35%)

LG & allied (2%)

Hero Honda (3%)

JCB (3%)

Piaggio (3%)

Domestic sales (77%)Exports (23%)

Sales profile

Sales break-up

12000

10000

8000

6000

4000

2000

0

1200

1000

800

600

400

200

0

2002-03 2003-04 2004-05 2005-06 2006-07

290

3334

4572

5536

7134

10812

485

621

827

1142

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

2002-03 2003-04 2004-05 2005-06 2006-07

685

1388

702

1741

2715

1075

22803010

1066

2914

1080

660

Net sales & PAT

Total capital employed & ROCE

PAT

(Rs.

mill

ion)

Net

sal

es (R

s. m

illio

n)

ROCE

(%)

Capi

tal e

mpl

oyed

(Rs.

mill

ion)

Net worth Total loans ROCEFCCB

Net sales PAT


Overview Motherson Sumi Systems Limited (a joint venture between the

Motherson Group of India, Sumitomo Wiring Systems of

Japan and Sojitz Corporation of Japan), along with its joint

ventures, is the largest wiring harness manufacturer in India

with a passenger car segment market share of nearly 65%.

Key strengths Wide product range: MSSL manufactures over 12,000 types

of wiring harnesses catering to automotive and non-

automotive customers.

Integrated presence: MSSL provides integrated wiring

harness solutions tailored to different specifications, catering

to diverse customer requirements with backward integration

for critical inputs.

Technology edge: The Company has protected its

technological edge by acquiring global technologies through

its collaborations with Sumitomo Wiring Systems (Japan) and

Kyungshin Industrial Company (South Korea).

Rich automotive customer portfolio: The Company’s

client list comprises leading vehicle manufacturers in India

including Maruti Udyog, Hyundai Motor India, Honda Siel Cars

India, Toyota Kirloskar Motor, DaimlerChrysler, Mahindra and

Mahindra, Tata Motors, Hero Honda, Bajaj Auto, Honda

Motorcycle and Scooters India and Yamaha Motors India,

among others. Some of the Company’s principal international

customers comprise Piaggio, Ducati, Yamaha, MBK and KTM.

Diversified customer base: The Company’s diversified client

base represents an effective de-risking against sectoral

slowdowns. It also supplies to a number of non-automotive

clients comprising white goods, medical equipment, electric

and electronic device industries, tractors and farm equipment,

Business segment review

Wiring harnesses

Sales break-up (Rs. in million)

Parameters 2006-07 2005-06 Percentage

increase

Standalone

Wiring harnesses 7,369.61 5,338.41 38.0

Polymer components 2,969.69 1,406.12 111.2

Rubber/metal machined components, mirrors and others 472.89 389.76 21.3

Total 10,812.19 7,134.29 51.6

Consolidated



Rubber/metal machined components, mirrors and others 1,546.56 1,393.94 10.9

Total 15,275.74 10,155.39 50.4

Motherson Sumi is present in three broad business segments:

• Wiring harnesses

• Polymer processing and tool manufacturing

• Elastomer processing, metal machining, mirrors and others

Business segment review - 1

material handling equipment and off-road vehicles. It has a

significant presence in material handling and earthmoving

equipment segments with supplies to leading names like,

NACCO, MCFE, JCB, Caterpillar and Komatsu. It also supplies

to its collaborator across a number of global locations.

Strong presence abroad: The Company has a manufacturing

presence in the United Kingdom and Sharjah through its joint

ventures and subsidiaries supported by a design centre in

Ireland and representative offices in Germany, Austria and

Singapore. The Company’s products are marketed across

Europe, Japan, the United States and Australia, among others.

Ongoing process enhancements: The Company

continuously undertakes measures to enhance process

efficiency through Kaizen and waste elimination/reduction.

Highlights, 2006-07 • Established a new joint venture with SWS at Sharjah for

serving requirements of global customers of SWS. In August

2006, MSSL (GB) Limited, a 100% subsidiary of MSSL, took

over the assets of ASL Systems Ltd. (UK), which provides

wiring harnesses to niche segments like special purpose

vehicles, buses and trailers. This acquisition has reinforced the

Company’s European presence with a wider customer base.

• In 2006-07, the Company widened its customer base and

increased revenue share per customer. Wiring harness exports

grew by 51% to Rs. 2762 million.

Outlook • The Company expects robust volume growth coming out of

all its major customers.

• The Company expects to strengthen its wiring harness

industry presence through acquisitions that will widen its

product basket and market presence.

• The Company intends to enhance its production through

stronger resource utilisation.

Constituent companies/divisions


(MSSL)

Motherson Sumi Systems Limited (flagship

Company of the Sumi Motherson Group) is

a joint venture between Sumitomo Wiring Systems, Ltd.

(Japan), Sojitz Corporation (Japan) and the Motherson Group

(India).

Focus: The product range of MSSL’s wiring harness division

comprises wiring harnesses, battery cables, high tension cords,

wiring harness components, wires and modules. Catering to

the entire cross-section of automotive industry in India, along

with tractors and farm equipment, material handling and

earthmoving, medical diagnostics, office automation,

electricals and electronics industries.

MSSL has wiring harness and wire manufacturing facilities

(MSSL, subsidiaries and JVs) in India (Noida, Gurgaon, Faridabad,

Pune, Chennai, and Bangalore) and abroad (the Middle East,

Europe and Sri Lanka). Representative offices in Austria, Germany

and Singapore to facilitate customer support and strategic

sourcing; a design and development centre in Ireland.

Certifications: TS 16949 and ISO-14001

Kyungshin Industrial Motherson

Limited (KIML)

A joint venture between Kyungshin

Industrial Co. Ltd. (South Korea) and

Motherson Sumi Systems Limited (India).

Focus: The Company manufactures wiring harnesses at twin

locations in Chennai (India), catering to the complete wiring

harness requirements of the range of vehicles manufactured

by Hyundai Motor India Limited.

Certifications: TS 16949, ISO-14001 and 5-Star (from

Hyundai)

Performance: KIML achieved a turnover of Rs.2119.89 million

as compared with Rs. 1610.80 million in the previous year. The

Company has paid an interim dividend of 40% for 2006-07.

During the year, KIML commenced supplies to all new car

models including Verna, Getz – improved for domestic and

export markets – and Sonata diesel. It set up a new

manufacturing facility in Oragadam, Chennai to service the

customer’s increasing requirements. KIML is among the first

three companies in India to get 5 Star certification from

Hyundai.

MSSL (GB) Limited

A 100% subsidiary of Motherson Sumi

Systems Limited. MSSL GB acquired the

business of ASL Systems Limited, UK,

which was supplying wiring harnesses and related modules to



niche segments in the UK.

Focus: Manufactures cable harnesses, wiring assemblies and

electronic control systems for automotive (truck and bus),

heavy trailers and off-road vehicles. Manufacturing location in

Gateshead, Tyne and Wear in Northeast England.

Performance: During August – December 2006, the Company

achieved a turnover of GBP 1.76 million and incurred a loss of

GBP 0.33 million. This loss includes the acquisition cost being

written-off to the extent of GBP 0.13 million. MSSL GB’s team

has been strengthened and the Company expects to

manufacture higher value-added products in the UK.

MSSL Ireland Private Limited


Systems Limited.

Focus: Provides design and engineering support and is

positioned as a strategic point to provide logistics support to

customers across Europe

Performance: During the year, the Company had net sales and

services of Euro 0.669 million compared with Euro 0.497

million in the previous year.

MSSL Mideast (FZE)


Systems Limited.

Focus: Located in the SAIF Zone (Sharjah). Specialists in the

manufacture of wiring harnesses. Supplying to leading

manufacturers of material handling equipment and off-road

vehicles in Europe.

Certification: TS16949

Performance: During the year, the Company’s revenue grew

from Euro 13.03 million to Euro 16.60 million, a growth of

27% over the previous year. This does not include sales from

the GPP division, which were transferred to new joint venture

company MSWS with effect from 1st September 2006.

MSSL ME wiring harness division added new business

including Geesink, Claas, Vishay, Komatsu and Wright Bus. The

polymer division of MSSL ME initiated supplies to Ford, Europe

for interior trim components, assemblies and grab handles in

June 2006 for which manufacturing has been done at MATE

(a division of MSSL), Chennai.

Motherson Sumi Wiring System

Limited (FZC)

A joint venture between Motherson Sumi

Systems Limited and Sumitomo Wiring

Systems, Ltd. (Japan).

Focus: Located in Sharjah. MSWS supplies wiring harnesses to

Sumitomo Electric Wiring Systems in Europe.

Performance: The business of MSSL Mideast – GPP Division

has been transferred to MSWS with effect from 1st September

2006. The MSWS facility attained world number one ranking

in the global benchmarking of all SWS facilities.

On a like to like basis, this business had a turnover of Euro

8.30 million during nine months from April to December 2006

as against a turnover of Euro 8.91 million during the 12

months of 2005-06. This business, though less profitable, is

expected to grow significantly.

Motherson Sumi Electric Wires

A division of Motherson Sumi Systems

Limited.

Focus: The largest manufacturer of automotive wires in India.

Product range includes wires for automotive and electrical

applications comprising multi-core cables and house wiring.

Manufacturing units in Noida and Bangalore.

Certification: TS 16949; ISO 14001; certification for

manufacturing UL 1007 and UL 1015 wires.

Motherson Electrical Wires Lanka

Private Limited


Systems Limited.

Focus: Located in Sri Lanka, Specialises in the manufacture of

wires for automotive applications. Supplies wires to different

manufacturing locations of the Group.

Certification: QS 9000

Performance: MWL achieved a turnover of Sri Lankan Rs

1916.82 million, a growth of 104% over the previous year.

The increase in turnover was partially due to a rise in the LME

copper price.

Overview The polymer processing and tool manufacturing operations

are spread over India, the Middle East, Australia and Europe.

The Company has spread its reach through overseas ventures

and acquisitions.

Key strengths Integrated presence: The Company is an integrated full

system solutions provider – designing, prototyping, tool

designing and manufacturing, component manufacturing,

sub-assembly and sequence in-line supplies of fully integrated

modules – which enables it to provide enhanced customer

value as well as control costs and quality.

Wide product portfolio: The Company manufactures a full

range of plastic parts ‘bumper to bumper’ comprising small to

large components, assemblies and modules for automotive

industry.

Diversified product mix: The Company has diversified its

presence to molding for white goods and consumer

electronics industries as well. The Company started the

molding of Aerobin – marketed in Australia – an engineered

product that automatically converts household organic waste

into compost.

Modern technology: The Company possesses more than

270 state-of-the-art molding machines with capacities ranging

from 20 tons to 3200 tons.

Tool design and manufacturing expertise: The Company

possesses state-of-the-art tool designing, manufacturing and

processing facilities, specialising in high precision multi-cavity

injection molding tools.

Highlights, 2006-07 • The division achieved a 129% growth in exports,

strengthening its presence in the European and Australian

markets.

• It expanded its product basket and commercialised the

manufacture of environmental products like the patented

Aerobin for JV company Global Environment Management

(FZC).

• It invested in capacities, plants and facilities to meet

growing demand.

Outlook • With an increase in the number of features and applications,

the Company is actively pursuing an increased content per car.

• It expects to enter into the manufacture of niche and value-

added products that require higher engineering capabilities.

• It is focused on expanding its footprint in Europe and

Australia, leveraging the presence of its subsidiaries and

collaborators.

Constituent companies/divisions

Balda Motherson Solution IndiaLimited A new joint venture between Balda

AG (Germany) and Motherson Sumi

Systems Limited.

Focus: The Company supplies plastic components and sub-

assemblies to the mobile infocom industry. Located near

Chennai, the Company has state-of-the-art capabilities in

injection molding, in mold decoration (IMD), painting and

assembly technologies.

Performance: The Company passed the Product and Process

Assessments Audit conducted by prospective customers like

NOKIA, Elcoteq and Salcomp. Commercial production was

delayed due to the late launch of the programs, which are

now expected to mature in the second half of 2007-08.

Meanwhile, the joint venture is exploring opportunities with

other related players and focusing on cost reduction.

FP Formagrau s.r.o.A 100% subsidiary of Motherson Sumi

Systems Limited.

Focus: The Company manufactures injection molded

components with specialisation in precision molded aesthetic

components, 2K molding, insert molded components,

components with safety requirements and prefabricated

assemblies. Located in the Czech Republic, the Company


Polymer processing and tool manufacturing Business segment review - 2


supplies to leading European automotive tier-I suppliers as

well as to non-automotive industries.

Performance: The results include only one month’s turnover

of Rs. 21.63 million.

G&S Kunststofftechnik GmbHA 100% subsidiary of Motherson Sumi

Systems Limited.

Focus: Specialists in plastic injection molding and two

component resin injection molding supported by post molding

processes like mirror welding, subsonic welding, rotation

welding, vibration welding and ERW. Provides engineering

solutions for construction and other mechanical components

and rapid prototyping services.

Certification: TS 16949; DIN 14001

Performance: Turnover for the year 2006-07 was Rs. 812.61

million compared to a four month’s turnover of Rs. 169.11

million for 2005-06

Motherson Automotive Technologies& EngineeringA division of Motherson Sumi Systems Limited.

Focus: Specialisation in blow molding and injection molding.Manufactures a range of plastic components for theautomotive industry, consumer durables, white goods andelectronics industries. Specialisation in modules includingbumpers, door trims and IP (dashboard) modules

The division has 10 manufacturing facilities in India spreadover Noida, Manesar, Bangalore, Chennai and Pondicherry,injection molding machines up to 3200 tons and moldingfacilities supported by comprehensive post molding facilities.

Certifications: TS 16949, ISO 14001, and Q1

Performance: The year included full year sales of IP modules,bumpers and door trims along with other moldedcomponents and assemblies for the Ford Fiesta. The divisionalso commenced supplies of bumpers and IP with ducts to theHonda Civic. MATE is focusing on value-added modules thatrequire specialised engineering capabilities.

The business of Motherson Advance Polymers, which wasmerged with MSSL, has been placed under MATE. With this,

MATE has acquired a range of products for the white goodsand electronics segments, adding new customers like LG andSamsung. The turnover from this business for 2006-07 was Rs. 521.53 million compared with Rs. 94.14 million in theprevious fiscal.

MSSL Australia Pty LimitedA subsidiary of MSSL Singapore Pte Ltd.

Focus: Fulfil an initial contract awarded byGM Holden Limited for the supply of door trims; will be thevehicle for developing supply relationships with globalcustomers and partners who build motor vehicles in Australia.

Performance: MSSL Australia Pty Ltd., incorporated inOctober 2006, acquired the business of door trims from HuonCorporation, in receivership, for direct supplies to GM Holden,Australia. On account of the planned phase out of this modelby GM Holden, the supplies of door trims will end in thecurrent year. However, a presence in the Australian market hasenabled the Company to acquire more business in the region.

MSSL Tooling (FZE)MSSL Tooling (FZE) (earlier known as MSSL

Hag Toolings Ltd.) is a 100% subsidiary of

Motherson Sumi Systems Limited.

Focus: Manufacture of precision injection molding tools and

components. Caters to customers in Europe and the United

States. A complete solution provider from concept and design

to complete manufacture of precision tools and components,

integral to the polymer and tooling business of the Company’s

European operations. Injection molding and tool room

facilities located in Sharjah.

Performance: MTL had a turnover of Euro 539,116 in 2006.

During the year, the Company expanded tool room capacity

and established molding facilities by purchasing machines

from the receiver of the Wippermannn. However, since a part

of these machines were under installation during the major

part of the year and shifting of the molds from Germany was

delayed, revenues were adversely affected. In line with

conservative accounting policies, the Company has provided

for an impairment amount of Euro 250,670. The Company is

expected to report a significant improvement in performance

during the current year.


Elastomer processing, metal machining,mirrors and others

Business segment review - 3

Elastomer processing

Overview Motherson Sumi operates in the elastomers business through

three joint ventures with WOCO: two in rubber injection

molding with facilities in Noida and Kandla (both EOUs) and

one in the area of liquid silicon rubber injection molding in

Sharjah (FZC).

Key strengths Technology: The Company has an access to global

technology through its collaboration with WOCO, a world

leaders in rubber and machined components.

Market presence: Through its three joint ventures with

WOCO, the division caters to the multiple needs of global

customers, including India.

Product mix: The product mix comprises a range of injection

molded rubber and silicon rubber components.

Post-balance sheet development The Company, through MSSL Australia Pty Limited, acquired

Empire Rubber in Australia in May 2007 to strengthen its

technology edge, expand market presence and enjoy access to

a new range of rubber machined products.

Outlook The division intends to consolidate its presence, catering to a

large and widening customer base.

Constituent companies

Woco Motherson Advanced Rubber

Technologies Limited

A joint venture between WOCO Group of

Germany and Motherson Sumi Systems Limited.

Focus: The manufacture and export of rubber, rubber-to-metal

and rubber-to-plastic bonded parts. Export back to WOCO in

Germany. Adding new products like pedal parts and solid

silicon articles for acoustic applications. Also working with

WOCO’s development department for manufacturing a new

series of rubber parts. Located in the Kandla Special Economic

Zone, India.

Performance: Commercial production commenced in April

2006. In the maiden year of production, the Company

achieved exports of Rs. 221.97 million. In Euro terms, exports

of the Company comprised Euro 3.88 million.

Woco Motherson Elastomer Limited


Systems Limited and WOCO Group of

Germany.

Focus: Manufacture of injection molded rubber components

including a wide range of components for automobile and

auto-component manufacturers. Export back to WOCO,

Germany. Top-of-the-line rubber injection molding machines

with cryogenic de-flashing and component finishing facilities.

Certification: TS 16949 and ISO 14001

Performance: WMEL achieved a turnover of Rs. 333.31 million

during the year compared with Rs. 384.14 million in 2005-06.

In Euro terms, exports during the year stood at

Euro 5.65 million against Euro 7.20 million in 2005-06.

Domestic sales comprised Rs. 4.65 million as against Rs. 0.06

million in 2005-06. The drop in exports is mainly attributed to

sluggish sales in the European automobile market and near

stagnant economic growth in the region. This situation was

compounded by a fall in exports from Europe to the US due to

a further strengthening of the Euro vis-à-vis the US Dollar.

Woco Motherson Ltd. (FZC)

A joint venture of Motherson Sumi

Systems Limited and the WOCO Group of

Germany.


Focus: Liquid silicon rubber injection molding. Manufacture of

products for automotive applications, kitchen appliances,

measuring and control technology as well as medical

equipment applications. 100% production of the joint venture

is exported back to the collaborator. Located in Sharjah Airport

International Free Zone.

Performance: During the calendar year 2006, WML recorded

a turnover of Euro 5.01 million against Euro 4.69 million in

calendar year 2005.

Rear view mirrorsOverviewThe mirror business is carried out through a joint venture

company – Schefenacker Motherson Limited.

Schefenacker Motherson Limited


Systems Limited and Schefenacker

International, Germany.

Focus: Leading supplier of rear view mirrors to major

automobile manufacturers in India. Possesses the capability to

design and develop products covering concept to

commercialisation. Also possesses an in-house testing facility

to conduct all major tests. Product range includes automotive

interior mirrors (flat, day/night mirrors and mirrors with

reading lamps), exterior mirrors (manual, handset, cable

control and electric) and mirror component sub-assemblies.

Manufacturing facilities in Noida and Chennai.

The Company’s customers comprise Maruti Udyog, Hyundai

Motor India, Ford India, General Motors and Toyota. Besides,

the Company also exports to its collaborator in the United

States, Australia, France, Spain and Turkey, among others.

Certification: TS 16949; ISO 14001

Performance: Gross turnover for the year was Rs. 574.80

million as against Rs. 510.82 million for the previous year

ended December 31, 2005.

The Company won new business from both the domestic

as well as international markets during 2006 for new models

of Suzuki, General Motors, Hyundai and also for

Schefenacker and SVS Spain. The Chennai plant is now

focusing on backward integration through in-house injection

molding facility. The company remained a leader in the

domestic passenger car rear view mirrors with over 45%

market share.

Metal machiningOverview MSSL is also engaged in the manufacture of high precision

machined metal components as well as assemblies through its

manufacturing facilities in India and Germany.

Highlights• Addition of a new product category of parts for hydraulic

cylinders.

• Introduction of high precision critical components for

automotive applications.

• Expansion of the customer base.

Outlook • The business expects to capture growing opportunities in

the automotive segment.

• Attractive export potential.

• Proposed capacity expansion to widen the product range.

• Leveraging a prudent synergy of India’s low-cost advantage,

coupled with technology-intensive production in Europe.

Constituent companies

Mothersonsumi Reiner GmbH


Systems Limited

Focus: Specialisation in metal machining and plastic-metal

combined parts. The Company specialises in metal turning and

plastic-metal combined parts. The product range includes

turned parts, metal/plastic combination, cubic parts and

extruded aluminium shapes. MSR also supplies to leading tier-I

manufactures in the European automotive industry. Located in

Donaueschingen, Germany.

Motherson Innovative Engineering

Solutions

A division of Motherson Sumi Systems Ltd.

Focus: Contract manufacturing of high precision machined

metal components and assemblies for a wide range of

applications including computers, test and measuring

equipment, scientific equipment, machinery parts, valve body

parts and other precision applications.

Others

Global Environment Management

(FZC)

A joint venture with E-Compost, Australia.

Focus: Provides systems for recycling

waste. The product Aerobin incorporates patented aerating

technologies to reduce composting time. MSSL has exclusive

rights for the manufacture of the Aerobin.

Performance: Currently the sale activity for GEM (FZC) relates

to the market launch of the Aerobin in Australia. The

Company is undertaking market research for launching the

product in Europe. New patents were lodged for the final

production design of the Aerobin, which incorporates new

patentable technology over and above the original patents.


(Australia) Pty Ltd.

A subsidiary of Global Environment

Management (FZC)

Focus: Marketing of Aerobin in Australia.

Performance: The Aerobin composter was launched in the

Australian market in May 2006, receiving excellent media

publicity. Aerobin has attracted strong interest from the local

bodies as well as large waste management contractors.

Australia has experienced the worst drought on record

affecting the sale of all garden and garden-related products.

After launching the business on the Internet, the Company is

working on tie-ups with leading hardware chains to market

the product. The Aerobin is now sold in leading nurseries and

through 200 stores across Australia.

Motherson PUDENZ WICKMANN

Limited

A joint venture between MSSL and

WICKMANN Group (part of Littelfuse Inc.,

USA).

Focus: Manufactures blade type fuses for the automotive

industry. Also manufactures fuse holders and fuse holder

systems for varied applications in the electronics, electrical and

automotive industries. Actively engaged in the distribution of

electronic circuit protection components manufactured under

Littelfuse family of brands. Supplies to leading OEMs in

consumer electronics, test and measurement,

telecommunications, industrial, automotive and electronics

contract equipment manufacturing (CEM) industry segments.

Customers in India, SAARC and Middle East.

Performance: Revenues of Rs. 56.64 million in 2006-07

compared with Rs. 63.12 million in 2005-06.



Targets set for 2010• Make MSSL a Billion Dollar Company.

• Exports should comprise 60% of our consolidated turnover.

• Contribution from a single customer not to exceed 20%.

• Strive to maintain an ROCE of 40%.

• Shift our stated dividend policy of 40% payout of the

Company’s profits to 40% payout of our consolidated profits.

Moving towards the targets set for2010•

Make MSSL a Billion Dollar Company: With healthy growth

across most segments, coupled with new business generated

from our acquisitions, we have better visibility of the target.

• Exports should comprise 60% of our consolidated turnover:

Our sales to customers outside India have been growing at a

healthy pace. With the launch of many new models in the

domestic market, as well as many car makers announcing their

plans to make India a hub for the export of small cars, we will

continue to be more focused on India, which may cause this

target to change.

• Contribution from a single customer to the total turnover

not to exceed 20%: With the largest customer having a share

of 18% in our consolidated revenues for 2006-07, we feel that

we now have a fairly de-risked model.

• Strive to maintain an ROCE of 40%: We remain focused on

generating positive cash flows as well as achieving an ROCE of

40% by 2010, even if it means sacrificing a part of our

revenue growth. In the short-term, the ROCE has received a

beating due to large investments being made (particularly in

land and building) and FCCB funds not being utilised fully.

• Shift our stated dividend policy of 40% payout of the

Company’s profits to 40% payout of the consolidated profits:

This year, apart from a dividend payout ratio of 36% on

standalone profits and 32% of consolidated profits, the Board

has proposed a bonus issue in the ratio of 1 against 2,

enhancing market liquidity.

Moving aheadMoving aheadwith speed and confidence

The sales performance of the company during the year 2006-07 on stand-alone and consolidated bases is as follows:

Rs. in million

Sales 2006-07 2005-06 % Increase /(Decrease)

Standalone

Domestic 8,376.43 5,601.31 49.5

Exports 2,435.76 1,532.98 58.9

Total 10,812.19 7,134.29 51.6

Consolidated

Domestic 9,751.45 6,787.74 43.7

Exports 5,524.29 3,367.65 64.0

Total 15,275.74 10,155.39 50.4

Both standalone and consolidates sales increased by over 50%.Consolidated sales outside India increased by 58.20% to Rs.5524 million moving from 33% to 36% of total sales. Therevenues of automotive and non automotive business havebeen as follows:

Rs. in Million

Total Revenue 2006-07 % of 2005-06 % of total total

Standalone

Automotive 9,368.20 85.2 6,259.19 85.4

Non automotive 1,760.65 16.0 1,022.52 13.9

Unallocated (131.78) -1.2 48.75 0.7

Total 10,997.07 7,330.46

Consolidated

Automotive 13,007.24 84.0 8,819.45 84.5

Non automotive 2,654.69 17.1 1,590.87 15.2

Unallocated (168.60) -1.1 29.82 0.3

Total 15,493.33 10,440.14

Domestic automotive industryDuring the year, the Indian automotive industry, in particularthe passenger car market has shown an impressive growthover 2005-06. The growth of the Indian Automotive Industryduring the last 3 years including 2006-07 was as follows:

Figures in ‘000

Segment 2006-07 2005-06 2004-05

Passenger Vehicles:

Numbers in thousand 1545 1309 1210

Growth Rate (%) 18.0 8.2 22.2

Commercial Vehicle:


Growth Rate (%) 33.0 10.6 28.7

Two Wheelers :


Growth Rate (%) 11.1 16.4 16.1

The passenger car and SUVs market has crossed 1.5 million.All the segments have shown a healthy growth rate of over10%. Though the growth rate in two wheeler market is lowerthan the previous year, it is mainly on account of lower sales ofscooters.

On the whole, in a trend similar to the last year, MSSLachieved significantly higher growth rate compared todomestic automotive industry. This was supported byincreased business with customers within India as well as asignificant increase in overseas sales. MSSL has been able tocreate value addition in terms of increased content per car aswell as start of supplies to existing customers for new modelslaunched by them in 2006-07.


Management Discussion And AnalysisMotherson Sumi Systems Limited (MSSL) manufactures high performance components assemblies andmodules, mainly catering to the requirements of Automotive Industry in India and abroad.


The performance of the company in terms of each of theproduct group during 2006-07 has been as follows:

Rs. in million

Sales 2006-07 2005-06 %increase

Standalone



Rubber / metal machined components/ 472.89 389.76 21.3mirrors and others

Total 10,812.19 7,134.29 51.6

Consolidated



Rubber / metal machined components/ 1,546.56 1,393.94 10.9mirrors and others

Total 15,275.74 10,155.39 50.4

Wiring harnessesWiring harness manufacturing contributes to over 64% of thetotal turnover. With 20 wiring harness and wiremanufacturing locations spread over India, Sri Lanka, Sharjahand Europe, wiring harness operations serve a spectrum ofcustomers in India, Asia, Europe and USA. The existingcustomer base of MSSL spans the entire cross-section of theautomotive industry including passenger cars & MUVs, twowheelers, and commercial vehicles, tractors and farmequipment, earthmoving and material handling equipment,electrical & electronics and medical systems.

Domestic market MSSL, along with its subsidiaries and joint ventures, holdsapproximately 65% in the domestic passenger car market,based on assessment done on the numbers of vehiclesmanufactured. The company developed wiring harnesses fornew models, Zen Estillo, Swift (Diesel), Wagon – R (Duo)launched by MUL, Civic (Honda Siel Cars), Verna (Hyundai Motors). The company further consolidated itsposition with Mahindra & Mahindra as well as Tata Motors inthe domestic markets. The company started supplies of wiringharnesses to two more locations of Tata Motors forcommercial vehicles. In the motor cycle segment and other 2wheeler segments, the company started supplies harnesses toHero Honda, Honda Motorcycles Scooter India, Yamaha Indiaand Bajaj Auto for their new models. The company’s

customers in the off the road segments also contributed tooverall growth in the company’s revenues.

Rs in million


Standalone

Domestic 5,715.98 4,195.11 36.3

Exports 1,653.63 1,143.30 44.6

Total 7,369.61 5,338.41 38.0

Consolidated

Domestic 7,041.19 5,166.93 36.3

Exports 2,761.65 1,828.91 51.0

Total 9,802.84 6,995.84 40.1

ExportsThe total exports of wiring harnesses on consolidated basisreached a new high level of Rs 2.7 billion crossing Rs 2 billionmark. The exports from India also grew by over 44 %, at Rs 1.65 billion. The growth in exports from India resulted inincrease of supplies to all its customers, mainly Piaggio, JCBamford (UK), Ducati, MBK and exports to SWS, which grewfrom Rs 341 million in 2005-06 to Rs 404 million in 2006-07.MSSL also added new overseas customers during the year thatinclude Karcher, Beldeyama, Antonio Carraro, Same Deutz andAprilia.

With acquisition of ASL Systems MSSL has also added newcustomers and new segments like buses, trailers, and specialpurpose vehicles. The new range of modules integrated withwiring harnesses has opened opportunities for MSSL to supplysuch value added modules to its existing customers.

Exports to collaborators are slated to improve further withestablishment of a new joint venture with SWS at Sharjah formanufacturing and supply of wiring harnesses to SWS grouplocations. The exports to collaborator from Sharjah grew to Rs 476 million during 9 months as against Rs 469 millionduring 2005-06.

Backward integrationIn line with growth in the wiring harnesses sales to customers,the wire division, including Sri Lanka, also recorded thehighest sales of 642300 Km as against 592259 km in theprevious year. However, the main raw material, copper beingused by the wire division saw unprecedented increase ininternational prices. The LME copper touched a peak of US $8046/MT in May 2006, overall on an yearly average basis, the

LME increased by 70% as compared to previous year.

With the constant focus on backward integration, thecompany decided to invest in manufacturing facility forextruded products including PVC tubing and corrugatedtubing which are critical components for wiring harnessmanufacturing.

This has helped the company in having better control onquality and delivery and has also added to the flexibility andspeed in developing new products, and responding tofluctuations in customer demands. In the coming years, thiscompany will focus on other auxiliary product requirements ofthe wiring harness business and will act as a vehicle forbackward integration for more and more products

Polymer The polymer division of the company Motherson AutomotiveTechnologies & Engineering (MATE) added new products to itsrange of injection molded components, assemblies, blowmolded components, and integrated modules. In order tokeep pace with increasing customer requirements MATE hascontinuously upgraded its existing facilities and added newfacilities. At present MATE has 10 manufacturing facilities inIndia spread over Noida, Manesar, Bangalore, Chennai andPondicherry. MATE has enhanced its capacity by adding two3200 Ton injection molded machines to manufacturecomponents larger than its earlier capacity of 3000 Tons.

DomesticThe year included full year sales of IP modules, bumpers anddoor trims along with other molded components andassemblies for Ford Fiesta. The division also stared supplies ofBumpers and IP with Ducts for Honda Civic. MATE is nowemerging as a full system solutions provider with a widerrange of modules. MATE is focusing on adding new valueadded modules that require specialised engineering abilities.

Rs. in million


Standalone

Domestic 2,443.04 1,254.96 94.7%

Exports 526.65 151.16 248.4%

Total 2,969.69 1,406.12 111.2%

Consolidated

Domestic 2,246.07 1,255.12 79.0%

Exports 1,680.27 510.49 229.1%

Total 3,926.34 1,765.61 122.4%

The business of Motherson Advance Polymers, which wasmerged with MSSL, has been placed under MATE. With thisMATE has acquired wide range of products for white goodsand electronics segments and added new customers includingLG and Samsung. The turnover from this business for thecurrent year is Rs.521.53 million against previous year turnoverof Rs. 94.14 million

ExportsMATE grew its exports from Rs. 151 million to Rs. 527 millionregistering a 3.5 times growth. The division started export ofGrab handles to Ford of Europe through MSSL Mideast, HVACparts and interior trim parts to Australia. The division alsoexported Aerobins to group company GEM which launchedthis product in Australia. The details of this are discussed inanother section under GEM.

The company’s deemed export from Pondicherry unit remained at the same level of Rs. 100 millionapproximately. The supplies for the current products areexpected to be phased out in 2007-08. The company is closely working with the customer to add new products forfilling the capacity.

On consolidated basis the sales to the customers outside Indianearly tripled to 1.48 billion. In addition to the revenues beingcontributed by the company’s subsidiaries G&S, MTL andGEM, the revenues were also contributed by the followingacquisitions:

1. MSSL Australia Pty Ltd. was incorporated in Oct. 06 whichacquired the business of door trims from Huon Corporation, inreceivership, for direct supplies to GM Holden, Australia. Whiledue to the planned phase out of this model by GM Holden,the supplies of door trims will end in the current year, thepresence in Australian market has enabled the company toacquire the businesses of Empire Rubber. It offers ampleopportunity to do more business in plastic molding as well asin new acquisitions.

2. FP Formagrau s.r.o was acquired by MSSL GmbH theEuropean subsidiary of MSSL w.e.f. 1st Dec. 2006. This 100%acquisition has given the company a manufacturing base inCzech Republic where most of the tier 1 suppliers to theEuropean car market have set-up the facilities.

3. The company also purchased assets from the receiver ofWippermann for which majority of the business was relocatedto Sharjah and Czech Republic.

The performance of these companies is discussed in therespective sections in the MDA.



Performance of Subsidiaries & Joint VenturesThe summary of performance of company subsidiaries and joint ventures is as follows:

Rs in million

MSSL Capital Net Profit Capital Holding (%) Employed Sales After Tax Expenditure

2006-07 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06

Subsidiary / Joint VenturesMSSL Mideast (FZE) 100 1,460.03 935.59 1,194.90 1,040.15 209.53 145.92 10.39 179.49

Motherson Sumi Wiring System Ltd. 51 464.67 – 248.04 – 1.20 – 314.19 –

G & S Kunststofftechnik GmbH 100 102.00 108.58 785.68 169.11 (40.17) 75.44 50.90 14.10

Mothersonsumi Reiner GmbH 100 17.92 144.41 477.71 268.63 (69.80) (29.34) 129.27 232.49

FP Formagrau s.r.o. 100 41.31 – 19.50 – 9.77 – 82.97 –

MSSL (GB) Ltd. 100 76.01 0.11 145.44 – (27.96) (0.27) 4.54 0.05

MSSL Tooling (FZE) 100 5.00 32.16 31.23 31.54 (43.25) (5.78) 51.84 6.38

Global Environment Management (FZC) 50.07 20.23 8.63 0.10 – (9.11) (16.69) 0.36 –

Global Environment Management Australia Pty Ltd. 100 9.91 – 39.32 – (42.96) – – –

MSSL Australia Pty Ltd. 80 255.16 – 42.04 – 8.62 – 9.56 –

Motherson Electrical Wires Lanka Pvt. Ltd. 100 215.78 180.73 755.64 411.25 126.99 60.03 2.76 20.04

Motherson PUDENZ WICKMANN Ltd. 56.13 31.03 48.55 51.73 58.19 7.48 8.99 0.03 0.45

Woco Motherson Ltd. (FZC) 33.33 126.88 137.50 290.01 252.91 92.04 87.57 1.00 0.95

Woco Motherson Advanced Rubber Technologies Ltd. 33.33 347.11 250.69 221.98 – 26.75 (18.90) 250.74 251.09

Woco Motherson Elastomer Ltd. 33.33 167.28 166.17 333.31 384.14 14.90 34.53 27.04 5.13

Schefenacker Motherson Ltd. 49 133.34 108.53 499.34 446.65 25.94 17.75 29.29 24.06

Kyungshin Industrial Motherson Ltd. 50 572.54 365.55 2,119.89 1,610.80 142.29 106.27 56.32 17.76

Balda Motherson Solutions India Ltd. 40 856.60 1.94 – – (91.80) (0.57) 699.01 1.81

Support CompaniesMSSL Ireland Pvt Ltd. 100 4.27 1.71 16.61 26.78 5.72 7.85 1.97 0.07

MSSL (S) Pte Ltd. 100 54.66 2.25 – – 0.78 (0.45) 0.18 1.55

MSSL GmbH 100 47.21 153.67 100.22 6.86 (66.37) (1.89) 62.84 5.67

MSSL Mauritius Holding Ltd 100 121.82 89.32 – – 38.49 18.53 – –

MSSL Handels GmbH 100 5.61 3.65 1.73 0.32 0.24 (2.93) – –

Machined metal components,rubber components, mirrors andothers: Machined metal components business received a renewedfocus with forming of a new division Motherson InnovativeEngineering Solutions (MINES). MINES moved from a singlecustomer model to a multi customer – multi segment model.A significant addition has been introduction of componentsfor automotive applications.

Other product groups of the company, namely rubber, mirrors,fuse and fuses related components have done well and theperformance of these businesses has been discussed in details

under ‘Performance of Subsidiaries and Joint Ventures’.Rs. in million


Standalone

Domestic 217.41 151.24 43.8

Exports 255.48 238.52 7.1

Total 472.89 389.76 21.3

Consolidated

Domestic 464.19 365.69 26.9

Exports 1,082.37 1,028.25 5.3

Total 1,546.56 1,393.94 10.9

Notes : 1 The following exchange rates have been considered for 2006-07 (rates used in 2005-06 given in brackets) :(a) Euro = Rs 57.93 (Previous year Rs 53.89) • (b) Sri Lankan Rs = Rs 0.3994 (Previous year Rs 0.442) • (c) Sing $ = Rs 28.59 (Previous year Rs 26.63) •(d) Aus $ = Rs 35.07 (Previous year Rs 31.67) • (e) GBP = Rs 85.37 (Previous year Rs 71.02)

Performance of subsidiaries and joint ventures has beendiscussed in detail in the section on business overview andforms a part of the MDA.

Support subsidiaries:MSSL GmbH, Germany (100% subsidiary of MSSL throughMSSL Mideast): MSSL GmbH located at Gelnhausen nearFrankfurt, acts as the holding company and corporate officeproviding support to the European entities. During the year2006, MSSL GmbH has charged to P&L A/C an amount ofEuro 626K (approx.) incurred on design approvals anddrawings for the building proposed to be constructed on theland purchased during the year.

MSSL Mauritius Holdings Ltd. [MMHL], Mauritius (MSSLHolding 100%): The company, incorporated in Mauritius, isholding investments in Woco Motherson Ltd. (FZC) Sharjah,MSSL Ireland Pvt. Ltd., Ireland, MSSL Toolings (FZC), Sharjahand Global Environment Management (FZC), Sharjah. Duringthe year, the company had an income of Euro 0.65 million, byway of dividend.

MSSL Ireland Pvt. Ltd. [MSSL-IR], Ireland (100% subsidiaryof MSSL Mauritius): The company, incorporated in Ireland,provides design services, mainly to wiring harnessescustomers. It also provides logistics support services to MSSLand MSSL Mideast enabling them to supply on line to thecustomers. During the year, the company had net sales &services of Euro 0.669 million as compared to Euro 0.497million in the previous year. During the year, the company hada net profit of Euro 98793.

MSSL (S) Pte Ltd., Singapore (MSSL Holding 100%): Thecompany, incorporated in Singapore, provides support toMSSL and its group companies mainly for internationalpurchasing. During the year, the company earned a serviceincome of S$ 48,000 as against S$ 34,500 in the previousyear. During the year the company also setup a joint venturesubsidiary company MSSL Australia Pty. Ltd. As describedearlier, MSSL Australia Pty. Ltd, purchased assets and businessrelating to door trims in Australia. The first financial year ofMSSL Australia will be ending on 31st Dec. 2007. However forpreparing the consolidated financials the company hasconsidered sales of AUD 1.20 Million and PAT of AUD 0.25million for the period ending 31st Dec. 2006 based onmanagement accounts.

MSSL Handels GmbH, Austria (MSSL Holding 100 %): Thecompany, incorporated in Austria, provides support to MSSLby coordinating with the customers. During the year, thecompany had net sales of Euro 29,185 with a net profit ofEuro 4212.

Loans and funds position:The position of loans as on 31-3-2007 is as follows:

Rs. in million

Loans Consolidated Standalone31-3-07 31-3-06 31-3-07 31-3-06

Short terms loans 774.98 770.01 618.15 669.71

Long term loans 912.82 779.77 447.82 405.13

Foreign Currency Convertible Bonds 2,914.08 2,714.69 2,914.08 2,714.69

Total 4,601.88 4,264.47 3980.05 3,789.53

The increase in the amount of FCCB bonds is on account ofexchange fluctuation in Euro- Rupee parity.

Foreign Currency Convertible Bonds (FCCB): During the year2005-06, the company had raised long term funds of Euro50.30 million, by way of Foreign Currency Convertible Bonds(FCCBs). These Bonds are convertible into shares at the optionof Bondholders within the tenure of the Bonds at a share priceof Rs 111.15 per share at a fixed exchange rate of Euro1 = Rs52.01. As per current guidelines, these funds can be utilizedeither for expansion of the group’s manufacturing operationsin India and overseas acquisition and investmentsinternationally. The company has bank deposit of Euro 5.80million (including interest on deposits) equivalent to Rs 338.43million as on 31-3-2007, out of funds raised by FCCB.

In consistence with the conservative policy being followed byMSSL, the premium payable on redemption on bonds on 16thJuly 2010, in case the Bonds are not converted into shares, isbeing amortized as charge to P/L account as Finance Cost,apart from amortization of issue expenses. In addition, theexchange fluctuation on the principal amount together withthe amortized amount of premium is also accounted asGain/(Loss) on exchange fluctuations. It may be noted thatthere is no cash outflow either on account of charge to P/Laccount in respect of amortized amount of premium orexchange fluctuation. This amount, net of tax, shall be addedback to P/L or reserves in case of conversion.

The amount being charged to Profit & Loss Account is asfollows:

FCCB costs Rs. in millionNon Consolidated Consolidated

06-07 05-06 06-07 05-06

- Issue expenses 14.76 11.07 14.76 11.07 - Premium 155.65 110.25 155.65 110.25 - Exchange fluctuations (net) 77.92 6.32 77.92 6.32 - Interest income (68.26) (42.11) (34.92) (27.02)

NET FCCB COST 180.07 85.54 213.41 100.62



Profitability of the company: During the year, the company’s profitability was as follows:

Rs. in million

2006-07 2005-06 % Increase

Standalone

Net sales 10,812.19 7,134.29 51.6

Other income 184.88 196.17 -5.8

Raw material consumed 6,396.25 3,978.11 60.8

Employee cost 860.73 662.69 29.9

Other expenditure 1,698.14 1,268.50 33.9

PBIDT 2,041.95 1,421.17 43.7

Interest (net) 177.93 124.87 42.5

Depreciation 447.45 357.27 25.2

Profit before tax 1,416.58 939.03 50.9

Profit after tax 1,141.77 826.70 38.1

Earning per share 4.86 3.52 38.1

Consolidated

Sales 15,275.74 10,155.40 50.4

Other Income 217.58 284.74 -23.6

Raw Material Consumed 8,639.48 5,602.54 54.2

Employee Cost 1,682.49 1,024.48 64.2

Other Expenditure 2,664.02 1,932.77 37.8

PBIDT 2,507.34 1,880.35 33.3

Interest (Net) 237.97 158.25 50.4

Depreciation 646.36 463.33 39.5

Profit Before Tax 1,623.01 1,258.77 28.9

Profit After Tax 1,286.82 1,091.53 17.9

Earning Per Share 5.51 4.56 20.8

Other incomeDuring the year consolidated financials include one timewaiver of liabilities of 41.57 million for 2006-07, (PreviousYear : Rs. 74.91 million).

Raw material costThe raw material costs in percentage terms also vary with thechanges in product mix, eg: modules use higher bought–outcontent. During the year price of copper, which is one of thekey material used by wiring harnesses, had unprecedentedrise. The company makes continuous efforts to reduce the rawmaterial costs through VA/VE, cutting wastages year on yearand by alternate sourcing.

Interest costsThe interest charge includes an amount of Rs. 170.41 millioncharged to P/L account on account of premium payable onredemption of FCCB bonds, in case the bonds do not getconverted and issue expenses are amortized over the period ofbonds. The deposits with the banks earned an income of Rs.34.37 millions during the year.

Earning per shareThe EPS on consolidated basis is Rs. 5.51 per share, having anincrease of 20.9% over the previous year. However this EPS has been considered on the existing capital base withoutdilution of equity on account of conversion of FCCB bondsinto shares.

Capital expenditureDuring the year, the company has incurred an amount of Rs. 1,549 million on consolidated basis and Rs. 853 million onstandalone basis. This includes the major expenditure on thefollowing:

1. Construction of building for wiring harnesses at Faridabadto cater to requirements of Haryana based customers. Thisincluded consolidation of selected manufacturing unitsfrom Delhi and Noida as well as expansion of overallcapacity;

2. Purchase of land at Chennai and Pune;

3. Expansion of molding facilities at Chennai, includinginstallation of large sized injection molding machine of3200 Ton;

4. Expansion of facilities at Manesar including installation of3200 Ton machine;

5. Setting up of unit for metal machining at Chennai ;

6. Expanding capacity of KIML (Joint Venture) at Chennai inline with expansion plans of Hyundai Motors;

7. Setting up of Greenfield facilities at Chennai for BaldaMotherson Solution India Ltd. (Joint Venture);

8. Purchase of land at Germany by MSSL GmbH (subsidiary)

9. Purchase of assets form the receiver of Wippermann, installed at Germany, Czech Republic andSharjah;

Based on plans, the company expects to incur an amount ofRs 1500 to Rs 1750 million on capital expenditure in this year.

Risk & concerns:The company operates mainly in automotive componentsindustry, which is highly competitive. At the same time, thecyclical nature of automotive industry and economic growthaffect the performance of our company. The introduction offeatures and models in the industry is driven by consumers’preferences rather than OEMs’ choices. Whenever new modelsare introduced the market expands correspondingly and sodoes the demand for components.

The company is conscious of risks associated with the businessand has been de-risking the model by developing a diversecustomer base together with focus on increasing exports. The

company is also acquiring overseas companies, apart formsetting up units in overseas location with distinct locationadvantages to reduce the dependence on any single location,product or market segment.

Human resources:We consider our human resource to be our most importantassets. We have developed a culture where a sense ofbelongingness and ownership of work are the key motivatingfactors. In our manufacturing units, for each activity there is aperson declared as the owner of that activity, who takes theonus of maintaining and improving that activity. Thisinvolvement spans from on the job activities to extra-curricular

Cash flowSummary of cash flow during 2006-07 on consolidated and standalone basis is as follows:

(The details of funds utilization during the year is included in Cash Flow)

Standalone Consolidated

2006-07 2005-06 2006-07 2005-06

Sources of Cash

Operating profit before working capital 2,159 1,383 2,750 1,834

Non-operating income 45 26 0 0

Refund of loan from subsidiary - - - 47

Increase of debt

- Foreign Currency Convertible Bonds - 2,726 - 2,726

- Other loans 188 383 409 457

Proceeds from minority Shareholders' Consideration - - 115 2

Total 2,392 4,518 3,274 5,066

Application of cash

Net capital expenditure 853 1,053 1,457 1,748

Increase in working capital 1,058 467 1,467 674

Net debt repayment 194 371 300 457

Investment in subsidiaries 1,066 147 - -

Loan to subsidiary (140) 476 59 103

Interest charge & lease rental 5 18 106 62

Purchase of minority interest in subsidiaries - - - 12

Dividend payout 307 267 314 271

Corporate taxes 340 198 400 245

Total 3,683 2,997 4,103 3,572

Increase / (Decrease ) in Cash & cash equivalents (1,291) 1,521 (829) 1,494


Rs. in million


activities including cultural programs and competitions.

We continuously make efforts to upgrade the skills of ouremployees through training and development programs. OurEndeavour is to provide world class training to create a worldclass work force. These efforts have started showing results.Our team participated in the global skill Olympics organizedby our collaborator SWS, and won one silver and one bronzemedal.

Quality Circle movement has been gaining more strength inthe company. We have more than 160 quality circles operatingwithin MSSL and its subsidiaries & JVs. On a national level ourquality circles have been placed in Excellent Category in NQCCat Ernakulam, excellent category in the Delhi Chapter QCCompetition organised by QCFI. Our quality circles have alsowon CCQC Distinguished Case Study Award at thecompetition held by QCFI, 1st Runner Up at QC Conventionorganised by ACMA, Meritorious Award at 20th AnnualConvention organised by QCFI, first prize in QC Competition –Northern Region organised by CII, Delhi Chapter and first prizeat TKML Supplier Association.

Our global footprint has provided a platform where people ofdifferent nationalities, languages and cultures are workingtogether. This has helped us in giving a global exposure andunderstanding to our employees. This also helps us inunderstanding and serving our customers across the globe in abetter way.

With a view to share its growth with the employees,Samvardhana Motherson Limited has given the option ofshares to employees of the Sumi Motherson Group.

Environment, health and safetyWe pay utmost attention to safety of our employees, relatedcommunities and environment at large. We are anenvironment conscious company. Most of our units areaccredited with ISO 14001 certification.

We have been developing products that help in improvingenvironment. Our subsidiary Global Environment Management

is dedicated to developing products for environmentimprovement. Their first product Aerobin is a revolutionaryproduct which employs patented Aereating technologieswhich reduce time required for composting in recycling ofwaste.

Opportunities & future prospectsLast few months of 2006-07 and the first quarter of 2007-08have witnessed a sharp increase in interest rates along with oilprices giving no indication of reduction in near future.Weakening of dollar would also have a short term effect onprofitability as export realization in rupee terms will comedown.

Notwithstanding the above, on the positive side the Indianeconomy registered a growth of 9.2%, a record in last 18years. The automotive industry is upbeat about newinvestments and volumes are growing. With clear focus on OEsupplies and our strong relationship with our customers weexpect to register significant growth. Our exports are growingfast and will be a major factor in future growth. With ourdiverse product range and support of our customers we seeourselves well on the course of our stated target of becominga billion dollar company by 2010.

Cautionary statement Certain Statements made in the Chairman’s Review andmanagement Discussions and Analysis Report and othersections relating to the company’s objectives, projections,outlook, expectations, estimates etc. may constitute ‘forwardlooking statements’ within the meaning and scope ofapplicable laws and regulations. Actual results may differmaterially from such expectations, projections etc. whetherexpress or implied. Several factors could make significantdifference to the company’s operations. These include climaticconditions, economic conditions affecting demand and supply, government regulations and taxations, naturalcalamities etc. over which the company does not have directcontrol.


Directors’ Report

Your Directors have the pleasure in presenting the 20th Annual Report together with the audited accounts. The key financial

figures on the profitability for the year ended March 31, 2007 are as follows:

Financial performance (Rs. in million)

Year ended Year ended

March 31, 2007 March 31, 2006

Gross sales 12384.72 8123.02

Net sales 10812.19 7134.29

Gross profit before depreciation, interest and tax 2041.95 1421.17

Less: Depreciation 447.44 357.27

Less: Interest 177.93 124.87

Profit before tax 1416.58 939.03

Less: Provision for taxation 274.80 112.33

Profit after tax 1141.78 826.70

Add: Balance brought forward 647.18 328.49

Net profit available for appropriation 1788.96 1155.19

Appropriations:

March 31, 2007 March 31, 2006

Proposed dividend 352.34 270.12

Tax on dividend 59.88 37.89

Transfer to general reserve 250.00 200.00

Balance carried to balance sheet 1126.74 647.18


OperationsThe Company recorded a turnover of

Rs. 10,812.19 million during the year

compared to Rs. 7,134.29 million in

the previous year and the Company

achieved a profit after tax of

Rs. 1,141.78 million as against

826.70 million during the previous

year. The Company’s performance is

discussed at length in Management

discussion and analysis, which forms a

part of the Directors’ Report.

DividendYour Directors recommended a

dividend of Rs. 1.50 per share for the

year ended March 31, 2007. The

dividend, if declared as above, will be

paid to those shareholders whose

names appear in the register of

members as on July 30, 2007. The

total cash outgo on account of a

proposed dividend is Rs. 412.22

million (compared to previous year’s

Rs. 308.01 million) which represents

36% of profit after tax.

Consolidated financial statements In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard

AS – 23 on Accounting for Investments in Associates and AS –27 on Financial Reporting of Interests in Joint Venture in

Consolidated Financial Statements, your Directors have the pleasure in attaching the Consolidated Financial Statements

which form a part of the Annual Report. The summary of consolidated results is as follows:

(Rs. in million)

For the year ended For the year ended

March 31, 2007 March 31, 2006

Gross sales 17064.80 11311.42

Net sales 15275.74 10155.40

Profit before interest, depreciation and tax 2507.34 1880.35

Share of profit in associate 1.70 2.16

Profit before Tax 1624.71 1260.93

Provision for Tax 337.89 169.40

Profit after Tax 1286.82 1091.53

Minority Interest (8.37) 20.33

Profit after Tax and minority interest 1295.19 1071.20

The performance of the Company on consolidated basis is discussed at length in the Management discussion and analysis.


FinanceThe Company continues to enjoy

“A1+” rating by ICRA for its

commercial paper / short-term debt

programme of Rs 500 million.

Energy conservation,technology absorptionand foreign exchangeearning and outgo Particulars required to be disclosed

under the Companies (Disclosure of

Particulars in the Report of Board of

Directors) Rules, 1988 are annexed

hereto in Annexure ‘A’.

Particulars of employeesAs required by the provisions of

Section 217(2A) of the Companies

Act, 1956, read with Companies

(Particulars of Employees) Rules,

1975, the names and other particulars

of employees are set out in the

Annexure B to the Directors’ Report.

Management discussionand analysisManagement discussion and analysis

is enclosed and forms a part of the

Director’s Report.

ExportsThe Company’s exports during the

year have grown to Rs 2,436 million

from Rs. 1,533 million, achieving a

growth rate of 59%. The Company

continues to make its efforts towards

achieving higher growth by providing

cost competitive quality solutions to

its customers. In addition, the

Company has set up offices, mainly in

Europe, to constantly service the

customers as well as scan the markets

for growth.

Amalgamations During the year Motherson Advance

Polymers Limited, a 100% subsidiary

of the Company amalgamated with

the Company. The amalgamation is

operative retrospectively from

February 1, 2006.

Changes in capitalstructure During the year under review the

authorised share capital of your

Company has been increased from Rs.

353,000,000 comprising

353,000,000 equity shares of Re. 1

each to Rs. 803,000,000 comprising

803,000,000 equity shares of Re. 1

each pursuant to merging of

authorised share capital of Motherson

Advance Polymers Limited with the

Company’s authorised share capital

pursuant to the order of the

Honourable High Court of Judicature

of Delhi.

Subsidiaries / Jointventures Your Company purchased the

business and assets of ASL Systems

Limited (in administration) from the

administrator on August 04, 2006

through 100% owned UK subsidiary,

MSSL GB Limited.

Your Company through its

subsidiaries, Motherson Elastomers

Pty Limited and Motherson

Investments Pty Limited, has acquired

the business and assets of Empire

Rubber ( Bendigo, Victoria, Australia),

which was engaged in rubber mixing

and manufacture of rubber extruded

components, from Huon Corporation

Pty Limited (in liquidation ).

In addition to the above mentioned

subsidiaries the Company has the

following 100% subsidiaries viz. MSSL

Mideast (FZE), MSSL Mauritius

Holdings Limited, MSSL Handels

(GmbH), Motherson Electrical Wires

Lanka Pvt. Ltd., MSSL GmbH (through

MSSL Mideast), MSSL Tooling (FZE)

(through MSSL Mauritius), and MSSL

Ireland Pvt Limited (through MSSL


Mauritius), MSSL(S) Pte Ltd., MSSL

(GB) Ltd. (through MSSL Mideast),

Motherson Sumi Wiring System

Limited (FZC) (through MSSL

Mideast), G & S Kunststofftechnik

GmbH (through MSSL GmbH),

Mothersonsumi Reiner GmbH

(through MSSL GmbH), MSSL

Australia Pty Ltd. (through MSSL (S)

Pte.), Global Environment

Management (FZC) (through MSSL

Mauritius), Global Environment

Management Australia (through


(FZC)), FP Formagrau s.r.o (through

MSSL GmbH), and the joint venture

subsidiary is Motherson PUDENZ

WICKMANN Ltd.

The Company has also incorporated

two more subsidiaries namely

Motherson Elastomers Pty. Ltd. and

Motherson Investments Pty. Ltd

through MSSL Australia Pty Limited,

which is a subsidiary of MSSL S Pte

Limited (80% held by your Company)

in February 2007 to take over the

assets and business of Empire Rubber

(A division of Huon Corporation Pty

Limited (in receivership)). The

accounts of these subsidiaries are not

attached herewith since the first

financial year of these subsidiaries will

close on December 31, 2007.

The performance of the subsidiaries

and joint ventures are discussed at

length in Management discussion and

analysis and forms a part of the

Directors’ Report.

Particulars required asper Section 212 of theCompanies Act, 1956 As per Section 212 of the Companies

Act, 1956, your Company is required

to attach the Directors report, balance

sheet and profit and loss account of

the subsidiaries of the Company. The

Company applied to the Central

Government for an exemption from

such attachment as it presents the

audited consolidated accounts of the

Company and its subsidiaries in its

annual report. The Central Government

has granted exemption with respect to

the above mentioned subsidiaries. In

the opinion of the management, the

consolidated accounts present a full

and fair picture of the state of affairs

and financial condition and they are

accepted globally.

The annual accounts of the subsidiary

companies, along with related

detailed information shall be made

available to the holding and subsidiary

investors seeking such information at

any point of time. Any shareholder of

the Company/ its subsidiaries

interested in obtaining the annual

accounts of the subsidiaries may write

to the Secretary at the Registered

Office of the Company. The annual

accounts of the subsidiary companies

shall also be kept for inspection by

any investor in a registered office of

the Company and that of the

subsidiary companies.

Bonus issue The Board of Directors of the

Company recommended the issue of

bonus shares in the ratio of one share

for every two shares held by the

shareholders. The approval of the

shareholders of the Company is

sought in this regard.

Directors’ responsibilitystatementThe Directors confirm:

a) That in the preparation of the

annual accounts, the applicable

accounting standards were followed

and that no material departure were

made for the same;

b) That they selected such accounting

policies and applied then consistently

and made judgments 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 that

period;

c) That they took 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 they prepared the annual

accounts on a going concern basis.


DirectorsMr. Hiroto Murai and Maj. Gen.

Amarjit Singh (Retd.) retires by

rotation and being eligible, offer

themselves for reappointment at the

ensuing Annual General Meeting.

The approval of the members of the

Company is sought for reappointment

of Mr. Akihiko Yamauchi as wholetime

Director of the Company with effect

from January 18, 2007 for a period of

three years with increase in

remuneration payable with effect

from April 1, 2007 and increase in

remuneration payable to Mr. Pankaj

Mital, Manager of the Company,

designated as Chief Operating Officer

of the Company.

Audit CommitteeThe Audit Committee was constituted

in terms of the requirements set out

in Clause 49 of the Listing Agreement

with the stock exchange(s) on

Corporate Governance comprising Mr.

M. S. Gujral, Maj. Gen. Amarjit Singh

(Retd.) and Mr. Toshimi Shirakawa.

Mr. M. S. Gujral is the Chairman of

the Audit Committee.

Human resourcesThe relations with the employees and

associates continued to remain cordial

throughout the year. The Directors of

your Company wish to place on

record their appreciation for the

excellent team spirit and dedication

displayed by the employees of the

Company.

Corporate Governance A separate section on Corporate

Governance, forming a part of the

Director’s Report and the certificate

from the Company’s auditors

confirming compliance of conditions

on Corporate Governance as

stipulated in Clause 49 of the Listing

Agreement, is included in the Annual

Report.

AuditorsM/s. Price Waterhouse, Chartered

Accountants, retire at the ensuing

Annual General Meeting and, being

eligible, offer themselves for re-

appointment. The Company has

received a certificate from them

pursuant to Section 244(1B) of the

Companies Act 1956, confirming their

eligibility for re-appointment.

Fixed depositsThe Company has neither invited nor

accepted any deposits from the public

during the year. There is no unclaimed

or unpaid deposit lying with the

Company.

ListingThe shares of your Company are listed

at National Stock Exchange of India

Limited, Bombay Stock Exchange

Limited, Delhi Stock Exchange

Association Limited and Ahmedabad

Stock Exchange. The bonds of the

Company are listed at Singapore

Exchange Securities Trading Limited.

The listing fees for the year 2006-07

were paid well before the due date

i.e. April 30, 2007.

AcknowledgementYour Board of Directors would like to

place on record their sincere

appreciation for the wholehearted

support and contributions made by all

the employees of the Company, as

well as, customers, suppliers, bankers

and the governments of Delhi,

Haryana, Uttar Pradesh, Maharashtra,

Tamilnadu and Karnataka towards the

conduct of the efficient operations of

your Company. Last but not the least

the Board of Directors wish to thank

the shareholders of the Company and

the collaborators Sumitomo Wiring

Systems Limited and Sojitz

Corporation, Japan for their unstinted

support.

For and on behalf of the Board

for Motherson Sumi Systems Limited

Sd/-

V.C. Sehgal

Chairman

Place: Noida

Date: May 26, 2007


A. Conservation ofenergyThe various steps taken for energy

conservation during the year

comprised:

• Installation of occupancy sensor to

switch-off lights automatically

• Installation of auto switch-off timer

in fans

• Reduction in energy consumed by

replacing high wattage bulbs on

machines to low wattage LEDs.

• Energy saving tube lights installed

across all units

• Installed variable drive motors on

compressors

• Daylight sensors on street lights

• Optimised air-cooling systems

B Technology absorption

Form “B”Forms for disclosure of particulars

with respect to:

Research and Development

Specific areas in which R& D was

carried out by the Company

The Company has been continuously

working towards enhancing its

research and development

capabilities. The Company has

established new engineering centre at

Nasik in India. The Company now also

has engineering centre at MSSL GB

Ltd., UK for designing of wiring

harnesses and electronic control

panels.

The Company has been keeping pace

with the technological advances by

implementation of state-of-the-art

manufacturing best practices.

Research and Development was

carried out for the development of

the new models for several Indian and

overseas customers.

In process engineering the Company

introduced a silicon sealing machines

for earth terminals.

Benefits derived as a result ofthe above R & D

The benefits derived as a result of the

above research and development

programmes were in the form of

winning new businesses, building

confidence of existing customer and

reducing the time to market.

Future plan of actions:

In future we intend to invest more

resources in developing and acquiring

technology for future vehicle thus

building the capability to cater to the

expectation of our customers.

Annexure - AParticulars Required Under the Companies (Disclosure of Particulars in the Report ofBoard of Directors) Rules, 1988


Expenditure on R&D for the year ended March 31, 2007

Revenue Expenditure – Rs 17.95 Million

Capital Expenditure – Nil

Total R&D Expenditure – Rs. 17.95 Million

R&D expenditure as a percentage of total revenue – 0.17%

Technology absorption,adaptation and innovation

With the changing requirements in

wiring harness manufacturing, the

Company has acquired new machines

and processes as per the product

requirements. The Company has

successfully implemented a number of

Kaizen led improvements to enhance

productivity and manufacturing

efficiency.

The Company has set-up conveyorised

state-of-the-art paint shops at

Chennai and Noida to supply large

sized body colour matched painted

plastic parts to its customers.

Foreign exchange earning andoutgoThe activities relating to export,

incentives to increase exports and

developments of new export markets

are discussed below.

The Company has continued to

maintain focus and avail of export

opportunities based on economic

consideration. During the year, the

Company has exports (FOB value)

worth Rs.2039.65 million compared

to previous year’s Rs. 1486.94 million.

2. Total foreign exchange used and earned (Rs. in million)

a. Total Foreign exchange earned 2111.01

b. Total Foreign exchange used 3665.49

The detailed information on foreign exchange earnings and outgo is also furnished in the notes to the accounts

For and on behalf of the Board

for Motherson Sumi Systems Limited

Sd/-

Place: Noida V.C. Sehgal

Date: May 26, 2007 Chairman


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Company’s philosophy on CorporateGovernanceIn line with its philosophy on Corporate Governance the

Company practices transparency across all operations and

strives to maintain a professional approach and

accountability to enhance shareholder value.

Corporate Governance is looked upon as an important tool

by the management to run its business effectively and

efficiently. The Company has always focused on

maintaining the highest ethical standards to instill a culture

of integrity and professionalism.

Board of DirectorsThe Board presently comprises a majority of Non-executive/Independent Directors, who are eminent professionals with a rich

experience in business, finance and public enterprises. All the relevant information about the Directors is provided below:

Attendance at Board meetings andAnnual General MeetingsThe Board of Directors of the Company meets at least once

a quarter to review the quarterly results and other items on

the agenda, and also at the time of the Annual General

Meeting of the Company. The Board of Directors of the

Company met six times during the last financial year: (i)

May 26, 2006 (ii) July 27, 2006 (iii) August 7, 2006 (iv)

November 6, 2006 (v) December 5, 2006 (vi) January 30,

2007.

Name of the Director Executive/Non Executive/ Other Committee Committee

Independent Directorships memberships Chairmanships

held*

Mr. V. C. Sehgal Non-executive Chairman 9 5 NIL

Mr. Toshimi Shirakawa Non-executive Director 2 1 NIL

Mr. M. S. Gujral Independent Director 4 6 4

Mr. Hiroto Murai Non-executive Director 2 NIL NIL

Maj. Gen. Amarjit Singh (Retd.) Independent Director 2 4 NIL

Mr. Bimal Dhar Non-executive Director 7 2 NIL

Mr. A. Yamauchi Executive/Wholetime Director 2 1 NIL

Mr. Arjun Puri Independent Director 1 1 NIL

Mr. Masahiro Matsushita Non-Executive Director 2 NIL NIL

(Alternate Director to Mr. Hiroto Murai)

Mr. Pankaj Mital Executive/Chief Operating Officer 1 1 1

(Alternate Director to Mr. Bimal Dhar)

*Excluding private and foreign companies

Report on Corporate Governance


The Company placed before the Board the annual operating plans, performance of various units/divisions and all statutory

and other significant information to enable the Board to discharge its responsibilities of strategic supervision of the

Company and as trustees of stakeholders.

Name of the Director No. of Board Attendance at last

meetings attended Annual General Meeting

Mr. V. C. Sehgal 6 Yes

Mr. Toshimi Shirakawa 4 Yes

Mr. M. S. Gujral 6 Yes

Mr. Hiroto Murai NIL No

Maj. Gen. Amarjit Singh (Retd.) 6 Yes

Mr. Bimal Dhar 3 No

Mr. A. Yamauchi 6 Yes

Mr. Masahiro Matsushita 6 Yes

(Alternate Director to Mr. Hiroto Murai)

Mr. Pankaj Mital 3 Yes

(Alternate Director to Mr. Bimal Dhar)

Mr. Arjun Puri 6 Yes

Remuneration of Directors The details of the payments made to the Directors for March 31, 2007 are as follows:

Name of the Director Gross remuneration Sitting fee* Total

(Rs.) (Rs.) (Rs.)

Mr. M. S. Gujral Nil 170,000.00 170,000.00

Maj. Gen. Amarjit Singh (Retd.) Nil 150,000.00 150,000.00

Mr. Arjun Puri NIL 105,000.00 105,000.00

• Includes sitting fees paid for committee meetings


Name of the Director Salary Amount

Mr. A. Yamauchi Basic salary 1,249,033.00

Other benefits 2,794,079.00

Total 4,043,112.00

Mr. Pankaj Mital Basic salary 1,836,000.00

Bonus 310,560.00

Other benefits 951,100.00

Total 3,097,660.00

Shares held by Non-executive Directors

Mr. V.C. Sehgal - 9,962,655

Mr. M.S. Gujral - 202,500

Mr. Bimal Dhar - 30,000

Audit CommitteeThe members of the Audit Committee met four times during the financial year 2006-07 and the Committee reviewed the

half-yearly and annual financial statements before submission to the Board. The dates on which the meetings were held are

as follows: (i) May 26, 2006 (ii) July 26, 2006 (iii) November 6, 2006 (iv) January 30, 2007

The Company’s Audit Committee comprises the majority of Independent Directors and the composition and attendance of

each member of the Committee is given below:

Name Designation Non-executive/ Independent Committee meetings attended

Mr. Toshimi Shirakawa Member Non-executive 2

Mr. M.S. Gujral Chairman Independent/Non-executive 4

Maj. Gen. Amarjit Singh (Retd.) Member Independent/Non- executive 4

The terms of reference of the Audit Committee comprises the following:

a) To hold periodic discussions with the Statutory Auditors

and Internal Auditors of the Company concerning the

accounts of the Company, internal control systems, scope

of audit and observations of the Auditors/Internal Auditors.

b) To review compliance with internal control systems.

c) To review the quarterly, half-yearly and annual financial

results of the Company before submission to the Board.

d) To investigate into any matter in relation to the items

specified in Section 292A of the Companies Act, 1956 or as

may be referred to it by the Board and for this purpose to


Particulars of the past three AGMs

Annual General Date Time Venue No of Special

Meeting Resolutions passed

17th September 18, 2004 11.00 A.M. FICCI Golden Jubilee Auditorium, NIL

New Delhi

18th August 20, 2005 11.00 A.M. FICCI Golden Jubilee Auditorium, NIL

New Delhi

19th August 07, 2006 11.00 A.M. FICCI Golden Jubilee Auditorium, NIL

New Delhi

seek any relevant information contained in the records of

the Company and also seek professional advice, if

necessary.

e) To review the Company's financial and risk management

policies.

f) To obtain external advice, legal or other professional

advise

g) To secure attendance of outside parties with relevant

expertise, if it considers necessary.

h) To seek information from any employee

Investors’ Grievance CommitteeThe Company has an Investors’ Grievance Committee which

looks into shareholders’ and investors’ grievances. The

following are the members of the Committee:

Name Designation Executive/Non-executive/

Independent

Mr. M.S. Gujral Chairman Independent/

Non-executive

Mr. A. Yamauchi Member Executive

Mr. G.N. Gauba, the Company Secretary, is the Compliance

Officer.

Share Transfers

• All shares have been transferred and returned in about 20

days from the date of receipt, so long as the documents

have been clear in all respects

• The Share Transfer Committee meets normally once a

fortnight

• Total number of shares transferred during the year 2006-

07 was 73317, compared to 117955 during 2005-06.

• As on March 31, 2007, there are no equity shares

pending for transfer.

Investor relations17 complaints relating to the non-receipt of shares after

transfer, non-receipt of dividend etc. were received.

The complaints received during the year were cleared

within the financial year except six complaints that are

constrained by disputes.

The complaints are generally responded to within 10 days

from the date in which they are lodged with the Company.


Postal ballotThe Company had sent the resolution along with the

explanatory statement to be passed by the postal ballot for

seeking the approval of the shareholders for making

borrowings upto Rs. 4000 million and for the creation of

charges, mortgages, hypothecations on the movable and

immoveable properties of the Company to secure the

facilities sanctioned to the Company and/or its subsidiaries.

Mr. Suresh Shetty was the scrutiniser for conducting the

postal ballot.

Note on Directors appointment/ reappointment

a) Mr. Hiroto Murai, 40, nominee of Sojitz Corporation,

Japan, is an engineering science graduate. He has been

associated with Sojitz Corporation for over 18 years in

various capacities, and is presently working as President of

Sojitz Automotive Investment Pte. Ltd. and Sait Co., Ltd.

b) Maj. Gen. Amarjit Singh (Retd.), 72, is a mechanical

engineer and a post graduate in Business Management.

He joined MSSL’s Board in May 2003, after seven years with

the Group, heading a senior corporate management

function.

Earlier, after his retirement from the Indian Army, where he

was awarded the Vishista Seva Medal (VSM) for his

distinguished services, he worked as the CEO of an auto

air-conditioning company in Northern India for

five years.

Particulars of loans/ advances and investment in its own shares by listed companies, their subsidiaries, associates, etc.,

required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of the Listing Agreement

Name of Company Status Nature Balance as on Maximum

March 31 outstanding

2007 2006 During the year

MSSL Mideast (FZE) 100% Subsidiary Loan 281.07 301.00 806.95

MSSL Mauritius Holdings Limited 100% Subsidiary Loan 15.57 33.49 33.49

MSSL Handels GmbH 100% Subsidiary Loan 8.69 6.92 8.69

MSSL (GB) Limited 100% Subsidiary Loan 105.46 105.46

MSSL (S) Pte Ltd 100% Subsidiary Loan 1.46 1.46

MSSL Tooling (FZE) 100% Subsidiary Loan 59.79 49.71 59.79

Global Environment 50.07% Subsidiary Loan 47.52 47.52

Management (FZC)

MSSL Australia Pty Limited 80% Subsidiary Loan 24.82 24.82

Motherson Electrical Wires 100% Subsidiary Loan 78.00 78

Lanka Pvt. Limited


Disclosures• No transaction of material nature has been entered into

by the Company with the Directors or management and

their relatives, etc. that may have a potential conflict with

the interests of the Company.

• Transactions with the related parties are disclosed in Note

no. B(23) of Schedule XIII to the Accounts in the Annual

Report.

• No penalties or strictures were imposed by SEBI or the

stock exchanges.

• All mandatory requirements have been complied with

and non mandatory requirements have not been complied

with.

Means of communication• The annual, half-yearly and quarterly results are regularly

posted by the Company on its website

www.motherson.com. These are also submitted to the

stock exchanges in accordance with the Listing Agreement

and published in leading newspapers like Economic Times.

• Management discussion and analysis forms a part of this

Annual Report.

Shareholders’ information1. Annual General Meeting

- Date and time : July 30, 2007 at 3.30 p.m.

- Venue : FICCI Golden Jubilee Auditorium,

Tansen Marg, New Delhi

2. Financial Calendar (tentative and subject to change)

Annual General Meeting for the year ending March 31,

2007: July 30, 2007

Financial reporting for the first quarter ending June 30,

2007: July, 2007

Financial reporting for the second quarter ending

September 30, 2007: October/ November 2007

Financial reporting for the third quarter ending December

31, 2007: January, 2008

Financial results for the year ending March 31, 2008: May,

2008

3. Book closure date : 25th July to 30th July 2007

4. Dividend payment :

Rs. 1.50 per share to those shareholders whose names

appears on the Register of members on July 30, 2007. With

respect to shares held in electronic form the dividend will

be payable to the beneficial owners of the shares as on the

closing hours of business on July 24, 2007 as per details

furnished by the depositories for this purpose.

Payment of dividend through ECS:

Members holding shares in physical form are advised to

submit particulars of their bank account, viz., name and

address of the branch of the bank, 9 digit MICR code of the

branch, type of account and account number to Karvy

Computershare Pvt Ltd., 46, Avenue 4, Street no. 1, Banjara

Hills, Hyderabad – 500 034

Members holding shares in electronic form are advised to

inform the particulars of their bank account to their

respective depository participant.

5. Listing on stock exchanges

-Equity shares

Bombay Stock Exchange Limited

Phiroze Jeejeebhoy Towers


Dalal Street, Mumbai

Code : 517334

National Stock Exchange of India Limited

Exchange Plaza, 5th Floor

Plot no. C/1, G Block

Bandra - Kurla Complex, Bandra (E), Mumbai

Code: MOTHERSUMI

Delhi Stock Exchange Association Limited

DSE House, 3/1, Asaf Ali Road, Delhi

Ahmedabad Stock Exchange

Kamdhenu Complex,

Near Polytechnic Panjara Pole

Ahmedabad

Listing on Stock Exchange at:

- Bonds

Singapore Exchange Securities Trading Ltd.

2, Shenton Way

# 19-00 SGX Centre I

Singapore

6. Market price data

Month The Stock Exchange, Mumbai National Stock Exchange of India

High Low High Low

Apr – 2006 110.00 100.05 113.50 101.25

May – 2006 108.50 85.15 109.00 81.55

Jun – 2006 93.90 70.20 94.50 70.50

Jul – 2006 90.00 77.00 90.50 80.15

Aug – 2006 92.00 78.00 91.90 72.00

Sep – 2006 100.00 84.00 101.00 84.00

Oct – 2006 102.90 90.00 103.90 90.00

Nov – 2006 109.90 91.10 108.90 91.00

Dec – 2006 117.80 100.00 119.25 100.00

Jan – 2007 114.70 102.00 114.00 104.05

Feb – 2007 112.00 100.00 111.95 101.10

Mar – 2007 111.00 100.00 120.00 100.00


7.Performance in comparison to broad based indices

8. Shareholding pattern of the Company as on March

31, 2007

Category No. of % of

shares held shareholding

Indian promoters 81031522 34.50

Foreign promoters 87375780 37.20

Institutional investors 22254816 9.47

Private corporate bodies 17559931 7.48

Indian public 25812923 10.99

NRIs/ Trusts/ Foreign/ 854228 0.36

Clearing members

Total 234889200 100

Registrar and Transfer Agents The Registrar and Transfer Agent of the Company are M/s

Karvy Computershare Pvt. Ltd. w.e.f. 01.04.06. The

investors can send their queries to:

M/s Karvy Computershare Pvt. Ltd.

46, Avenue 4, Street no. 1,

Banjara Hills, Hyderabad – 500 034

[email protected]

Share Transfer SystemTo expedite the share transfer process in the physical

segment, authority has been delegated to the Share

Transfer Committee which comprises:

Mr. V.C. Sehgal

Mr. A. Yamauchi

Mr. Pankaj Mital

Share transfer/ transmissions approved by the Committee

are placed at the Board meeting from time to time.

14,000 120

100

80

60

40

20

13,000

12,000

11,000

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0 0Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06

MSSL Rate

BSE Sensex

Jan-07 Feb-07 Mar-07


Distribution of shareholding as on March 31, 2007

Shareholding of No. of % of shareholders No. of % of shares

nominal value of Rs. shareholders to total shares to total

1 – 5000 6694 94.30 6394392 2.72

5001-10000 172 2.42 1244145 0.53

10001 – 20000 87 1.23 1234330 0.52

20001 – 30000 30 0.42 727159 0.31

30001- 40000 23 0.32 815669 0.35

40001 – 50000 12 0.17 568908 0.24

50001 – 100000 27 0.38 1839939 0.78

100001 and above 54 0.76 222064658 94.55

Total 7099 100.00 234889200 100.00

12. Dematerialisation of shares and liquidity

Your Company’s shares are tradable compulsorily in

electronic form and your Company has established

connectivity with both the depositories i.e. NSDL and CDSL.

The members are requested to dematerialise their physical

holding in view of the various advantages in dematerialised

form.

Demat ISIN Number in NSDL and CDSL for equity shares:

ISIN No. INE775A01035

13. Plant locations

Noida (Uttar Pradesh)

Faridabad (Haryana)

Gurgaon (Haryana)

Manesar (Haryana)

Pune (Maharashtra)

Bangalore (Karnataka)

Chennai (Tamilnadu)

Pondicherry

Representative office(s)

Austria

Sharjah

Germany

14. Investors’ correspondence may be addressed to:

Mr. G.N. Gauba

Company Secretary & V.P. Finance

3rd Floor, Bhageria House

43, Community Centre

New Friends Colony

New Delhi - 110 025

email: [email protected]


To the Members of


We have examined the compliance of conditions of Corporate Governance by Motherson Sumi Systems

Limited, for the year ended March 31, 2007, as stipulated in Clause 49 of the Listing Agreement(s) of the

said Company with stock exchange(s) in India.

The compliance of conditions of Corporate Governance is the responsibility of the Company’s management.

Our examination was carried out in accordance with the Guidance Note on Certification of Corporate

Governance (as stipulated in Clause 49 of the Listing Agreement), issued by the Institute of Chartered

Accountants of India and was limited to procedures and implementation thereof, adopted by the Company

for ensuring the compliance of the conditions of Corporate Governance. 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).

We state that such compliance is neither an assurance as to the future viability of the Company nor the

efficiency or effectiveness with which the management has conducted the affairs of the Company.

Kaushik Dutta

Partner

Membership No: F-88540

For and on behalf of

Place: Noida Price Waterhouse

Date: May 26, 2007 Chartered Accountants

Auditors’ Certificate regarding compliance ofconditions of Corporate Governance


Auditors’ Report


1. We have audited the attached Balance Sheet of MothersonSumi Systems Limited, as at March 31, 2007, and the relatedProfit and Loss Account and Cash Flow Statement for theyear ended on that date annexed thereto, which we havesigned under reference to this report. These financialstatements are the responsibility of the company’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted our audit in accordance with the auditingstandards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles usedand significant estimates made by management, as well asevaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for ouropinion.

3. These financial statements have been prepared after givingeffect to the amalgamation of the erstwhile M/s MothersonAdvance Polymers Limited (MAPL), a subsidiary of theCompany, with the Company with effect from the appointeddate February 1, 2006 (Refer Note B(1) on Schedule XIII).The amalgamated financial statements for the year endedMarch 31, 2006 presented as the corresponding previousyear figures have been reviewed by us and have beenconsidered as opening balances for these financialstatements.

4. As required by the Companies (Auditor’s Report) Order,2003, as amended by the Companies (Auditor’s Report)(Amendment) Order, 2004, issued by the CentralGovernment of India in terms of sub-section (4A) of Section227 of ‘The Companies Act, 1956’ of India (the ‘Act’) and onthe basis of such checks of the books and records of theCompany as we considered appropriate and according tothe information and explanations given to us, we furtherreport that:

i) a) The Company is maintaining proper recordsshowing full particulars including quantitativedetails and situation of fixed assets.

b) The fixed assets are physically verified by themanagement according to a phased programmedesigned to cover all the items over a period of

three years, which in our opinion, is reasonablehaving regard to the size of the Company and thenature of its assets. Pursuant to the programme, aportion of the fixed assets has been physicallyverified by the management during the year and nomaterial discrepancies between the book recordsand the physical inventory have been noticed.

c) In our opinion and according to the informationand explanations given to us, a substantial part offixed assets has not been disposed off by theCompany during the year.

ii) a) The inventory (excluding stocks with third parties)has been physically verified by the managementduring the year. In respect of inventory lying withthird parties, these have substantially beenconfirmed by them. In our opinion, the frequencyof verification is reasonable.

b) In our opinion, the procedures of physicalverification of inventory followed by themanagement are reasonable and adequate inrelation to the size of the Company and the natureof its business.

c) On the basis of our examination of the inventoryrecords, in our opinion, the Company ismaintaining proper records of inventory. Thediscrepancies noticed on physical verification ofinventory as compared to book records were notmaterial.

iii) a) The Company has not granted any loans, secured orunsecured, to companies, firms or other partiescovered in the register maintained under Section301 of the Act.

b) The Company has not taken any loans, secured orunsecured, from companies, firms or other partiescovered in the register maintained under Section301 of the Act.

iv) In our opinion and according to the information andexplanations given to us, having regard to theexplanation that certain items purchased are of specialnature for which suitable alternative sources do notexist for obtaining comparative quotations, there is anadequate internal control system commensurate withthe size of the Company and the nature of its businessfor the purchase of inventory, fixed assets and for the


Name of Nature Amount Period to Forum wherethe statute of dues (Rs.) which the the dispute

amount ispending relates

Central Excise Service 311,367 1999-00 Customs, ExciseAct, 1944 tax and and Service Tax

2000-01 Appellate Tribunal,Chennai


sale of goods and services. Further, on the basis of ourexamination of the books and records of the Company,and according to the information and explanationsgiven to us, we have neither come across nor have beeninformed of any continuing failure to correct majorweaknesses in the aforesaid internal control system.

v) a) In our opinion and according to the informationand explanations given to us, the particulars ofcontracts or arrangements referred to in Section301 of the Act have been entered in the registerrequired to be maintained under that section.

b) In our opinion and according to the informationand explanations given to us, having regard to theexplanation that certain items/services purchasedare of special nature for which suitable alternativesources do not exist for obtaining comparativequotations, the transactions made in pursuance ofsuch contracts or arrangements and exceeding thevalue of Rupees Five Lakhs in respect of any partyduring the year, have been made at prices whichare reasonable having regard to the prevailingmarket prices at the relevant time.

vi) The Company has not accepted any deposits from thepublic within the meaning of Sections 58A and 58AAof the Act or any other relevant provisions of the Actand the rules framed there under.

vii) In our opinion, the Company has an internal auditsystem commensurate with its size and nature of itsbusiness.

viii) We have broadly reviewed the books of accountmaintained by the Company in respect of productswhere, pursuant to the Rules made by the CentralGovernment of India, the maintenance of cost recordshas been prescribed under clause (d) of sub-section (1)of Section 209 of the Act and are of the opinion thatprima facie, the prescribed accounts and records havebeen made and maintained. We have not, however,made a detailed examination of the records with a viewto determine whether they are accurate or complete.

ix) a) According to the information and explanationsgiven to us and the records of the Companyexamined by us, in our opinion, the Company isgenerally regular in depositing undisputed statutorydues including provident fund, investor educationand protection fund, employees’ state insurance,income-tax, sales tax, wealth tax, excise duty, service

tax, customs duty, and other material statutorydues as applicable, with the appropriate authorities.

b) According to the information and explanationsgiven to us and the records of the Companyexamined by us, there are no dues in respect ofincome-tax, wealth tax, customs duty, and cess asat March 31, 2007 which have not been depositedon account of a dispute. The particulars of dues ofservice tax duty that have not been deposited onaccount of a dispute are as follows -

x) The Company has no accumulated losses as at March31, 2007 and it has not incurred any cash losses in thefinancial year ended on that date or in the immediatelypreceding financial year.

xi) According to the records of the Company examined byus and the information and explanation given to us,the Company has not defaulted in repayment of duesto any financial institution or bank or debenture holdersas at the balance sheet date.

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

xiii) The provisions of any special statute applicable to chitfund / nidhi / mutual benefit fund / societies are notapplicable to the Company.

xiv) In our opinion, the Company is not a dealer or traderin shares, securities, debentures and other investments.

xv) In our opinion and according to the information andexplanations given to us, the terms and conditions ofthe guarantees given by the Company, for loans takenby others from banks or financial institutions during theyear, are not prejudicial to the interest of the Company.

xvi) In our opinion, and according to the information andexplanations given to us, on an overall basis, the term



loans have been applied for the purposes for whichthey were obtained.

xvii) On the basis of an overall examination of the balancesheet of the Company, in our opinion and according tothe information and explanations given to us, there areno funds raised on a short-term basis which have beenused for long-term investment.

xviii) The Company has not made any preferential allotmentof shares to parties and companies covered in theregister maintained under Section 301 of the Actduring the year.

xix) The Company does not have any debenturesoutstanding as at the year end.

xx) The management has disclosed the end use of moneyraised by public issue during the previous year (ReferNote B (19) of Schedule XIII) and the same has beenverified by us.

xxi) During the course of our examination of the books andrecords of the Company, carried out in accordance withthe generally accepted auditing practices in India, andaccording to the information and explanations givento us, we have neither come across any instance offraud on or by the Company, noticed or reportedduring the year, nor have we been informed of suchcase by the management.

5. Further to our comments in paragraph 3 and 4 above, wereport that:

a) We have obtained all the information and explanations,which to the best of our knowledge and belief werenecessary for the purposes of our audit;

b) In our opinion, proper books of account as required bylaw have been kept by the Company so far as appearsfrom our examination of those books;

c) The Balance Sheet, Profit and Loss Account and CashFlow Statement dealt with by this report are inagreement with the books of account;

d) In our opinion, the Balance Sheet, Profit and LossAccount and Cash Flow Statement dealt with by thisreport comply with the accounting standards referredto in sub-section (3C) of Section 211 of the Act;

e) On the basis of written representations received fromthe directors, as on March 31, 2007 and taken onrecord by the Board of Directors, none of the directorsis disqualified as on March 31, 2007 from beingappointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

f) In our opinion and to the best of our information andaccording to the explanations given to us, the saidfinancial statements together with the notes thereonand attached thereto give in the prescribed manner theinformation required by the Act and give a true and fairview in conformity with the accounting principlesgenerally accepted in India:

i) in the case of the Balance Sheet, of the state ofaffairs of the Company as at March 31, 2007;

ii) in the case of the Profit and Loss Account, of theprofit for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cashflows for the year ended on that date.

Kaushik DuttaPartner

Membership No. F 88540For and on behalf ofPrice WaterhouseChartered AccountantsNoida, May 26, 2007

Balance Sheet as at March 31, 2007

(Figures in Rs. Thousands)


Schedule 31.03.2007 31.03.2006

SOURCES OF FUNDS

Shareholders' Funds

Share Capital I 234,889 234,889

Reserves & Surplus II 2,774,924 2,045,365

3,009,813 2,280,254

Loan Funds

Secured Loans III 946,392 972,898

Unsecured Loans IV 3,033,654 2,816,634

Deferred tax liability (net) (Refer B (17) of Schedule XIII) 50,963 103,275

Total 7,040,822 6,173,061

APPLICATION OF FUNDS

Fixed Assets

Gross Block V 5,577,885 4,507,765

Less: Depreciation 2,328,390 1,915,287

Net Block 3,249,495 2,592,478

Capital Work in Progress 68,162 225,068

3,317,657 2,817,546

Investments VI 1,300,206 234,373

Current Assets, Loans and Advances VII

Inventories 1,204,816 918,155

Sundry Debtors 1,686,153 994,875

Cash & Bank Balances 365,922 1,622,307

Loans & Advances 1,408,888 1,196,404

4,665,779 4,731,741

Less: Current Liabilities & Provisions VIII

Current Liabilities 1,532,770 1,210,021

Provisions 1,294,885 1,155,822

2,827,655 2,365,843

Net Current Assets 1,838,124 2,365,898

Miscellaneous Expenditure (To the extent not written off or adjusted) IX 584,835 755,244

Total 7,040,822 6,173,061

Significant Accounting Policies and Notes forming part of the Accounts XIII

This is the Balance Sheet referred to in our The schedules referred above form integral report of even date part of the Balance Sheet

for and on behalf of the Board

Kaushik Dutta V. C. Sehgal A. Yamauchi Pankaj MitalPartner Chairman Whole time Director Chief Operating Officer M.No.: F88540

For and on behalf ofPrice Waterhouse G. N. GaubaChartered Accountants Co. Secretary & V.P. Finance

Place: NoidaDate : May 26, 2007


Profit and Loss Account for the year ended March 31, 2007


This is the Profit and Loss Account The schedules referred above form integral part of the referred to in our report of even date Profit and Loss Account


Kaushik Dutta V.C. Sehgal A. Yamauchi Pankaj MitalPartner Chairman Whole time Director Chief Operating Officer M.No.: F88540




Schedule 31.03.2007 31.03.2006

INCOME

Sale of Finished Goods (Gross) 12,384,724 8,123,016

Less: Excise duty 1,572,536 988,730

Sale of Finished Goods (Net) 10,812,188 7,134,286

Other Income X 184,877 196,172

Total 10,997,065 7,330,458

EXPENDITURE

Manufacturing and other expenses XI 8,955,117 5,909,292

Depreciation 447,445 357,268

Interest (net) XII 177,926 124,870

Total 9,580,488 6,391,430

Profit Before Taxation 1,416,577 939,028

Tax Expense

Provision for Current Income Tax 371,000 135,500

Provision for Deferred Income Tax (Refer B (17) of Schedule XIII) (52,312) (17,275)

Provision for Fringe Benefit Tax 11,800 13,393

Provision for Wealth Tax 2,000 1,500

1,084,089 805,910

Less : Income Tax for earlier years written back (57,684) (20,789)

Profit After Taxation 1,141,773 826,699

Add: Balance brought forward from previous year 647,180 328,490

Surplus Available For Appropriation 1,788,953 1,155,189

APPROPRIATIONS

Transfer to General Reserve 250,000 200,000

Proposed Dividend 352,335 270,124

Tax on Dividend 59,879 37,885

Balance Carried to Balance Sheet 1,126,739 647,180

Total 1,788,953 1,155,189

Earning per share (Basic/ Diluted) of face value Re. 1/- each 4.86 3.52

(Refer A(11) & B(16) of Schedule XIII)



Cash Flow Statement for the year ended March 31, 2007



2006-07 2005-06

A. CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax 1,416,577 939,028

Adjustments for:


Interest Expense 255,532 173,293

Interest Income (77,606) (48,423)

Income from Investment – Dividends (45,353) (26,398)

Lease Rent 764 10,941

(Profit)/Loss on Fixed Assets sold (3,854) 7,282

(Profit)/Loss on sale of Investments – (23,919)

Debts / Advances Written off 2,096 112

Provision for Bad & Doubtful Debts / Advances 750 300

Liability no longer required written back (3,079) (8,259)

Provision for Gratuity & Leave Encashment 9,869 7,720

Provision for diminution in value of Long term Investment written back – (50,000)

Change in carrying amount of current investments 34 (2)

Unrealised foreign exchange (gain) /loss 156,215 43,797

Provision for warranty (46) 74

Operating profit before working capital changes 2,159,344 1,382,814

Adjustments for changes in working capital

– (Increase)/ Decrease in Sundry Debtors (690,572) (303,803)

– (Increase)/ Decrease in Other Receivables (385,403) (160,989)

– (Increase)/ Decrease in Inventories (286,661) (214,582)

– Increase/ (Decrease) in Trade and Other Payables 303,615 212,638

Cash generated from operations 1,100,323 916,078

– Taxes (Paid) / Received (net of TDS) (340,244) (196,818)

Net cash from operating activities 760,079 719,260

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets Including CWIP (866,716) (1,076,766)

Proceeds from Sale of fixed assets 14,056 23,349

Proceeds from Sale of Investments – 10,276

Purchase of investments (including advance against equity) (1,065,867) (157,513)

Loan to Subsidiary (net) 140,464 (476,355)

Lease Rent Payment (764) (10,941)

Interest Received (Revenue) 73,450 40,097

Dividend Received 45,353 26,398

Net cash used in investing activities (1,660,024) (1,621,455)


Cash Flow Statement (Contd.)



2006-07 2005-06

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from long term borrowings

Receipts 233,431 2,725,689

Payments (188,342) (271,064)

Proceeds from short term borrowings

Receipts 40,000 –

Payments (45,199) (100,046)

Proceeds from Cash Credits (net) (46,359) 382,785

Interest Paid (77,286) (47,156)

Dividend Paid (269,434) (234,182)

Corporate Dividend Tax Paid (37,885) (32,943)

Net cash generated/ (used) in financing activities (391,074) 2,423,083

Net Increase/(Decrease) in Cash & Cash Equivalents (1,291,019) 1,520,888

Cash and cash equivalents Opening 1,622,307 26,544

Cash and cash equivalents as at April 1, 2005 - acquired consequent to amalgamation of

Draexlmaier & Motherson Electrical Systems India Limited & Motherson Advance Polymers

Limited (Refer B (1) of Schedule XIII ) – 18,237

Total Cash and Cash Equivalents as per cash flow statement 331,288 1,565,669

Cash and cash equivalents comprise

Cash In Hand 2,468 2,128

Cheque In Hand 9,529 9,576

Balance with Scheduled Banks 352,582 1,603,551

Balance with Non - Scheduled Banks 1,343 7,052

Cash and cash equivalents as per Balance Sheet (restated) 365,922 1,622,307

Less: Net unrealised (gain) on Foreign Currency cash & Equivalents (34,634) (56,638)

Cash and cash equivalents Closing 331,288 1,565,669

i) The above Cash Flow Statement has been prepared under the Indirect Method as set out in the Accounting Standard - 3 on CashFlow Statement issued by The Institute of Chartered Accountants of India.

ii) Previous year's figures have been regrouped wherever necessary to conform to the current year's classification.

iii) Following non cash transactions have not been considered in the cash flow statement:– Tax deducted at source on income

iv) Figures in brackets indicate cash outgo.

This is the Cash Flow Statement referred to in ourreport of even date for and on behalf of the Board





Schedules forming part of the Balance Sheet as at March 31, 2007



31.03.2007 31.03.2006

Authorised 1

803,000,000 Equity Shares of Re. 1/- each (Previous Year 803,000,000 Equity Shares of Re. 1/- each) 803,000 803,000

Issued234,892,400 Equity Shares of Re. 1/- each

(Previous Year 234,892,400 Equity Shares of Re. 1/- each) 234,892 234,892 Subscribed and Paid up

234,889,200 Equity Shares of Re. 1/- each (Previous Year 234,889,200 Equity Shares of Re. 1/- each) 234,889 234,889 (Of the above shares 6,090,000 (6,090,000) shares are allotted as fully paid up pursuant to a contract for consideration other than cash) (Of the above shares 165,292,400 (165,292,400) shares are allotted as fully paid bonus shares by way of capitalisation of share premium & general reserve).

Total 234,889 234,889

1 Increased consequent to amalgamation of erstwhile Motherson Advance Polymers Limited with the Company and in accordancewith the order of Hon'ble High court of judicature of Delhi. (Refer B(1) of Schedule XIII).

Schedule I – Share Capital

31.03.2007 31.03.2006

Revaluation Reserve 20,031 20,031Reserve on AmalgamationAs per Last Balance Sheet 572,346 80,352 Additions during the year – 491,994 1

Deductions during the year – 572,346 – 572,346General ReserveAs per Last Balance Sheet 805,808 605,808 Additions during the year 250,000 200,000 Deductions during the year – 1,055,808 – 805,808Profit and Loss AccountAs per Last Balance Sheet 647,180 799,882 Additions during the year 729,559 518,690 Additions on Amalgamation – (471,392) 2

Deductions during the year 250,000 1,126,739 200,000 647,180Total 2,774,924 2,045,365

1 a) Includes Rs. 25,050 thousand on account of amalgamation of erstwhile Draexlmaier & Motherson Electrical Systems IndiaLimited and

b) Rs. 466,944 thousand on account of amalgamation of erstwhile Motherson Advance Polymers Limited. (Refer B(1) of ScheduleXIII)

2 a) Includes Rs. 4,223 thousand on account of amalgamation of erstwhile Draexlmaier & Motherson Electrical Systems India Limitedand

b) Rs. 467,169 thousand on account of amalgamation of erstwhile Motherson Advance Polymers Limited. (Refer B(1) of ScheduleXIII)

Schedule II – Reserves & Surplus





Secured Loans referred above are 1 Secured by first charge by way of hypothecation of all present and future stocks, book debts and other specified moveable assets

of the Company and second charge by way of hypothecation of all immovable property.2 Long term loans due within a Year Rs. 200,046 thousand (Previous Year Rs. 16,276 thousand).3 Includes loan of Rs134,466 thousand secured by charge on immovable property, stock in trade and book debts of the Company

and Rs. 23,800 thousand secured by charge on entire fixed assets both moveable and immovable of the erstwhile MothersonAdvance Polymers Limited since merged with the Company.

4 Secured by first pari-passu charge on entire fixed assets both moveable and immovable of the Company present and future andsecond pari-passu charge on the entire current assets of the Company. These are also secured by way of deposit of title deedsof specified properties.

5 i) Tooling advances received from customers are repayable by way of amortisation on supply of components and hence cannotbe distinguished between short term and long term

ii) Secured by hypothecation of specific moulds used for production of compone

Short term loans Other than Banks 1 42,400 47,400Interest Accrued and Due – 199

Long term loans 2

Zero Coupon Foreign Currency Convertible Bonds (Refer B (5) of Schedule XIII) 2,914,080 2,714,691Other than Banks 3 77,174 54,344

Total 3,033,654 2,816,634

Schedule IV – Unsecured Loans

1 Repayable on demand.2 Long Term Loan due within a Year Rs. Nil (Previous Year Rs.Nil).3 Tooling advances received from customers are repayable by way of amortisation on supply of components and hence cannot be

distinguished between short term and long term.


31.03.2007 31.03.2006

Short term loans from banks 1

Rupee Loan 345,370 584,502Foreign currency Loan 230,379 37,605

Long Term Loans 2

i) From Banks Rupee Loan 3 158,265 35,800Foreign currency Loan 4 191,494 239,022

ii) From OthersRupee Loan 5 20,884 75,969

Total 946,392 972,898

Schedule III – Secured Loans



GROSS BLOCK DEPRECIATION NET BLOCK

Particulars As at Additions Deletions / Total as at Upto Depreciation Depreciation Upto As at As at

31.03.2006 during the Sale/ 31.03.2007 31.03.2006 for the on Deletions/ 31.03.2007 31.03.2007 31.03.2006

year1 Adjustments year Sales/

Adjustments

Tangible Assets

Leasehold Land 234,701 123,169 – 357,870 9,147 3,840 – 12,987 344,883 225,554

Freehold Land 118,222 45,878 – 164,100 – – – – 164,100 118,222

Leasehold Improvements 52,777 – – 52,777 28,226 863 – 29,089 23,688 24,551

Building 879,781 163,024 34 1,042,771 118,344 35,033 34 153,343 889,428 761,437

Plant & Machinery 2 2,863,740 680,470 22,039 3,522,171 1,527,623 338,599 19,323 1,846,899 1,675,272 1,336,117

Furniture, Fixtures &

Office equipments 115,962 8,205 4,978 119,189 73,230 16,428 2,279 87,379 31,810 42,732

Computers 116,555 22,000 1,149 137,406 88,650 18,670 1,105 106,215 31,191 27,905

Vehicles 126,027 71,918 16,344 181,601 70,067 34,012 11,601 92,478 89,123 55,960

Total 4,507,765 1,114,664 44,544 5,577,885 1,915,287 447,445 34,342 2,328,390 3,249,495 2,592,478

Previous Year 3 3,158,476 1,405,919 56,630 4,507,765 1,584,018 357,268 25,999 1,915,287 2,592,478 1,969,951

Capital Work in Progress 68,162 225,068

3,317,657 2,817,546

Schedule V – Fixed Assets (Refer A(2), A(7) & A(8) of Schedule XIII)

1 Addition to fixed assets include adjustment on account of exchange gain of Rs. 612 thousand (Previous Year exchange gain Rs. 936 thousand).

2 Includes items of plant and machinery having a gross block amounting to Rs. 87,964 thousand on which the Company has re-assessed the useful life during the year and accordingly charged additional depreciation on such items resulting in a chargeof Rs. 18,523 thousand during the current year.

3 Additions during the year include assets amounting to Rs. 608,171 thousand and accumulated depreciation includes Rs. 395,493thousand taken over consequent to amalgamation of erstwhile Motherson Advance Polymers Limited with the Company.







Particulars 31.03.2007 31.03.2006

A. Unquoted (At Cost)In Subsidiaries (Long-term Investments)Motherson PUDENZ WICKMANN Ltd.1 9,045 9,045

1403226 equity shares (1403226) of Rs 10/- each fully paid up

MSSL Mauritius Holding Ltd.1 22,452 22,452

525000 equity shares (525000) of 1 Euro each fully paid up

MSSL Mideast (FZE) 1

1 equity share (1) of AED 150000 equivalent to Euro 46,875 each fully paid up 1,997 1,997

Advance against preference shares 521,406 –

MSSL Handels GmbH 1 1,835 1,835

1 share (1) of Euro 35,000

Motherson Electrical Wires Lanka Pvt. Ltd. 1 6,857 6,857

1456202 shares (1456202) of Srilankan Rs. 10/- each fully paid up

MSSL (S) PTE Ltd. 1

100000 shares (100000) of S$ 1/- each fully paid up 2,655 2,655

1800000 preference shares (Nil) of S$ 1/- each fully paid up 51,120 –

Advance against equity 198,199 –

In Others (Long-term Investments)Woco Motherson Elastomers Ltd. 1 11,393 11,393

1139333 equity shares (1139333) of Rs. 10/- each fully paid up

Woco Motherson Advanced Rubber Technologies Ltd. 1 6,667 6,667


4422867 6% redeemable convertible non-cumulative 44,229 26,667

preference shares (2666667) of Rs. 10/- each fully paid up

Balda Motherson Solution India Ltd. 1 (Formerly Balda Motherson Info Devices Ltd.)

50000 equity shares (50000) of Rs. 10/- each fully paid up 500 500

22958000 7% optionally convertible redeemable cumulative

preference shares (Nil) of Rs. 10/- each fully paid up 229,580 –

Advance against Equity – 2,000

Schefenacker Motherson Ltd. 1 67,368 67,368


Saks Ancillaries Ltd. 1 10,724 10,724


Kyungshin Industrial Motherson Ltd. 1 86,080 36,080


Motherson Air Travel Agencies Ltd. 1 1,206 1,206


Motherson Sumi Infotech & Designs Ltd. 1 12,500 12,500

1250000 7% preference shares (1250000) of Rs. 10/- each fully paid up

(Current Investments)Lord Krishna Bank Ltd. 102 102


Total (A) 1,285,915 220,048

Schedule VI – Investment (Refer A(3) on Schedule XIII)



Particulars 31.03.2007 31.03.2006

B. Quoted (Long-term Investments)Motherson Sumi Infotech & Designs Ltd. 1 13,800 13,800

1200000 equity shares (1200000) of Rs.10/- each fully paid up

(Current Investments)Balrampur Chini Mills Ltd 10 10


Electrolux Kelvinator Ltd. (Formerly Intron Ltd.) 12 12


Jaysynth Dyechem Ltd 1 1


GIVO Ltd. 254 286


Mahindra & Mahindra Ltd 203 203


Pearl Engineering Polymers Ltd 11 13


Total (B) 14,291 14,325Total (A+B) 1,300,206 234,373Less: Provision for Diminution – –

Net Total 1,300,206 234,373

1 Trade Investment

Note

a) Market value of quoted investments 26,891 14,110 (Based on last traded price available as at March 31, 2007)

No. of Rs. in Shares Thousands

b) Investments made during the year

Equity Shares

Kyungshin Industrial Motherson Ltd. 5,000,000 50,000

Preference Shares

Balda Motherson Solution India Ltd. (Formerly Balda Motherson Info Devices Ltd.) 22,958,000 227,580

MSSL (S) PTE Ltd 1,800,000 51,120

Woco Motherson Advanced Rubber Technologies Limited 1,756,200 17,562

Advance against preference shares

MSSL Mideast (FZE) – 521,406

MSSL (S) PTE Ltd. – 198,199

Schedule VI – Investment (Refer A(3) on Schedule XIII) (Contd.)






Particulars 31.03.2007 31.03.2006

A. CURRENT ASSETSStock in Trade i) Finished Goods 236,830 234,180 ii) Work in Progress 232,649 144,979 iii) Raw Material & Components 609,960 426,156 iv) Goods in Transit (Raw Material & Components) 121,511 109,737 v) Tools, Store & Spares 3,866 3,103

(1) 1,204,816 918,155Sundry Debtors 1 (Unsecured, unless otherwise stated)i) Outstanding for more than six months

Considered Good – –Considered Doubtful 5,845 5,321

5,845 5,321 Less Provision for doubtful debts 5,845 5,321

ii) Other DebtsConsidered good 1,686,153 994,875 Considered Doubtful 2,647 2,071

1,688,800 996,946 Less Provision for doubtful debts 2,647 2,071

(2) 1,686,153 994,875Cash and Bank Balancesi) Cash in hand 2,469 2,128 ii) Cheques in hand 9,529 9,576 iii) Balance with

a) Scheduled Banks ini) Current Accounts 10,390 15,559 ii) Deposit account 2 338,431 1,584,920 iii) Dividend Account 3,760 3,072

b) Non Scheduled Banks in 3

i) Current Account with Bank Austria – 2,413 ii) Current Account with HSBC Bank Middle East Ltd. 1,343 1,058 iii) Current Account with Commerz Bank Hanau Germany – 3,581

(3) 365,922 1,622,307 Total A (1+2+3) 3,256,891 3,535,337

B. Loans and Advances (Unsecured, unless otherwise stated)i) Advances recoverable in cash or in kind or for value to be received 4

– Considered good 363,396 435,545 – Considered doubtful 3,466 3,816

366,862 439,361 Less Provision for doubtful advances 3,466 3,816

363,396 435,545 ii) Loan to Subsidiaries 307,433 418,730 iii) Loan to Joint Venture Company 147,120 – iv) Deposits with Excise, Customs & Govt Authorities 582,994 349,020 v) Advance Tax (Net) 5 7,945 (6,891)Total B 1,408,888 1,196,404 Grand Total (A+B) 4,665,779 4,731,741

Schedule VII – Current Assets, Loans and Advances


1 Includes due from subsidiaries Rs. 157,159 thousand (Previous Year Rs.20,909 thousand).2 i) Includes Deposit out of proceeds of Zero Coupon Foreign Currency Convertible Bonds of Rs. 336,179 thousand (Previous Year

Rs. 1,582,116 thousand).


ii) Deposits pledged with Excise & Sales Tax authorities Rs. 40 thousand (Previous Year Rs. 20 thousand).iii) Margin money Rs. 2,241 thousand (Previous Year Rs. 1,388 thousand).

3 Maximum balance outstanding during the Year :i) Bank Austria Rs. 2,475 thousand (Previous Year 6,882 thousand)

ii) HSBC Bank Middle East Limited Rs. 4,464 thousand (Previous Year Rs. 5,098 thousand).

iii) Commerz Bank Hanau Germany Rs. 6,134 thousand (Previous Year Rs. 11,278 thousand)4 i) Includes due from subsidiaries Rs. 3,546 thousand (Previous Year Rs. 2,052 thousand).

ii) Includes capital advances of Rs. 174,022 thousand (Previous Year Rs. 223,017 thousand).5 Net of Provision for Tax Rs. 391,017 thousand (Previous Year Rs. 440,481 thousand)


31.03.2007 31.03.2006

A. Current Liabilitiesi) Sundry Creditors 1

Small Scale Industrial Undertakings (Refer B(4) of Schedule XIII) 20,487 33,194

Others 1,275,056 968,346

ii) Advance from customers 146,636 138,682

iii) Other Liabilities 81,334 61,120

iv) Investor Education & Protection Fund shall be credited by the following amount:

– Unpaid Dividend 3,760 3,072

v) Interest Accrued but not due 5,497 5,607

1,532,770 1,210,021B. Provisions

i) Premium on Redemption of Zero Coupon Foreign Currency Convertible Bonds

(Refer B(5) of Schedule XIII) 833,598 807,470

ii) For Dividend (including tax thereon) 412,214 308,009

iii) For Fringe Benefit Tax 11,800 13,393

iv) For Wealth tax 2,000 1,500

v) For Employee benefit (Refer A(5) of Schedule XIII) 33,273 23,404

vi) For Warranty (Refer B(18) of Schedule XIII) 2,000 2,046

1,294,885 1,155,822

Total 2,827,655 2,365,843

1 Includes due to subsidiaries Rs. 62,299 thousand (Previous Year Rs. 32,084 thousand).

Schedule VIII – Current Liabilities and Provisions

Premium on Redemption/ Issue Expenditure of Zero CouponForeign Currency Convertible BondsOpening Balance 755,244 –Add: Addition during the year – 876,566Less: Written off during the year 170,409 121,322Total 584,835 755,244

Schedule IX – Miscellaneous Expenditure (To the extent not written off or adjusted) (Refer B (5) of Schedule XIII)



Schedules forming part of the Profit and Loss Account for the year ended March 31, 2007



31.03.2007 31.03.2006

a) Dividend Received 1

– From other than Subsidiary companies 45,353 26,398b) Rent 29,573 13,043c) Service Income – 5,258d) Provision for dimunition in value of long term investment written back – 50,000e) Sundries written back 3,079 8,259f) Miscellaneous Income 103,018 76,577g) Profit on sale of Fixed assets (net) 3,854 (7,282)h) Profit on sale of Investment – 23,919Total 184,877 196,172 Tax deducted on source a) Rent 3,697 2,879 b) Miscellaneous Income 8,499 2,962 1 Includes dividend from Short term Non- Trade investments 153 158

Schedule X – Other income

Materials consumedOpening Stock

Raw materials 426,156 312,626 Work-in-progress 144,979 106,091 Finished goods 234,180 153,558

Additions consequent to amalgamation (Refer B (1) of Schedule XIII)Raw materials – 40,498 Work-in-progress – 9,316 Finished goods – 7,981

805,315 630,070 Add : Purchases of Raw materials 6,670,370 4,153,350 Less: Closing Stock

Raw materials (609,960) (426,156)Work-in-progress (232,649) (144,979)Finished goods (236,830) (234,180)

(1,079,439) (805,315)Total consumption for goods sold 6,396,246 3,978,105 Salary, wages & bonus 710,323 549,572 Contribution to Provident & Other Fund 62,255 48,174 Staff Welfare 88,155 64,940 Electricity, Water and Fuel 215,215 171,620 Repairs and Maintenance

Machinery 123,287 86,788 Building 65,144 40,976 Others 89,018 64,621

Consumption of Store and Spare parts 115,340 89,989 Conversion charges 149,400 117,589 Lease rent 764 10,941 Rent 51,909 41,141

Schedule XI – Cost of materials and manufacturing and Other Expenses




Schedules forming part of the Profit and Loss Account for the year ended March 31, 2007


31.03.2007 31.03.2006

Rates & taxes 16,932 13,327 Insurance 30,562 25,027 Donation 5,639 5,454 Travelling 125,066 105,753 Freight & forwarding 192,446 107,935 Royalty 50,797 39,449 Cash Discount 16,114 14,728 Commission 1,337 2,258 Provision for dimunition in value of Short Term Investments 34 (2)Bad Debts / Advances written off 2,096 112 Legal & professional expenses 203,976 175,237 Exchange fluctuation(net) 23,092 (26,743)Miscellaneous expenses 219,970 182,301 Total 8,955,117 5,909,292

Schedule XI – Cost of materials and manufacturing and Other Expenses (Contd.)

Interest & Finance ExpenseSubsidiaries 834 – Privately Placed Debentures 17,751 13,108 Fixed loans 14,437 13,648 Amortisation of Premium / Issue Expenditure on Redemption of Zero Coupon Foreign Currency Convertible Bonds (Refer B (5) of Schedule XIII) 170,409 121,322 Others 52,101 25,215

Less : Interest Income (Gross)From Subsidiaries 33,338 15,087 From Bank Deposits 34,369 32,480 From Others 9,899 856

Total 177,926 124,870 Tax deducted on source Interest Income 2,802 384

Schedule XII – Interest (Net)

Schedule XIII – Significant Accounting Policies and Notes forming part of the AccountsA. SIGNIFICANT ACCOUNTING POLICIES

1. ConventionThe Financial Statements are prepared under the historical cost convention as modified to include revaluation of certain fixedassets as indicated in (2) below, in accordance with applicable Accounting Standards issued by the Institute of CharteredAccountants of India and relevant presentational requirements of the Companies Act, 1956.

2. Fixed Assets and DepreciationFixed Assetsi) The fixed assets except as stated in (ii) below are stated at cost less accumulated depreciation. Cost of acquisition or

construction is inclusive of inward freight, duties and taxes and other incidental expenses.

ii) The fixed assets of the Component Division of erstwhile Motherson Auto Components Engineering Limited (MACE) havebeen stated at an amount inclusive of appreciation arising on revaluation of the assets by an approved valuer on December31, 1998. The method adopted for revaluation of the assets are as under:

a) Land: Prevailing market rate of land as on the date of revaluation.

b) Buildings, Indigenous Plant and Machinery, Furniture and Fixtures, Moulds and Dies: Replacement value.

The Company charges assets Costing less than Rs. 5,000 to expense, which could otherwise have been included as Fixed Asset,because the amount is not material in accordance with Accounting Standard 10 -‘Accounting for Fixed Assets’.

Depreciationi) Depreciation on fixed assets except as stated in (ii) below, is provided from the month the asset is ready for commercial

Schedules forming part of the Accounts


Schedule XIII – Significant Accounting Policies and Notes forming part of the Accounts (Contd.)


production on a pro-rata basis at the SLM rates prescribed in schedule XIV to the Companies Act, 1956 or based onuseful life, whichever is higher. In accordance with the above policy the following assets are depreciated, at rates higherthan those prescribed in schedule XIV of the Companies Act, 1956:

Rate (%)Computers 33.33Vehicles 25.00Furniture, fixtures & Office equipments 16.67Electrical Installations 10.00Specific Identified Plant & Machinery 25.00

ii) In respect of revalued assets, depreciation is being provided on the revalued amounts over the remaining useful lifeof the assets at the SLM rates. Leasehold Land is amortized over the balance period of lease.

3. InvestmentsInvestments are classified into long term and current investments. Long-term investments are stated at cost. A provision fordiminution is made to recognize a decline, other than temporary, in the value of long term investments.

Current investments are carried at lower of cost and fair value. Fair value in the case of quoted investments refers to the marketvalue of the investments arrived at on the basis of last traded prices as at the year-end.

4. InventoriesStores and spares, loose tools are valued at cost or net realizable value, whichever is lower.

Raw materials, components, finished goods and work in progress are valued at cost or net realizable value, whichever islower. The basis of determining cost for various categories of inventories is as follows:

i) Stores and Spares, Raw Materials and Components First in First Out (FIFO) method

ii) Work in Progress and Finished Goods Material cost plus appropriate share of labour and production overheads.

iii) Tools Cost less amortization based on useful life of the items ascertained on a technical estimate by the management

5. Retirement BenefitsThe Company’s contribution to defined contribution schemes such as provident fund, family pension fund and superannuationfund are charged to the profit and loss account as incurred. The Company also provides gratuity benefits to the employees,which is funded through a LIC group gratuity scheme. The liability at the year-end for the same is determined by an actuarialvaluation done at year-end and shortfall/surplus over the amount contributed to the scheme is charged off to the profit andloss account or treated as prepaid, as the case may be. Provision for Leave Encashment is made on the basis of actuarialvaluation done at the year-end.

6. Revenue RecognitionSales are recognized upon the transfer of significant risks and rewards of ownership to the customers.

7. Foreign Exchange TransactionsTransactions involving foreign currencies are recorded at the exchange rate prevailing on the transaction date. Foreign currencymonetary items are translated at the exchange rate prevailing at the balance sheet date and the gain/loss arising on suchtranslation other than monetary items related to acquisition of fixed assets is credited / charged to profit and loss account.The gain / loss arising on translation of monetary items related to acquisition of fixed assets are adjusted to the cost of fixedassets. Premium or discount arising at the inception of a forward exchange contract is amortized as expense or income overthe life of contract.

8. Borrowing CostsThe borrowing costs on funds other than those directly attributable to the acquisition of a qualifying asset i.e. an asset thatnecessarily takes a substantial period of time to get ready for its intended use, is charged to revenue in the period in whichthey are incurred.

The borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets arecapitalized as part of the cost of that asset.

9. LeasesLease rental in respect of operating lease arrangements are charged to expense when due as per the terms of the related





agreement on a straight-line basis over the lease period.

Lease rentals in respect of finance lease transactions entered into prior to March 31, 2001 is charged to expense when dueas per the terms of the related agreement. Finance lease transactions entered into after this date are considered as financingarrangements in accordance with Accounting Standard 19 and the leased asset is capitalized at an amount equal to thepresent value of future lease payments and a corresponding amount is recognized as a liability. The lease payments madeare apportioned between finance charge and reduction of outstanding liability in relation to leased asset.

10.TaxationCurrent TaxCurrent tax is provided on the basis of tax payable on estimated taxable income computed in accordance with the applicableprovisions of Income tax Act, 1961 after considering the benefits available under the said Act.

Deferred TaxesIn accordance with Accounting Standard 22 – Accounting for Taxes on Income, issued by the Institute of CharteredAccountants of India, the deferred tax for timing differences between the book and tax profits for the year is accounted forusing the tax rates and laws that have been enacted or substantially enacted as of the balance sheet date.

Deferred Tax Assets arising from temporary timing differences are recognized to the extent there is reasonable certainty thatthe assets can be realized in future.

Fringe Benefit TaxFringe benefit tax is determined based on the liability computed in accordance with relevant tax rates and tax laws.

11.Earnings Per ShareThe earnings considered in ascertaining the Company’s EPS comprises the net profit after tax (and includes the post tax effectof any extra ordinary items) attributable to equity shareholders. The number of shares used in computing Basic EPS is theweighted average number of shares outstanding during the year. The diluted EPS is calculated on the same basis as basic EPS,after adjusting for the effect of potential dilutive equity shares.

B. NOTES TO THE ACCOUNTS

1. Amalgamation of Motherson Advance Polymers Limited (MAPL) with the Companya) The High Court of judicature at Delhi approved on September 4, 2006 the arrangement as embodied in the Scheme of

Amalgamation (“the Scheme”) of the erstwhile M/s Motherson Advance Polymers Limited (MAPL), a subsidiary of thecompany, the transferor company with the Company (M/s Motherson Sumi Systems Limited), the transferee Company.On complying with the requisite formalities by the Company, the Scheme became effective on October 27, 2006 (“theeffective date”), operative retrospectively from February 1, 2006, the appointed date as per the scheme. Accordingly, thewhole of the undertakings of MAPL was transferred to and vested in the Company as a going concern and MAPL withoutany further act was dissolved without winding up.

b) MAPL is in the business of manufacture and sale of plastic components.

c) The company had purchased 43,104,774 equity shares of Rs. 10 each of MAPL on February 1, 2006, thereby making MAPLa 100% subsidiary of the company. As per the scheme the said transaction was recorded in such a manner so that witheffect from the appointed date, all assets and liabilities are vested in the company. The amalgamation has been accountedfor under the “pooling of interests” method as prescribed by Accounting Standard (AS-14) issued by the Institute of CharteredAccountants of India and the specific provisions of the Scheme. Accordingly, all the assets, liabilities and reserves of thetransferor company as on February 1, 2006 have been recorded by the Company at their respective amounts.

d) With effect from the Appointed date, all debts, liabilities, duties and obligations of the transferor company as on the closeof the business on the date preceding the appointed date, whether or not provided in the books of the transferor companyand all liabilities which arise or accrue on or after the Appointed date shall be deemed to be the debts, liabilities, dutiesand obligations of the Company.

e) In view of the amalgamation of MAPL with the Company effective from February 1, 2006, the financial statements of theCompany were redrawn for the year ended March 31, 2006 which were reviewed by the statutory auditors and the samehave been represented as the previous year figure instead of audited financials of Motherson Sumi Systems Limited foryear ended March 31, 2006 for the purpose of comparison. The figures for the current year are not directly comparableto those of the previous year.





As at As atMarch 31, 2007 March 31, 2006

a) In respect of Excise 1 27,614 26,917b) In respect of Entry Tax 2,522 2,522c) In respect of Sales Tax 20,525 13,605d) In respect of Service Tax 6,324 6,324e) In respect of Stamp Duty 1,804 1,804f) In respect of Income Tax 1,588 864g) In respect of Labour Cases 5,359 11,852h) The company has given corporate guarantee in respect of : 2

i) Subsidiary Company 194,100 293,965ii) Joint Ventures 97,500 97,500

i) Bank Guarantees / Letter of Credit furnished by the company 158,578 123,806

1 Excludes interest2 Actual amount outstanding

Subsidiary Company Rs. 144,400 thousand (Rs. 181,053 thousand)Joint Ventures Rs. 75,144 thousand (Rs. 53,572 thousand)

Further, in respect of certain subsidiary companies, the Company has furnished letter of support to enable the said companiescontinue the operations.


Unexpired amount of the contracts on capital accounts and not provided for (net of advance) 137,937 141,351

3. Outstanding Capital Commitments


f) The Company’s Fixed Assets for the previous year include Net Fixed Assets of Rs. 198,768 thousand (including capital workin progress of Rs. 4,904 thousand); Net Current Assets of Rs. 54,852 thousand and Debit balance of Profit & Loss Accountof Rs. 467,169 thousand attributable to MAPL. Rs. 466,944 thousand being the excess of the value of assets over thevalue of the liabilities/ reserves after adjusting for the aggregate value of the investments held in the transferee companyand the adjustments mentioned in (c) above has been credited to the amalgamation reserve of the Company, inaccordance with the scheme. The said investment by the company stands cancelled.

2. Contingent Liabilities

4. The small scale industrial undertakings to whom the Company owes and which is outstanding for more than 30 days as atMarch 31, 2007 are:

A G N Electro Coats, Autotest Mechanisms Pvt Ltd, Chamundi Die Cast (P) Ltd., Aglow Engineers Pvt Ltd., B.R. Auto Connectors& Spares P. Ltd, Chaithanya Dip Moulding Works, Harinder Industries Pvt. Ltd., Haryana Industries, Hytech Engineers, M/S.Brass Copper & Alloy (I) Ltd, Manoj Industries, Pacoline Industries Pvt. Ltd., Pranay Insulations And Packaging (P) Ltd, SgrElastomers (India) Pvt.Ltd., Shree Balasai Industries, Tech Plast India Pvt Ltd, Variturn Electro Products Private Ltd, SurelockPlastics Pvt Ltd, Yash Industries, Euro Power Tech, Kumar Industries, Avon Containers Pvt. Ltd., Shri Vishwanath Packaging,Niyati Industries, Technovinyl Polymers India Limited, Action Spring Products, Alfa Industries, Alfa Rubber & Springs Pvt Ltd,Alphaa Springs Chennai Pvt Ltd, Bafna Packagings Pvt Ltd, Chennai Poly Pack Pvt Ltd, Dong A India Limited, I P Enterprises,Industrial Packing, Jay Jay Polymers, Kings Pack System, P.A.R.K. Felts Pvt. Ltd., Senna Polymers, Shri Mayuram Industries,Shriram Engineering, Silicon Valley Auto Components Pvt Ltd, Sree Ganapathi Industries, Sumex Engineering Pvt Ltd, UshaFire Safety Equipments Pvt Ltd, Sharad Electronics, Oxford Fasteners, P.K. Enterprises, Anand Electronics & Electricals, B. R.Engineering Works, D. M. Enterprises, Elemix Electric Company, Naresh Sales Agencies, Om Tulsi Electricals, PoornarthSolutions, Engineering Plastics India Pvt. Ltd., Gauri Shankar Enterprises, Hari Har Engineering Works, M. D. Plastics, ShreeShiva Engineering Works, Kuldeep Engineering Works, India Wire

The above information regarding small scale industrial undertaking has been determined to the extent such parties havebeen identified on the basis of information available with the Company. Further, based on information available with themanagement, there are no dues payable to enterprises covered under “Micro, Small and Medium Enterprises DevelopmentAct, 2006.”




(Figures in Rs. Thousands) Year ended Year ended

March 31, 2007 March 31, 2006

a) Salaries and other allowances 3,570 3,177b) Contribution to provident and other funds 496 414c) Perquisites 3,075 2,342d) Directors Sitting Fees 425 100

Total 7,566 6,033

6. Managerial Remuneration

3 As the employee-wise break up of gratuity and leave encashment is not ascertainable, the amount related to one of thedirectors has not been included in the above particulars.


5. Issue of Zero Coupon Convertible BondsDuring the year ended March 31, 2006, the Company issued Euro 50,300,000 Zero Coupon Convertible Bonds due 2010(the “Bonds”). The Bonds are convertible either at the option of the holder at any time on or after August 24, 2005 (or suchearlier date as is notified to the holders of the Bonds by the Company) upto July 6, 2010 by holders into fully paid equity shareswith full voting rights at par value of Re. 1.00 each of the Issuer (“Shares”) at an initial Conversion Price (as defined in the“Terms & Conditions of the Bonds”) of Rs. 111.45 per Share with a fixed rate of exchange on conversion of Rs. 52.01 = Euro1.00. The Conversion Price is subject to adjustment in certain circumstances.

The Bonds may otherwise be redeemed, in whole or in part, at the option of the Issuer, at any time on or after July 15, 2008and prior to July 7, 2010 subject to satisfaction of certain conditions and at their “Early Redemption Amount” (as defined inthe “Terms & Conditions of the Bonds”) at the date fixed for such redemption if the “Closing Price” (as defined in the “Terms& Conditions of the Bonds”) of the Shares translated into Euro at the “prevailing rate” (as defined in the “Terms & Conditionsof the Bonds”) for each of 20 consecutive “Trading Days” (as defined in the “Terms & Conditions of the Bonds”) the last ofwhich occurs not more than five days prior to the date upon which notice of such redemption is published, is greater than130 per cent, of the “Conversion Price” (as defined in the “Terms & Conditions of the Bonds”) then in effect translated intoeuro at the rate of Rs. 52.01 = Euro 1.00.

The Bonds may also be redeemed, in whole, but not in part, at any time at the option of the Issuer at their Early RedemptionAmount, if less than 10 per cent, in aggregate principal amount of the Bonds originally issued is outstanding.

The Bonds may also be redeemed in whole, but not in part, at the option of the Issuer subject to satisfaction of certainconditions including obtaining Reserve Bank of India (“RBI”) approval, at their Early Redemption Amount, on the date fixedfor redemption in the event of certain changes relating to taxation in India.

Unless previously redeemed, converted or purchased and cancelled, the Bonds will be redeemed by the Issuer in Euros onJuly 16, 2010 at 126.77 per cent of its principal amount.

The issuer will, at the option of any holder of any Bonds, repurchase at the Early Redemption Amount such Bonds at suchtime as the Shares cease to be listed or admitted to trading on the BSE and the NSE (as defined in the “Terms & Conditionsof the Bonds”) in respect of the Issuer. These Bonds are listed in the Singapore Exchange Securities Trading Limited (the“SGX-ST”).

a) Statutory Audit Fees 3,300 3,250b) Taxation Matters 150 100c) Reimbursement of expenses 383 365d) Others (certification charges and other services) 400 1,000

Total 4,233 4,715

7. Payment to Auditors

a) Raw Material 2,971,977 1,735,238b) Capital Goods 333,814 346,968c) Spare Parts 51,537 26,467

8. Value of imports on CIF Basis in respect of




a) Royalty 18,212 44,677b) Travelling 31,237 28,730c) Interest 14,503 5,947d) Professional Fee 45,523 39,235e) Technical Assistance Fees 6,103 6,487f) Commission – 891g) Salaries and allowances 1,719 3,092h) Computer and Software Expenses 5,458 1,230i) Others (includes training, bankcharges and representative office expenses of rent etc.) 84,923 84,723

9. Expenditure in foreign currency on account of: (Cash Basis) (Net of Taxes)

10.Value of imported and indigenous consumed and percentage of each to total consumption:A. Raw Materials and Components

Particulars Year ended March 31, 2007 Year ended March 31, 2006(%) (Amount) (%) (Amount)

a) Imported 39 2,510,996 48 1,961,611b) Indigenous 61 3,977,570 52 2,118,707

Total 100 6,488,566 100 4,080,318

B. Stores & Spares

Particulars Year ended March 31, 2007 Year ended March 31, 2006(%) (Amount) (%) (Amount)

a) Imported 12 14,278 14 12,485b) Indigenous 88 101,062 86 77,504Total 100 115,340 100 89,989

11.Actual Production, opening stock, closing stock and salesA. Quantity

Year ended March 31, 2007 Year ended March 31, 2006Wiring High Plastic Wires Wiring High Plastic Wires

Harness Tension Comp. Harness Tension Comp.Cords Cords

(Nos.) (Nos.) (Nos.) (Kms.) (Nos.) (Nos.) (Nos.) (Kms.)

Opening Stock 368 – 568 13 249 1 398 13Production 16,270 398 58,134 447 16,779 389 43,666 365Total 16,638 398 58,702 460 17,028 390 44,064 378Sales / Consumption 16,253 398 57,943 439 16,660 390 43,496 365Closing Stock 385 – 759 21 368 – 568 13

Year ended Year endedMarch 31, 2007 March 31, 2006

B. ValueYear ended March 31, 2007 Year ended March 31, 2006

Opening Sales Closing Opening 4 Sales ClosingStock Stock Stock Stock

Wiring Harness 82,882 5,072,806 101,135 59,588 5,025,569 82,882High Tension Cords 1 92,814 – 9 103,906 1Plastic Comp. 80,754 2,955,862 44,144 10,247 1,397,649 80,754Wires 65,501 2,231,128 87,919 61,944 348,485 65,501Others 5 5,042 459,578 3,632 29,751 258,677 5,042Total 234,180 10,812,188 236,830 161,539 7,134,286 234,1804 Includes stock taken over pursuant to amalgamation of erstwhile Draexlmaier & Motherson Electrical Systems India

Limited and Motherson Advance Polymers Limited with the Company.5 Quantitative information in respect of value disclosed in others is not being given separately as the related revenue and

costs are less than 10% of total revenue and cost of the Company.


(Numbers in Thousands)







6 Includes Deemed Exports of Rs. 136,375 thousand (Previous Year Rs. 117,990 thousand)

7 Not ascertainable as the products manufactured by the Company are of variable size & technical complexities.

8 No Single raw material or components accounts for more than 10% of total consumption


a) FOB Value of Exports 6 2,039,647 1,486,939b) Interest Received

– from subsidiary 33,338 14,813– from Others 34,274 32,489

c) Reimbursement from Customers 6 5,237d) Service Income 3,741 –e) Refund of Value Added Taxes received – 1,669

12.Earnings in foreign currency during the year

a) Amount remitted 100,482 87,376b) No of non-resident shareholders 2 2c) No of shares held by them (in thousands) 87,376 87,376d) Year to which dividend pertains Year ended Year ended

March 31, 2006 March 31, 2005

13.Remittance in foreign currency during the year on account of dividend

a) Licensed Capacity N. A. N. A.b) Installed Capacity of 7

i) Wiring Harness (Nos.) N. A. N. A.ii) High Tension Cords (Nos.) N. A. N. A.iii) Rubber Components (M.T.) N. A. N. A.iv) Plastic Components (M.T.) N. A. N. A.v) Wires (Km’s) N. A. N. A.

c) Actual Production of i) Wiring Harness (Nos.) 16,270 16,779ii) High Tension Cords (Nos.) 398 389iii) Plastic Components (M.T.) 58,134 43,666iv) Wires (Km’s) 447 365

14.Licensed and Installed Capacity

15.Raw Materials and Components consumed during the year

Year ended March 31, 2007 Year ended March 31, 2006Raw Materials and Components Qty Value Qty Value

a) Copper (MT) 4,131 1,380,294 3,689 738,935b) Others 8 5,108,272 3,341,383

(Figures in Thousands)

(Figures in Thousands)



Schedules forming part of the AccountsSchedule XIII – Significant Accounting Policies and Notes forming part of the Accounts (Contd.)

9 Potential conversion of Zero Coupon Currency Convertible Bonds issued is anti-dilutive and accordingly, has not beenconsidered in the calculation of diluted earnings per share.


Weighted Average number of Equity Shares of Re. 1 /- each (Previous Year Re 1/- each ) outstanding at the end of the year 234,889,200 234,889,200Net profit after tax available for equity Shareholders (Rs. in thousand) 1,141,773 826,699Basic/ Diluted Earnings (in Rupees) Per Share of Re. 1/- each. (Previous Year Re 1/- each ) 9 4.86 3.52

16.Earnings per share

Timing differences on account of: As at Credit/ (Charge) As atMarch 31, 2007 for the year March 31, 2006 10

Expenses charged in the financial statements but allowable as deductions in future years under the Income Tax Act (to the extent considered realizable) (72,104) 45,805 (26,299)Difference between depreciation as per financial statement and depreciation as per Income Tax Return 123,067 (6,507) 129,574Net Deferred Tax Liability/ (Asset) 50,963 (52,312) 103,275

17.Deferred Taxi) The break up and movement of net deferred tax liability for the year ended March 31, 2007 is as under:

10 Includes Deferred tax liabilities amounting to Rs. 85 thousand taken over consequent to amalgamation of Draexlmaier& Motherson Electrical Systems India Limited.

ii) In view of the Company’s past financial performance and future profit projections, the Company expects to fully recoverthe Deferred Tax Assets.

Description Opening Additions Utilized/Reversed Closing BalanceBalance during the year during the year

WarrantyCurrent Year 2,046 4,395 4.441 2,000Previous Year 1,972 229 155 2,046

18.The Company has the following provision in the books of accounts as on March 31,2007

Warranty provision relates to the estimated outflow in respect of warranty for products sold by the Company. Due to the verynature of such costs, it is not possible to estimate the timing / uncertainties relating to the outflows of economic benefits.

11 Public Issue proceeds12 Reinstated as at year end rate.

19.The Company has utilized the proceeds on issue of Euro 50,300,000 Zero Coupon Foreign Currency ConvertibleBonds to the public in the following manner:

Particulars Year ended March 31, 2007 Year ended March 31, 2006(Euro) (Rs.) (Euro) (Rs.)

Funds available 29,316 1,582,116 50,300 11 2,616,103 11

Less: Issue Expenses – – 1,408 73,251Less: Investment in overseas subsidiary companies through loans / capital 24,116 1,398,478 20,076 1,069,551Add : Interest Received 603 34,915 500 27,020 Unutilized Public Issue Proceeds in Deposits 5,803 336,179 12 29,316 1,582,116 12







20.Related Party DisclosuresRelated party disclosures, as required by AS18, “Related Party Disclosures”, are given below:

I Relationships where control exists:Subsidiaries of the Company:MSSL Mideast (FZE)MSSL Mauritius Holdings LimitedMSSL Ireland Pvt. Ltd.MSSL Handels GmbHMotherson Electrical Wires Lanka Pvt. LtdMSSL (S) Pte LtdMotherson PUDENZ WICKMANN LimitedMSSL (GB) LimitedMSSL GmbHMotherson Sumi Wiring Systems Ltd (FZC)MSSL Tooling (FZE)Global Environment Management (FZC)MSSL Australia Pty. LtdMotherson Elastomers Pty LtdMotherson Investments Pty LtdMotherson sumi Reiner GmbHG & S Kunststofftechnik GmbHGlobal Environment Management Australia Pty. LtdFP Formagrau s.r.o.

II. Other Related Partiesa. Joint Ventures

Kyungshin Industrial Motherson LimitedSchefenacker Motherson LimitedBalda Motherson Solution India Limited 13

Woco Motherson Elastomer LimitedWoco Motherson Advanced Rubber Technologies LimitedWoco Motherson Ltd. (FZC)13 Issue of fresh equity shares by the company on June 26, 2006 consequent to which the company became a jointventure instead of a subsidiary.

b. Associate CompaniesSaks Ancillaries Limited

c. Key Management Personneli) Board of Directors:

Mr. V C SehgalMr. Toshimi ShirakawaMr. M S GujralMr. Bimal DharMr. H MuraiMr. A YamauchiMr. M MatsushitaMaj. Gen Amarjit Singh (Retd)Mr. Pankaj MitalMr Arjun Puri

ii) Other Key Management Personnel:Mr. Vivek AvasthiMr. Ravindra MathurMr. G.N. GaubaMr. N Ramanathan





iii) Relatives of Key Management Personnel:Mr. Laksh Vaaman SehgalMrs. Renu SehgalMs. Vidhi SehgalMrs. Geeta SoniMrs. Neelu MehraLate Mr. P. AvasthiMrs. P. AvasthiMr. Harjit SinghMs Subina Avasthi

d. Companies in which Key Managerial Personnel or their relatives have control/ significant influence:Motherson Auto LtdMotherson Air Travel Agencies LimitedGanpati Auto IndustriesSouth City Motors Ltd.ASI Motherson Communication Solutions LimitedMotherson Techno Tools LimitedSumi Motherson Innovative Engineering LimitedSWS India Management Support & Service (P) LtdVaaman Auto IndustriesA Basic Concepts Design India Private LtdMotherson Sumi Infotech and Designs LimitedMotherson Engineering Research and Integrated Technologies LimitedMoon Meadows Pvt. Ltd.Sisbro Creations Pvt. Ltd.Motoman Motherson Robotics Ltd.NACHI Motherson Tool Technology LimitedMotherson Consultancy Pvt. Ltd.Samvardhana Motherson Finance Ltd.A Basic Concepts Design Pty LtdATAR Mauritius Pvt. Ltd.Motherson Auto Solutions Pvt. LtdMotherson Machinery and Automations Pvt. LtdSpheros Motherson Thermal System LimitedMotherson Automation Technology LtdMatsui Technologies India LimitedMotherson Moulds and Diecasting LtdASI Motherson Communications Solution Ltd.Webasto Motherson Sunroofs LimitedAnest Iwata Motherson LimitedField Motor Private LimitedAES (India) Engineering LimitedMiyazu Motherson Engineering Design LimitedMotherson Moulds Pvt. LtdAnest Iwata Motherson Coating Equipment Limited

e. Joint Venturer:Sumitomo Wiring Systems Limited, JapanWilhelm Pudenz GmbH, GermanySchefenacker International AG & Co.Kyungshin Industrial Co., KoreaWoco Franz Josef Wolf Holding GmbHBalda AG





III. Details of transactions, in the ordinary course of business at commercial terms, and balances with related partiesas mentioned in I & II above:

S.No. Particulars Parties mentioned Parties mentioned Parties mentioned Parties mentioned Parties mentionedin 20 (I) above in 20 (II) (a)above in 20 (II) (b)& (d)above in 20 (II) (e)above in 20 (II) (c)above

Current Previous Current Previous Current Previous Current Previous Current PreviousYear Year Year Year Year Year Year Year Year Year

1. Sale of Goods 475,581 181,871 332,784 195,694 20,878 12,419 386,921 340,661 – –

2. Rendering of Services 386 7,012 15,068 139 17,215 10,612 4,719 – – –

3. Sale of Fixed Assets – 11,164 – – – 223 – – – –

4. Purchase of Goods 624,405 276,311 16,365 7,950 409,556 390,071 301,257 277,164 – –

5. Purchase of Fixed Assets 6,495 155,266 723 4,023 40,638 37,743 699 1,147 – –

6. Purchase of Services – 11,517 476 266 212,645 202,783 2,103 7,878 3,151 14 2,844 14

7. Reimbursement (Net) 20,484 17,984 3,404 (172) (769) (396) 1,934 6,354 – –

8. Investments made during

the year 51,120 500 297,142 32,833 – 12,500 – – – –

9. Purchase of Shares – – – – – 27,233 – 11,400 – –

10. Sale of Shares – – – – – – – 22,620 – –

11. Royalty – – – – – – 52,250 39,909 – –

12. Remuneration/

Sitting Fees of Directors – – – – – – – – 17,429 14,174

13. Interest Income 33,338 15,087 8,660 – – – – – – –

14. Interest Expense 834 – 521 – 547 639 – 329 – –

15. Dividend Paid – – – – 77,223 67,150 74,284 64,595 16,394 15 14,269 15

16. Dividend Received – – 45,200 26,240 151 – – – – –

17. Advance given against Equity /

Preference Shares 719,605 2,000 – – – – – – – –

18. Loans Received during the year 24,000 – – – 40,000 25,000 – – – –

19. Loans Given during the year 7,282 469,323 147,120 – – – – – – –

20. Loans Repaid during the year 24,000 – – – 30,000 25,000 – 71,388 – –

21. Loans Received back

during the year 154,416 – 15,000 – – – – – – –

22. Security Deposits Received – 2,561 9,535 – 544 1,607 – – – –

23. Security Deposits Repaid – – – – – 2,400 – – – –

Balance as at year end24. Investments 95,960 56,233 445,816 136,781 38,230 38,230 – – – –

25. Advance given against Equity /

Preference Shares 719,605 2,000 – – – – – – – –

26. Loans Payable – – – 15,199 10,000 – – – – –

27. Loans Receivable 307,433 418,730 147,120 – 726 – – – – –

28. Advances Receivable 3,546 2,052 4,699 26 1,817 7,317 – 22,620 – –

29. Security Deposit Received – 2,561 2,561 – 2,298 1,960 – – – –

30. Security Deposits Given – – – – 2,877 7,706 – – 542 542

31. Guarantees Closing 194,100 291,865 97,500 97,500 – – – – – –

32. Trade Payable 62,299 32,084 6,283 1,122 115,053 135,064 71,944 50,347 – –

33. Trade Receivable 157,159 20,909 10,164 22,258 4,434 40,568 28,720 27,966 – –


14 Rent of Rs. 3,151 thousand paid to Mr. V.C Sehgal, Mr. P. Avasthi, Mr. Laksh Vaaman Sehgal, Mrs. Renu Sehgal, Ms. Vidhi Sehgal& Ms. Geeta Soni.

15 Dividend of Rs. 16,394 thousand paid to Mr. V. C. Sehgal, Mr. Laksh Vaaman Sehgal, Mrs. Neelu Mehra, Mrs. Geeta Soni, Ms. Vidhi Sehgal, Mr. Pankaj Mital, Mr. M.S. Gujral, Mr. G.N.Gauba, Mr. Vivek Avasthi, Mrs. Renu Sehgal, Mrs. Padma Avasthi, Ms. Subina Avasthi, Mr. Harjit Singh, Mr. R. Ganpati




21.Segment Informationa. Information about Primary Business Segments

Automotive Non automotive Unallocated Total

Current Previous Current Previous Current Previous Current PreviousYear Year Year Year Year Year Year Year

Segment revenue External 9,368,198 6,259,190 1,760,640 1,022,516 3,825 105,742 11,132,663 7,387,448

Inter-segment 135,598 56,990 – – – – 135,598 56,990 Total revenue 9,232,600 6,202,200 1,760,640 1,022,516 3,825 105,742 10,997,065 7,330,458Results Segment result 1,284,150 737,233 306,528 220,921 – – 1,590,678 958,154 Interest expense (net of Interest income) – – – – 177,926 124,870 177,926 124,870 Other Unallocable (net of Income) – – – – (3,825) (105,744) (3,825) (105,744)Profit before taxation – – – – – – 1,416,577 939,028 Provision for taxation – – – – 274,804 112,329 274,804 112,329 Net profit after tax – – – – – – 1,141,773 826,699 Other items Segment assets 6,280,055 4,828,845 882,386 627,429 2,686,005 3,062,599 9,848,446 8,518,873 Segment liabilities 1,170,946 1,053,023 387,840 277,047 5,299,876 4,928,580 6,858,662 6,258,650 Capital expenditure 1,058,482 776,226 56,182 21,522 – – 1,114,664 797,748 Depreciation 369,864 330,101 77,581 27,167 – – 447,445 357,268 Amortization of Premium on Redemption of Zero Coupon Foreign currency convertible bonds – – – – 170,409 121,322 170,409 121,322


b. Information about Secondary Business Segments

India Outside India 16 Unallocated Total


Revenue by geographical markets External 8,557,484 5,709,950 2,435,756 1,514,766 3,825 105,742 10,997,065 7,330,458 Total 8,557,484 5,709,950 2,435,756 1,514,766 3,825 105,742 10,997,065 7,330,458 Carrying amount of segment assets 6,692,251 5,003,684 469,490 452,590 2,686,705 3,062,599 9,848,446 8,518,873 Addition to fixed assets 1,112,230 791,372 2,434 6,376 – – 1,114,664 797,748


16 Includes Europe, Americas, Asia Pacific, Middle East and Australia

c) Composition of Business Segments

The Company is organized into two main business segments, namely:

Automotive Wiring Harness, High Tension Cords, Wire, Plastic Components, Rubber Components, Cockpit Assembly

Non Automotive Wiring Harness, Pen-Stamp Assembly, Plastic Components, Household Wires, Plates, Aerobin

d) Inter Segment Transfer PricingInter Segment prices are normally negotiated amongst the segments with reference to the costs, market prices andbusiness risks, with an overall optimisation objective for the Company.





Name of the Company Country of % Voting power % Voting powerIncorporation held as at held as at

March 31, 2007 March 31, 2006Kyungshin Industrial Motherson Limited India 50% 50%Schefenacker Motherson limited India 49% 49%Balda Motherson Solution India Limited India 40% 17 100%Woco Motherson Elastomer Limited India 33.33% 33.33% 18

Woco MothersonAdvanced Rubber Technologies Limited India 33.33% 33.33%

22.Interests in Joint Ventures:The Company’s interests, as a venture, in jointly controlled entities as at March 31, 2007 are:

The following amounts represent the Groups share of the assets and liabilities and revenue and expenses of the joint ventureand are included in the consolidated balance sheet and consolidated profit & loss account:

17 In terms of the joint venture agreement with Balda AG, Germany, Balda Motherson Solution India Ltd has issued furtherequity shares on June 26, 2006 reducing the Company’s shareholding to 40%. Consequently, Balda Motherson SolutionIndia Limited has ceased to be a subsidiary company and has been accounted for as a joint venture of the Company. Hence,the current year’s figures are not directly comparable with the previous year’s figures.

18 Woco Motherson Elastomers Limited had ceased to be a 100% subsidiary of the Company w.e.f. March 31, 2006 and hasbeen accounted for as a Joint Venture during the current year. Consequently the current year’s figures are not comparablewith the previous year’s figures.

Particulars 2007 2006AssetsFixed Assets 524,091 162,539Capital Work in Progress 78,195 74,384Current Assets 689,094 428,366LiabilitiesSecured Loans 125,906 107,164Unsecured Loans 169,502 16,665Current Liabilities & Provisions 423,461 288,484Deferred Tax (Net) 2,226 1,898Reserves & Surplus 124,792 103,221RevenueSales 1,489,699 1,024,260Other Income 24,208 5,451Expenditure 1,400,910 941,139Profit before Tax 112,997 88,572Provision for Tax 51,978 32,898Profit after Tax 61,019 55,674Contingent Liabilities– In respect of Excise, Sales tax & Service tax matters 6,806 4,097– Bank Guarantees 9,588 1,171Capital Commitment 56,154 6,309



Schedules forming part of the AccountsSchedule XIII – Significant Accounting Policies and Notes forming part of the Accounts (Contd.)

23.The Company has a comprehensive system of maintenance of information and documents as required by the transfer pricinglegislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information anddocumentation to be contemporaneous in nature, the Company appoints independent consultants for conducting a TransferPricing Study to determine whether the transactions with associate enterprises are undertaken, during the financial year, onan "arms length basis". Adjustments, if any, arising from the transfer pricing study shall be accounted for as and when thestudy is completed for the current financial year. However the management is of the opinion that its international transactionsare at arm's length so that the aforesaid legislation will not have any impact on the financial statements, particularly on theamount of tax expense and that of provision for taxation.

24.The corresponding figures of previous year have been regrouped, rearranged wherever necessary to conform to the currentyear’s classification.


V.C. Sehgal A. Yamauchi Pankaj MitalChairman Whole time Director Chief Operating Officer

Place: Noida G. N. GaubaDate : May 26, 2007 Co. Secretary & V.P. Finance



Information pursuant to part IV of Schedule VI of the Companies Act, 1956





Public Issue

Bonus Issue

3 1 0 3

Registration No.

Balance Sheet Date

I. Registration Details

II. Capital Raised during the year (Amount in Rs. Thousands)

Total Liabilities

III. Position of Mobilisation & Deployment of Funds (Amount in Rs. Thousands)

2 0 0 7

Date Month Year

Private Placement

Paid-up Capital

Sources of Funds

Total Assets

Reserves & Surplus

IV. Performance of Company (Amount in Rs. Thousands)

Product Description Item Code

V. Generic Names of three Principal Products/Services of the Company (As per monetary terms)

Net Fixed Assets Investments

Turnover Total Expenditure

Application of Funds

7 0 4 0 8 2 2

2 3 4 8 8 9

1 0 9 9 7 0 6 5 9 5 8 0 4 8 8

Profit/Loss before Tax Profit/Loss after Tax+ 1 4 1 6 5 7 7 + 1 1 4 1 7 7 3

Earnings Per Share in Rs. Dividend Rate%4 . 8 6 1 5 0

3 3 1 7 6 5 7 1 3 0 0 2 0 6

Net Current Assets Misc. Expenditure1 8 3 8 1 2 4 5 8 4 8 3 5

Integrated Wiring harness 8 5 4 4 . 9 0

Rubber Components 4 0 1 6 0 0 0 0

PVC Insulated Wire 8 5 4 4 . 9 0

Accumulated Losses N I L

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Secured Loans Unsecured Loans9 4 6 3 9 2 3 0 3 3 6 5 4

Deferred Tax (Net) 5 0 9 6 3

Balance Sheet Abstract and Company’s General Business Profile




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Statement pursuant to exemption received under Section 212 (8) of theCompanies Act, 1956 relating to subsidiary companies


S.No. Name of the MSSL Reporting Exchange Capital Reserves Total Turnover Profit Provision Profit Proposed

Subsidiary Company Holding Currency Rate Assets

Total Investments

Liabilities Before for After Tax Dividend

Tax Taxation

1. MSSL Mideast (FZE) 100% Euro 57.93 524,122 654,279 1,575,495 1,194,897 209,535 – 209,535 –

2. Motherson Sumi Wiring

System Limited 2 51% Euro 57.93 231,736 1,201 640,306 248,036 1,201 – 1,201 –

3. MSSL GmbH 2 100% Euro 57.93 14,483 32,723 632,657 100,223 (64,366) 2,005 (66,370) –

4. G & S Kunststofftechnik GmbH 3 100% Euro 57.93 2,966 78,596 203,168 785,678 (42,606) (2,433) (40,173) –

5. Motherson sumi Reiner GmbH 3 100% Euro 57.93 11,587 9,353 158,708 477,712 (67,427) 2,375 (69,803

6. FP Formagrau s.r.o. 3 100% Euro 57.93 4,223 9,773 91,042 19,505 9,974 201 9,773 –

7. MSSL GB Limited 2, 6 100% GBP 85.37 85 (27,928) 109,411 145,437 (27,960) – (27,960) –

8. MSSL Mauritius Holding Ltd 100% Euro 57.93 30,415 68,485 122,700 – 38,492 – 38,492 –

9. MSSL Tooling (FZE) 4 100% Euro 57.93 1,883 (63,351) 83,082 31,233 (43,250) – (43,250) –

10. MSSL Ireland Pvt Limited 4 100% Euro 57.93 2,897 (33,984) 8,346 16,607 5,723 – 5,723 –

11. Global Environment

Management (FZC) 4 50.07% Aus $ 35.07 49,252 (28,611) 60,543 99 (9,112) – (9,112) –

12. Global Environment Management

Australia Pty Limited 5 100% Aus $ 35.07 0 (42,960) 19,871 39,322 (42,960) – (42,960) –

13. MSSL (S) Pte Limited 100% Singapore $ 28.59 54,329 335 55,435 – 779 – 779 –

14. MSSL Australia Pty Limited 80% Aus $ 35.07 222,096 8,623 286,438 42,036 12,318 3,696 8,623 –

15. MSSL Handels GmbH 100% Euro 57.93 2,028 (5,106) 5,196 1,727 244 – 244 –

16. Motherson Electrical

Wires Lanka Pvt. Ltd. 100% Sri Lankan 0.40 5,817 189,845 224,908 755,643 130,213 3,224 126,989 –

Rupee

17. Motherson PUDENZ Indian

WICKMANN Limited 56.13% Rupee 1.00 25,000 20,275 66,292

1,575,495 382,455

640,306

632,657 195,732

203,168

158,708

91,042

109,411

122,700 6,774

83,082

8,346

60,543

19,871

55,435 250,717

286,438

5,196

224,908

66,292 51,730 7,286 (193) 7,479 –

–

–

–

–

–

–

–

–

–

–

–

–

1 As required under Para VI of the approval dated April 26, 2006 - issued by Ministry of Company Affairs , Indian rupees equiv-alents of the figures in the foreign currencies in the accounts of subsidiary companies has been given based on year end inter-bank exchange rates.

2 Subsidiary of MSSL Mideast (FZE)3 Subsidiary of MSSL GmbH4 Subsidiary of MSSL Mauritius Holding Ltd.5 Subsidiary of Global Environment Management (FZC)6 Reporting date revised to December 31, 2006 in the current year


1. We have audited the attached Consolidated Balance Sheet of

Motherson Sumi Systems Limited and its subsidiaries, joint

ventures and associate as at March 31, 2007, the

Consolidated Profit and Loss Account for the year ended on

that date annexed thereto, and the Consolidated Cash Flow

Statement for the year ended on that date, which we have

signed under reference to this report. These consolidated

financial statements are the responsibility of the

management. Our responsibility is to express an opinion on

these consolidated financial statements based on our audit.

2. We have conducted our audit in accordance with auditing

standards generally accepted in India. Those Standards

require that we plan and perform the audit to obtain

reasonable assurance about whether the financial

statements are prepared, in all material respects, in

accordance with an identified financial reporting framework

and 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.

3. These financial statements have been prepared after giving

effect to the amalgamation of the erstwhile M/s Motherson

Advance Polymers Limited (MAPL), a subsidiary of the

Company, with the Company with effect from the appointed

date February 1, 2006 (Refer Note B(1) on Schedule XIII).

The amalgamated financial statements for the year ended

March 31, 2006 presented as the corresponding previous

year figures have been reviewed by us and have been

considered as opening balances for these financial

statements.

4. We did not audit the financial statements of certain

subsidiaries, joint ventures and associate, who collectively in

these financial statements reflect total assets of

Rs. 2,741,593 thousand as at March 31, 2007 and total

revenues of Rs. 3,892,608 thousand for the year ended on

that date. These financial statements have been audited by

other auditors, whose reports have been furnished to us and

our opinion, insofar as it relates to the amounts included in

respect of these subsidiaries, joint ventures and associate, is

based solely on the report of the other auditors.

5. We report that the consolidated financial statements have

been prepared by the Company in accordance with the

requirements of Accounting Standard 21, Consolidated

Financial Statements, issued by the Institute of Chartered

Accountants of India and on the basis of the separate

audited financial statements of Motherson Sumi Systems

Limited and its subsidiaries, joint ventures and associate,

included in the consolidated financial statements.

6. On the basis of the information and explanations given to us

and on consideration of the separate audit reports on

individual audited financial statements of Motherson Sumi

Systems Limited and its aforesaid subsidiaries, joint ventures

and associate, in our opinion, the consolidated financial

statements give a true and fair view in conformity with the

accounting principles generally accepted in India:

a) in the case of the consolidated balance sheet, of the

consolidated state of affairs of Motherson Sumi Systems

Limited and its subsidiaries as at March 31, 2007;

b) in the case of the consolidated profit and loss account,

of the consolidated results of operations of Motherson

Sumi Systems Limited and its subsidiaries for the year

ended on that date; and

c) in the case of the consolidated cash flow statement, of

the consolidated cash flows of Motherson Sumi Systems

Limited and its subsidiaries for the year ended on that

date.

Kaushik DuttaPartner

Membership No. F 88540For and on behalf ofPrice WaterhouseChartered AccountantsNoida, May 26, 2007

To the Board of Directors of



Consolidated Auditors’ Report

Consolidated Balance Sheet as at March 31, 2007



Schedule 31.03.2007 31.03.2006

SOURCES OF FUNDSShareholders' FundsShare Capital I 234,889 234,889 Reserves & Surplus II 3,561,254 2,704,376

3,796,143 2,939,265 Minority InterestCapital 137,305 13,157 Reserves 1,638 10,006 Loan FundsSecured Loans III 1,156,773 1,212,253 Unsecured Loans IV 3,445,109 3,052,219 Deferred tax liability (net) (Refer B (10) of Schedule XIII) 73,070 113,064 Total 8,610,038 7,339,964 APPLICATION OF FUNDSFixed AssetsGross Block V 7,620,673 5,405,088 Less: Depreciation 2,770,478 2,178,998 Net Block 4,850,195 3,226,090 Capital Work in Progress 178,288 553,505

5,028,483 3,779,595 Investments VI 47,489 47,068 Current Assets, Loans and Advances VIIInventories 2,003,413 1,449,787 Sundry Debtors 2,407,857 1,396,461 Cash & Bank Balances 993,577 1,780,652 Loans & Advances 1,362,636 1,062,457

6,767,483 5,689,357 Less: Current Liabilities & Provisions VIIICurrent Liabilities 2,502,054 1,763,709 Provisions 1,316,198 1,167,591

3,818,252 2,931,300 Net Current Assets 2,949,231 2,758,057 Miscellaneous Expenditure (To the extent not written off or adjusted) IX 584,835 755,244 Total 8,610,038 7,339,964 Significant Accounting Policies and Notes forming part of the Accounts XIII

This is the Consolidated Balance Sheet referred The schedules referred above form integral to in our report of even date part of the Consolidated Balance Sheet


Kaushik Dutta V. C. Sehgal A. Yamauchi Pankaj MitalPartner Chairman Whole time Director Chief Operating Officer M.No.: F88540





Consolidated Profit and Loss Account for the year ended March 31, 2007

This is the Consolidated Profit and Loss Account The schedules referred above form integral part of the referred to in our report of even date Consolidated Profit and Loss Account






Schedule 31.03.2007 31.03.2006

INCOMESale of Finished Goods (Gross) 17,064,804 11,311,419 Less: Excise duty 1,789,060 1,156,019 Sale of Finished Goods (Net) 15,275,744 10,155,400 Other Income X 217,584 284,739 Total 15,493,328 10,440,139 EXPENDITUREManufacturing and other expenses XI 12,985,984 8,559,785 Depreciation (Refer B (14) of Schedule XIII) 646,364 463,331 Interest (net) XII 237,971 158,251 Total 13,870,319 9,181,367 Profit Before Taxation and adjustments 1,623,009 1,258,772 Share of Profit in Associate (Refer B (4) (B) of Schedule XIII) 1,703 2,158 Profit Before Taxation 1,624,712 1,260,930 Tax ExpenseProvision for Current Income Tax 427,354 186,946 Provision for Deferred Income Tax (Refer B (9) of Schedule XIII) (48,078) (13,522)Provision for Wealth Tax 2,052 1,538 Provision for Fringe Benefit Tax 13,798 14,515

1,229,586 1,071,453 Less : Income Tax for earlier years (57,238) (20,075)Profit After Taxation 1,286,824 1,091,528 – Concern share 1,295,192 1,071,196 – Minority (8,368) 20,332 Add: Balance brought forward from previous year 1,289,314 736,195 Surplus Available For Appropriation 2,584,506 1,807,391 AppropriationsTransfer to General Reserve 255,465 206,370 Proposed Dividend 352,334 270,123 Tax on Dividend 59,879 37,885 Tax paid on Dividend by consolidated companies 6,339 3,699 Balance Carried to Balance Sheet 1,910,489 1,289,314 Total 2,584,506 1,807,391 Earning per share (Basic/ Diluted) of face value Re. 1/- each 5.51 4.56(Refer B (8) of Schedule XIII)



Consolidated Cash Flow Statement for the year ended March 31, 2007



Particulars 2006-07 2005-06

A. CASH FLOW FROM OPERATING ACTIVITIES

Net (loss)/profit before tax 1,624,712 1,260,930

Adjustments for:

Share of Profit in Associate (1,703) (2,158)


Amortization 1,248 1,248

Interest Expense 292,296 200,384

Interest Income (54,325) (42,133)

Income from Investment - Dividends (153) (158)

Lease Rent 35,873 25,166

(Profit)/Loss on Fixed Assets sold 66 11,471

(Profit/Loss on sale/dimunition in value of Investments 34 (6,682)

Gain on account of sale / change in shareholding in subsidiaries – (5,237)

Debts / Advances Written off 8,637 142

Provision for Bad & Doubtful Debts / Advances 4,991 1,727

Liability no longer required written back (5,130) (24,180)

Provision for Gratuity & Leave Encashment 19,663 11,714

Waiver of claims from suppliers – (74,905)

Unrealised foreign exchange (gain) /loss 178,399 13,196

Provision for warranty (1,097) 617

Operating profit before working capital changes 2,749,875 1,834,473

Adjustments for changes in working capital

– (Increase)/Decrease in Sundry Debtors (980,906) (433,005)

– (Increase)/Decrease in Other Receivables (527,092) (313,989)

– (Increase)/Decrease in Inventories (529,481) (290,524)

– Increase/(Decrease) in Trade and Other Payables 570,072 363,481

Cash generated from operations 1,282,468 1,160,436

– Taxes (Paid) / Received (Net of TDS) (400,458) (244,720)

Net cash from operating activities 882,010 915,716

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets Including CWIP (1,474,486) (1,779,170)

Proceeds from Sale of fixed assets 17,326 31,376

Proceeds from Sale of Investments – 10,299

Purchase of minority interest in subsidiary – (12,330)

Purchase of investments – (12,500)

Consideration paid for acquisition of subsidiary (59,043) (98,279)

Consideration paid for acquisition of business as a going concern – (2,695)

Lease Rent Payment (35,873) (25,166)

Interest Received (Revenue) 42,505 38,775

Dividend Received 153 158

Loan received back – 47,182

Net cash used in investing activities (1,509,418) (1,802,350)



Consolidated Cash Flow Statement (Contd.)


Particulars 2006-07 2005-06

C. CASH FLOW FROM FINANCING ACTIVITIESProceeds from minority shareholders' 115,285 2,156 Proceeds from long term borrowingsReceipts 409,156 2,782,567 Payments (272,774) (369,544)Proceeds from short term borrowingsReceipts – 14,856 Payments (2,369) (87,345)Proceeds from Cash Credits (net) (24,232) 384,115 Interest Paid (112,602) (75,405)Dividend Paid (269,434) (234,182)Dividend Tax Paid (44,224) (36,642)Net cash used in financing activities (201,194) 2,380,576 Net Increase/(Decrease) in Cash & Cash Equivalents (828,602) 1,493,942 Cash and cash equivalents - Opening 1,780,654 209,024 Add: Cash and cash equivalents acquired consequent to acquisition of subsidiaries/business during the year 5,984 22,146 Less: Proportionate Share of cash and cash equivalents of the venturer transferred consequent to sale/dilution in shareholding in Woco Motherson Elastomers Limited – 3,303 Cash and cash equivalents - Closing 958,036 1,721,809 Cash and cash equivalents compriseCash In Hand 6,378 3,255 Cheques In Hand 9,958 10,804 Deposit Account 659,453 1,597,244 Balance with Banks 317,788 169,351 Total Cash and cash equivalents 993,577 1,780,654 Cash and Cash Equivalents include :Cash & bank balances as per Balance Sheet (restated) 993,577 1,780,654 Net Unrealised Loss on Foreign Currency Cash & Equivalents (35,541) (58,845)Total 958,036 1,721,809

This is the Consolidated Cash Flow Statement referred to in our report of even date for and on behalf of the Board




Notes:i) The above Cash Flow Statement has been prepared under the Indirect Method as set out in the Accounting Standard - 3 on Cash

Flow Statement issued by the Institute of Chartered Accountant of India.

ii) Previous year's figures have been regrouped wherever necessary to conform to the current year's classification.

iii) Following non cash transactions have not been considered in the cash flow statement :-Tax deducted at source on income.

iv) Figures in brackets indicate cash outgo.


Schedules forming part of the Consolidated Balance Sheet as at March 31, 2007



31.03.2007 31.03.2006

Authorised 1

803,000,000 Equity Shares of Re. 1/- each (Previous Year 803,000,000 Equity Shares of Re. 1/- each) 803,000 803,000

Issued234,892,400 Equity Shares of Re. 1/- each

(Previous Year 234,892,400 Equity Shares of Re. 1/- each) 234,892 234,892 Subscribed and Paid up

234,889,200 Equity Shares of Re. 1/- each (Previous Year 234,889,200 Equity Shares of Re. 1/- each) 234,889 234,889 (Of the above shares 6,090,000 (6,090,000) shares are allotted as fully paid up pursuant to a contract for consideration other than cash) (Of the above shares 165,292,400 (165,292,400) shares are allotted as fully paid bonus shares by way of capitalisation of share premium & general reserve).

Total 234,889 234,889

1 Increased consequent to amalgamation of erstwhile Motherson Advance Polymers Limited with the Company and in accordancewith the order of Hon'ble High court of judicature of Delhi. (Refer B(1) of Schedule XIII).

Schedule I – Share Capital

31.03.2007 31.03.2006

Revaluation Reserve 20,031 20,031 Reserve on AmalgamationAs per Last Balance Sheet 572,346 80,352 Additions during the year 1 – 491,994 Deductions during the year – 572,346 – 572,346 General ReserveAs per Last Balance Sheet 824,158 617,788 Additions during the year 255,465 206,370 Deductions during the year – 1,079,623 – 824,158 Exchange Reserve on Consolidation (Refer A(9) on Schedule XIII)As per Last Balance Sheet (18,080) (4,097)Additions during the year (28,642) (13,983)Deductions during the year – (46,722) – (18,080)Capital Reserve on Consolidation (Refer A(2) on Schedule XIII)As per Last Balance Sheet 16,607 47,353 Additions during the year 8,880 – Deductions during the year – 25,487 30,746 16,607 Profit and Loss AccountAs per Last Balance Sheet 1,289,314 736,195 2

Additions during the year 876,640 759,489 Deductions during the year 255,465 1,910,489 206,370 1,289,314 Total 3,561,254 2,704,376

1 a) Includes Rs. 25,050 thousand on account of amalgamation of erstwhile Draexlmaier & Motherson Electrical Systems IndiaLimited and

b) Rs. 466,944 thousand on account of amalgamation of erstwhile Motherson Advance Polymers Limited. (Refer B(1) of ScheduleXIII).

2 a) Includes Rs. 4,223 thousand on account of amalgamation of erstwhile Draexlmaier & Motherson Electrical Systems India Limitedand

b) Rs. 467,169 thousand on account of amalgamation of erstwhile Motherson Advance Polymers Limited. (Refer B(1) of ScheduleXIII).

Schedule II – Reserves & Surplus





31.03.2007 31.03.2006

Short term loansi) From Banks 1

– Rupee Loan 396,647 602,160 – Foreign currency Loan 310,929 98,084

ii) From Others 2

– Rupee Loan 5,003 5,507 Long Term Loans 3

i) From Banks 4

– Rupee Loan 227,798 119,800 – Foreign currency Loan 195,419 252,838

ii) From Others 5

– Rupee Loan 20,977 133,864 Total 1,156,773 1,212,253

Schedule III – Secured Loans

Secured Loans referred above are 1 Rs. 47,937 thousand (previous year Rs. 9,721 thousand) is secured against hypothecation of stocks and book debts and guarantee

from promoters of the company of Kyungshin Industrial Motherson Limited, Rs. 16,371 thousand (previous year Rs. 11,917thousand) is secured by hypothecation over plant & machinery, inventories, stocks and a corporate guarantee from promoters ofthe company of Motherson Electrical Wires Lanka Private Limited, Rs. 3,341 thousand (previous year Rs. 7,937 thousand) securedby first charge by way of hypothecation of all current assets including present and future stocks, book debts and other specifiedmoveable assets and first charge on entire fixed assets present & future of Woco Motherson Elastomer Limited, balance securedby first charge by way of hypothecation of all present and future stocks, book debts and other specified moveable assets of theCompany and second charge by way of hypothecation of all immovable property of the Company.

2 Rs. 5,003 thousand secured by hypothecation of specific moulds, tools & dies of Schefenacker Motherson Limited used forproduction of components.

3 Long terms loans due within a Year are Rs. 211,712 thousand (Previous Year Rs. 89,818 thousand).4 Rs. 93 thousand (previous year Rs. 153 thousand) secured by way of hypothecation of specific vehicles of Schefenacker Motherson

Limited, Rs. 27,206 thousand (previous year Rs. 43,851 thousand) is secured against fixed assets, a guarantee from promoters of thecompany of Kyungshin Industrial Motherson Limited, Rs. 3,924 thousand (previous year Rs. 13,816 thousand) is secured byhypothecation over plant & machinery, inventories, stocks and a corporate guarantee from promoters of the company of MothersonElectrical Wires Lanka Private Limited, Rs. 42,326 thousand (previous year Rs. 39,996) is secured by way of hypothecation of all currentassets including stocks, book-debts and other specified assets, both present and future and entire fixed assets present and future ofWoco Motherson Advanced Rubber Technologist limited and balance secured by first pari-passu charge on entire fixed assets bothmoveable & immovable of the company present and future and second pari-pasu charge of the entire current assets of the company,these are also secured by way of deposit of title deeds of specified properties.

5 i) Tooling advances received from customers are repayable by way of amortisation on supply of components and hence cannot be distinguished between short term and long term.

ii) Secured by hypothecation of specific moulds used for production of components.





GROSS BLOCK DEPRECIATION NET BLOCK

Particulars As at Additions Deletions / Exchange Total as at Upto Depreciation/ Depreciation/ Exchange Upto As at As at

31.03.2006 during the Sale/ Translation 31.03.2007 31.03.2006 Amortization Amortization Translation 31.03.2007 31.03.2007 31.03.2006

year Adjustments Adjustment for the year on Delections/ Adjustment

Sale/

Tangible Adjustment

Leasehold Land 239,070 184,747 – – 423,817 9,147 3,840 – – 12,987 410,830 229,923

Freehold Land 118,223 45,878 – – 164,101 – – – – – 164,101 118,223

Leasehold improvements 57,711 238 – – 57,949 29,858 1,502 – – 31,360 26,589 27,853

Building 1,004,763 510,340 409 2,290 1,516,984 130,845 48,013 34 533 179,357 1,337,627 873,918

Plant & Machinery 1 3,483,563 1,356,981 46,389 14,229 4,808,384 1,722,600 482,854 38,948 1,561 2,168,067 2,640,317 1,760,963

Furniture, fixtures &

Office equipments 167,796 41,880 7,279 2,242 204,639 91,327 33,343 4,273 554 120,951 83,688 76,469

Computers 146,386 32,137 3,953 538 175,108 109,698 24,951 3,553 311 131,407 43,701 36,688

Vehicles 2 152,030 87,065 18,709 546 220,932 79,555 41,278 12,611 311 108,533 112,399 72,475

Intangible

Goodwill on consolidation 1,699 – – (79) 1,620 – – – (78) (78) 1,698 1,699

Technical Knowhow fees 1,169 – – 2 1,171 1,066 101 – 2 1,169 2 103

Customer Lists &

relationships 32,678 2,427 – 2,175 37,280 4,902 7,575 (71) 268 12,816 24,464 27,776

Intellectual property rights – 7,918 – 770 8,688 – 2,907 – 1,002 3,909 4,779 –

Total 5,405,088 2,269,611 76,739 22,713 7,620,673 2,178,998 646,364 59,348 4,464 2,770,478 4,850,195 3,226,090

Previous Year 4,584,441 1,058,077 227,240 (10,190) 5,405,088 1,869,716 463,331 152,040 (2,009) 2,178,998

Capital Work in Progress

(Include pre–operative

expenses of Rs. 5,239

thousand (Previous

Year Rs. 8,327 thousand) 178,288 553,505

Grand Total 5,405,088 2,269,611 76,739 22,713 7,620,673 2,178,998 646,364 59,348 4,464 2,770,478 5,028,483 3,779,595

Schedule V – Fixed Assets (Refer A(3), & A(4) of Schedule XIII

1 Includes items of plant and machinery having a gross block amounting to Rs. 89,891 thousand on which the Company has re-assessed the useful life during the year and accordingly charged additional depreciation on such items resulting in a chargeof Rs. 19,378 thousand during the current year.

2 Included Rs. 296 thousand (Previous Year Rs. 296 thousand) in respect of Vehicles acquired under finance lease.


1 Repayable on demand.2 Tooling advances received from customers are repayable by way of amortisation on supply of components and hence cannot be

distinguished between short term and long term.3 Long terms loans due within a Year are Rs. 119,422 thousand (Previous Year Rs. Nil).


31.03.2007 31.03.2006

Short term loans– Other than Banks 1 62,398 64,264

Long term loans From Other than Banks– Rupee Loan 2 136,022 54,344 – Foreign currency Loan 3 332,609 218,920 – Zero Coupon Foreign Currency Convertible Bonds (Refer B (6) of Schedule XIII) 2,914,080 2,714,691 Total 3,445,109 3,052,219

Schedule IV – Unsecured Loans




31.03.2007 31.03.2006

Long-term Investments1. In Associate

Saks Ancilliaries Limited– Goodwill

On Consolidation 6,239

Less : Amortisation 6,239 – 1,248

– Net Assets Value

As at the beginning of the year 17,687

Share of Profit in Associate 1,703 19,390 17,687

2. In Others 27,506 27,506

Short Term Investments in Shares 593 627

Total 47,489 47,068

Schedule VI – Investments

A. CURRENT ASSETS1. Stock in Trade (Refer A(6) on Schedule XIII)

i) Finished Goods 494,926 431,654ii) Work in Progress 356,901 214,838iii) Raw Material & Components 969,479 639,385iv) Goods in Transit(Raw Material & Components) 171,942 149,656v) Store & Spares 10,165 14,254

(1) 2,003,413 1,449,7872. Sundry Debtors (Unsecured, unless otherwise stated)

i) Outstanding for more than six monthsConsidered Good 904 1,340Considered Doubtful 7,144 9,014

8,048 10,354Less : Provision for doubtful debts 7,144 9,014

904 1,340ii) Other Debts

Considered good 2,406,953 1,395,121Considered Doubtful 5,185 2,499

2,412,138 1,397,620Less : Provision for doubtful debts 5,185 2,499

2,406,953 1,395,121(2) 2,407,857 1,396,461

3. Cash and Bank Balances i) Cash in hand 6,378 3,255ii) Cheques in hand 9,958 10,804iii) Balance with Banks in

a) Current Accounts 314,028 166,279b) Deposit account 1 659,453 1,597,244c) Dividend Account 3,760 3,072

(3) 993,577 1,780,654Total A (1+2+3) 5,404,847 4,626,902

Schedule VII – Current Assets, Loans and Advances





31.03.2007 31.03.2006

B. LOANS AND ADVANCES (Unsecured, unless otherwise stated)i) Advances recoverable in cash or in kind or for value to be received 2

Considered good 718,335 701,652Considered doubtful 8,535 4,360

726,870 706,012Less : Provision for doubtful advances 8,535 4,360

718,335 701,652

ii) Deposits with Excise, Customs & Govt Authorities 634,484 369,907iii) Advance Income tax 9,817 (9,102)Total B 1,362,636 1,062,457Grand Total (A+B) 6,767,483 5,689,359

Schedule VII – Current Assets, Loans and Advances (Contd.)

1 i) Includes Deposit out of proceeds of Zero Coupon Foreign Currency Convertible Bonds of Rs. 336,179 thousand (Previous YearRs. 1,582,166 thousand).

ii) Deposits pledged with Excise & Sales Tax authorities Rs. 56 thousand (Previous Year Rs. 297 thousand).

iii) Margin money Rs. 9,476 thousand (Previous Year Rs. 2,516 thousand).2 Includes capital advances of Rs.174,630 thousand (Previous Year Rs. 398,367 thousand).


A. Current Liabilitiesi) Sundry Creditors

Small Scale Industrial Undertakings 21,372 33,433Others 1,930,311 1,407,067

ii) Advance from customers 169,426 144,351iii) Other Liabilities 366,263 169,635iv) Investor Education & Protection Fund shall be credited by the following amount

– Unpaid Dividend 3,760 3,072v) Interest Accrued but not due 10,922 6,151

2,502,054 1,763,709B. Provisions

Refer B (10) of Schedule XIII)i) Premium on Redemption of Zero Coupon Foreign Currency Convertible Bonds 833,598 807,470ii) For Dividend (including tax thereon) 412,213 308,007iii) For Wealth tax 2,093 1,528iv) For Fringe Benefit Tax 13,210 14,068v) For employee benefit 52,570 32,907vi) For Warranty 2,514 3,611

1,316,198 1,167,591Total 3,818,252 2,931,300

Schedule VIII – Current Liabilities and Provisions

Premium on Redemption/ Issue Expenditure of Zero CouponForeign Currency Convertible BondsOpening Balance 755,244 – Add: Addition during the year – 876,566 Less: Written off during the year 170,409 121,322 Total 584,835 755,244

Schedule IX – Miscellaneous Expenditure (To the extent not written off or adjusted) (Refer B (6) of Schedule XIII)


Schedules forming part of the Consolidated Profit and Loss Accountfor the year ended March 31, 2007


31.03.2007 31.03.2006

a) Dividend Received 1

– From Others 153 158b) Rent 34,066 7,921c) Change in carrying amount of current investments – 2d) Provision for dimunition in investment written back – 50,000e) Profit on sale of fixed assets 4,854 –f) Service Income – 5,258g) Sundries written back 5,130 24,180h) Miscellaneous Income 161,310 95,148i) Waiver of claims from suppliers – 74,905j) Exchange fluctuation(net) 12,071 15,250k) Gain on account of sale / change in shareholding in subsidiaries – 5,237l) Profit on sale of Investments – 6,680Total 217,584 284,739Tax deducted on source a) Rent 3,697 2,879b) Misc.Income 8,499 3,3361 Includes dividend from short term Non-Trade investments 153 158

Schedule X – Other income

Materials consumedOpening Stock

Raw materials 639,385 509,817Work-in-progress 214,838 140,645Finished goods 431,654 271,895

Increase in opening stock on account of acquisition of a subsidiaryRaw materials 24,146 17,797Work-in-progress 5,780 7,483Finished goods 6,628 7,981

1,322,431 955,618Add : Purchases of Raw materials 9,140,351 5,953,139Less: Closing Stock

Raw materials (969,479) (639,385)Work-in-progress (356,901) (214,838)Finished goods (494,926) (431,654)

Decrease in closing stock on account of dilution of shareholding in subsidiaryLess: Closing Stock

Raw materials – (16,338)Work-in-progress – (3,141)Finished goods – (865)

(1,821,306) (1,306,221)Total consumption for goods sold 8,641,476 5,602,536

Schedule XI – Cost of materials and manufacturing and Other Expenses


Schedules forming part of the Consolidated Profit and Loss Accountfor the year ended March 31, 2007


Salary, wages, bonus etc 1,390,915 828,268Contribution to Provident & Other Fund 150,941 87,156Staff Welfare 140,631 109,056Electricity, Water and Fuel 297,565 229,419Repairs and Maintenance :

Machinery 178,451 126,049Building 71,970 42,472Others 106,712 78,865

Consumption of Store and Spare parts 148,330 129,474Conversion charges 314,066 171,386Lease rent 35,873 25,166Rent 115,602 77,750Rates & taxes 19,967 14,145Insurance 52,448 39,062Donation 5,888 6,008Travelling 183,311 138,812Freight & forwarding 301,765 183,801Royalty 63,936 55,241Cash Discount 18,608 17,175Commission 4,490 2,715Loss on sale of fixed assets(net) 66 11,471Provision for dimunition in value of Short Term Investments 34 –Bad Debts / Advances written off 8,637 142Provision for Doubtful Debts/ Advances 4,991 1,727Legal & professional expenses 361,481 269,560Miscellaneous expenses 373,069 320,656

12,991,223 8,568,112Less : transfer of pre-operative expenses to capital work in progress (5,239) (8,327)Total 12,985,984 8,559,785

Schedule XI – Cost of materials and manufacturing and Other Expenses (Contd.)

Interest and Finance Expense– Privately Placed Debentures 17,751 13,108 – Fixed loans 19,312 28,972 – Amortisation of Premium / Issue expenditure on Redemption of Zero

Coupon Foreign Currency Convertible Bonds 170,409 121,322 – Others 84,824 36,982 Less : Interest Income (Gross)– From Bank Deposits 37,824 32,480 – From Others 16,501 9,653 Total 237,971 158,251 Tax deducted on source:Interest Income 4,720 1,100

Schedule XII – Interest (Net)


31.03.2007 31.03.2006



Schedules forming part of the Consolidated Accounts

Schedule XIII – Significant Accounting Policies and Notes forming part of the Consolidated Accounts


A. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of AccountingThe Financial Statements are prepared under the historical cost convention as modified to include revaluation of certain fixedassets as indicated in (3) below, in accordance with applicable Accounting Standards issued by the Institute of CharteredAccountants of India and relevant presentational requirements of the Companies Act, 1956.

2. Principles of Consolidation The Consolidated Financial Statements relate to Financial Statements of Motherson Sumi Systems Limited (‘the Company’)and it’s Subsidiary Companies, Joint Ventures and Associates (‘the Group’).

The consolidated financial statements have been prepared on the following basis:

a) Subsidiariesi) The subsidiaries have been consolidated by applying Accounting Standard 21 “Consolidated Financial Statements”.

ii) Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are no longerconsolidated from the date of disposal.

iii) The financial statements of the Company and its Subsidiary Companies have been combined on a line-by-line basisby adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminatingintra-group balances & intra-group transactions resulting in unrealized profits or losses.

iv) The excess of the cost of acquisition over the Company’s portion of equity and reserves of the Subsidiary Companyat each time an investment is made in a subsidiary is recognized in the financial statements as goodwill. Negativegoodwill is recognized as capital reserve.

b) Investments in business entities over which the Company exercises joint control and the Company does not hold majorityvoting power are accounted for using proportionate consolidation in accordance with Accounting Standard 27 “FinancialReporting of Interest in Joint Venture”.

c) Investments in Associates (entity over which the Company exercises significant influence, which is neither a subsidiary nora joint venture) are accounted for using the equity method in accordance with Accounting Standard 23 “Accounting forInvestments in Associates in Consolidated Financial Statements”.

The Consolidated financial statements have been prepared using financial statements drawn upto same reporting datesto the extent practicable and where financial statements used are drawn up to different reporting dates adjustments aremade for any significant transactions for events occurring between those dates and the date of this financial statement.

The Consolidated financial statements have been prepared uniform accounting policies for like transactions and otherevents in similar circumstances and are presented to the extent possible, in the same manner as the Company’s separatefinancial statements.

3. Fixed Assetsi) The fixed assets except as stated in (ii) below are stated at cost less accumulated depreciation. Cost of acquisition or

construction is inclusive of inward freight, duties and taxes and other incidental expenses.

ii) The fixed assets of the Component Division of erstwhile Motherson Auto Components Engineering Limited (MACE) havebeen stated at an amount inclusive of appreciation arising on revaluation of the assets by an approved valuer on December31, 1998. The method adopted for revaluation of the assets are as under:

a) Land: Prevailing market rate of land as on the date of revaluation.

b) Buildings, Indigenous Plant and Machinery, Furniture and Fixtures, Moulds and Dies: Replacement value.

The Company charges assets Costing less than Rs 5,000 to expense, which could otherwise have been included as FixedAsset, because the amount is not material in accordance with ‘ Accounting Standard 10-‘ Accounting for Fixed Assets’

4. Depreciationi) Depreciation on fixed assets, except as stated below, is provided from the month the asset is ready for commercial

production on a pro-rata basis at the SLM rates prescribed in schedule XIV to the Companies Act, 1956 where applicable



Schedule XIII – Significant Accounting Policies and Notes forming part of the Consolidated Accounts (Contd.)


or based on useful life, whichever is higher. The following assets are amortized, on the straight line method over a periodof their estimated useful lives, at rates higher than those prescribed in schedule XIV of the Companies Act, 1956:

Rate (%)Computers 33.33Vehicles 25.00Furniture, fixtures & Office equipments 16.67Electrical Installations 10.00Specific Identified Plant & Machinery 25.00

ii) In respect of revalued assets, depreciation is being provided on the revalued amounts over the remaining useful life ofthe assets at the SLM rates. Leasehold Land is amortized over the balance period of lease.

iii) Goodwill generated on consolidation in respect of subsidiaries is being carried at cost.

iv) Technical know-how fees paid to a foreign collaborator by one of the consolidating Company is being depreciated on SLMbasis @ 50%.

v) Intangible Assets being customer relations acquired are amortized over a period of 5 years.

5. InvestmentsInvestments other than subsidiaries, joint ventures and associates, which are accounted for separately as per 2 above, areclassified into long term and current investments. Long term investments are stated at cost. A provision for diminution is madeto recognize a decline, other than temporary, in the value of long term investments.

Current investments are carried at lower of cost and fair value. Fair value in the case of quoted investments refers to the marketvalue of the investments arrived at on the basis of last traded prices as at the year-end.

6. InventoryStores and spares, loose tools are valued at cost or net realizable value, whichever is lower.

Raw materials, components, finished goods and work in progress are valued at cost or net realizable value, whichever islower. The basis of determining cost for various categories of inventories is as follows:

i) Stores and Spares, First in First Out (FIFO) methodRaw Materials and Components

ii) Work in Progress and Finished Goods Material cost plus appropriate share of labour and production overheads.

iii) Tools Cost less amortization based on useful life of the items ascertained on a technical estimate by the management

7. Retirement Benefits The Company’s contribution to defined contribution schemes such as provident fund, family pension fund and superannuationfund are charged to the profit and loss account as incurred. The Company also provides gratuity benefits to the employees,which is funded through a LIC group gratuity scheme. The liability at the year-end for the same is determined by an actuarialvaluation done at year-end and shortfall/surplus over the amount contributed to the scheme is charged off to the profit andloss account or treated as prepaid, as the case may be. Provision for Leave Encashment is made on the basis of actuarialvaluation done at the year-end.

8. Revenue RecognitionSales are recognized upon the transfer of significant risks and rewards of ownership to the customers.

9. Foreign Exchange Transactions Transactions involving foreign currencies are recorded at the exchange rate prevailing on the transaction date. Foreign currencymonetary items are translated at the exchange rate prevailing at the balance sheet date and the gain/loss arising on suchtranslation other than monetary items related to acquisition of fixed assets is credited / charges to profit and loss account.The gain / loss arising on translation of monetary items related to acquisition of fixed assets are adjusted to the cost of fixedassets. Premium or discount arising at the inception of a forward exchange contract is amortized as expense or income overthe life of contract.


Schedules forming part of the Consolidated AccountsSchedule XIII – Significant Accounting Policies and Notes forming part of the Consolidated Accounts (Contd.)


For the purpose of consolidation, the Company has translated Assets and Liabilities of subsidiaries outside India, whoseoperations are classified as non-integral, at the year-end exchange rate and Income and Expenditure items at an averageexchange rate that approximates to the exchange rate prevailing on the date of transaction. The resultant translationadjustment is reflected as a separate component of Shareholders’ funds as “Exchange Reserve on Consolidation”.

10.Borrowing CostsThe borrowing costs on funds other than those directly attributable to the acquisition of a qualifying asset i.e. an asset thatnecessarily takes a substantial period of time to get ready for its intended use, is charged to revenue in the period in whichthey are incurred.

The borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets arecapitalized as part of the cost of that asset.

11.LeasesLease rental in respect of operating lease arrangements are charged to expense when due as per the terms of the relatedagreement on a straight line basis over the term of lease.

Lease rentals in respect of finance lease transactions entered into prior to March 31, 2001 is charged to expense when dueas per the terms of the related agreement. Finance lease transactions entered into after this date are considered as financingarrangements in accordance with Accounting Standard 19 and the leased asset is capitalized at an amount equal to thepresent value of future lease payments and a corresponding amount is recognized as a liability. The lease payments madeare apportioned between finance charge and reduction of outstanding liability in relation to leased asset.

12.TaxationCurrent TaxCurrent tax is provided on the basis of tax payable on estimated taxable income computed in accordance with the applicableprovisions after considering the tax allowances & exemptions.

Deferred TaxesIn accordance with Accounting Standard 22 – Accounting for Taxes on Income, issued by the Institute of CharteredAccountants of India, the deferred tax for timing differences between the book and tax profits for the year is accounted forusing the tax rates and laws that have been enacted or substantially enacted as of the balance sheet date.

Deferred Tax Assets arising from temporary timing differences are recognized to the extent there is reasonable certainty thatthe assets can be realized in future.

Fringe Benefit TaxFringe benefit tax is determined based on the liability computed in accordance with relevant tax rates and tax laws.

13.Earnings Per ShareThe earnings considered in ascertaining the Company’s EPS comprises the net profit after tax (and includes the post tax effectof any extra ordinary items) attributable to equity shareholders. The number of shares used in computing Basic EPS is theweighted average number of shares outstanding during the year. The diluted EPS is calculated on the same basis as basic EPS,after adjusting for the effect of potential dilutive equity shares.

B. NOTES TO THE ACCOUNTS1. Amalgamation of Motherson Advance Polymers Limited (MAPL) with the Company

a) The Company had purchased 43,104,774 equity shares of Rs. 10 each of MAPL on February 1, 2006, thereby makingMAPL a 100% subsidiary of the Company. The company had also applied at the High Court of judicature at Delhi foramalgamation of MAPL with itself w.e.f. February 1, 2006.

b) Subsequently, the High Court of judicature at Delhi approved on September 4, 2006 the arrangement as embodied inthe Scheme of Amalgamation (“the Scheme”) of the erstwhile M/s Motherson Advance Polymers Limited (MAPL), asubsidiary of the Company, the transferor company with the Company (M/s Motherson Sumi Systems Limited), thetransferee Company. On complying with the requisite formalities by the Company, the Scheme became effective onOctober 27, 2006 (“the effective date”), operative retrospectively from February 1, 2006, the appointed date as per thescheme. Accordingly, the whole of the undertakings of MAPL was transferred to and vested in the Company as a goingconcern and MAPL without any further act was dissolved without winding up.







a) In respect of Excise 1 29,228 29,750b) In respect of Entry Tax 2,522 2,522c) In respect of Sales Tax 18,945 13,961d) In respect of Service Tax 7,521 7,212e) In respect of Stamp Duty 1,804 1,804f) In respect of Income Tax 5,735 29g) In respect of Labour Cases 5,359 11,887h) In respect of other taxes / duties 171 1,466i) The Company has given corporate guarantee in respect of : 2

i) Joint Ventures 97,500 97,500j) Bank Guarantees furnished by the Company 168,417 124,976

1 Excludes interest2 Actual amount outstanding

Joint Ventures Rs. 75,144 thousand (Rs. 53,572 thousand)


Unexpired amount of the contracts on capital accounts and not provided for (net of advance) 195,148 222,828

3. Outstanding Capital Commitments

c) The amalgamation has been accounted for under the “pooling of interests” method as prescribed by Accounting Standard(AS-14) issued by the Institute of Chartered Accountants of India and the specific provisions of the Scheme. Accordingly,all the assets, liabilities and reserves of the transferor Company as on February 1, 2006 have been recorded by theCompany at their respective amounts.

d) In view of the amalgamation of MAPL with the Company effective from February 1, 2006, the financial statements of theCompany and the consolidated financial statements of the Group were redrawn for the year ended March 31, 2006which were reviewed by the statutory auditors and the same have been represented as the previous year figure insteadof audited consolidated financial statements of Motherson Sumi Systems Limited for year ended March 31, 2006 for thepurpose of comparison. The figures for the current year are not directly comparable to those of the previous year.

e) Accordingly, the goodwill amounting to Rs. 225 thousand arising on consolidation of MAPL with the group has beenreversed and the debit balance of the Profit and Loss Account of Rs. 467,169 thousand attributable to MAPL has beenadjusted against the opening balance of the Consolidated Profit and Loss Account, and Rs. 466,944 thousand being theexcess of the value of assets over the value of the liabilities/ reserves after adjusting for the aggregate value of theinvestments held in the transferee company has been credited to the amalgamation reserve of the Group, in accordancewith the scheme during the year ended March 31, 2006.

2. Contingent Liabilities :





Name of the Company Country of % voting power Reporting DatesIncorporation held as at used for

March 31, 2007 Consolidation

MSSL Mauritius Holdings Limited Mauritius 100% December 31, 2006MSSL Mideast (FZE) UAE 100% March 31, 2007Motherson Electrical Wires Lanka Pvt. Limited Sri Lanka 100% March 31, 2007MSSL Handels GmbH Austria 100% March 31, 2007MSSL (S) Pte Ltd Singapore 100% March 31, 2007Motherson PUDENZ WICKMANN Limited India 56.13% March 31, 2007MSSL GmbH (through MSSL Mideast (FZE)) Germany 100% December 31, 2006MSSL (GB) Limited (through MSSL Mideast (FZE)) U.K. 100% December 31, 2006Motherson Sumi Wiring System Limited (FZC) (through MSSL Mideast (FZE)) UAE 51%MSSL Ireland Private Limited (through MSSL Mauritius Holdings Limited) Ireland 100% December 31, 2006MSSL Tooling (FZE) (through MSSL Mauritius Holdings Limited) UAE 100% December 31, 2006Global Environment Management (FZC) (through MSSL Mauritius Holdings Limited) UAE 50.01% December 31, 2006MSSL Australia Pty Limited (through MSSL(S) Pte. Ltd) Australia 80% December 31, 2006G&S Kunststofftechnik GmbH (through MSSL GmbH) Germany 100% December 31, 2006Motherson sumi Reiner GmbH (through MSSL GmbH) Germany 100% December 31, 2006FP Formagrau s.r.o. Czech Republic 100% December 31, 2006Global Environment Management Australia Pty Limited(through Global Environment Management (FZC)) Australia 100% December 31, 2006Motherson Elastomers Pty Limited (through MSSL Australia Pty Limited) 3 Australia 100% –Motherson Investments Pty Limited (through MSSL Australia Pty Limited) 3 Australia 100% –

4. Consolidation:A. Details of Motherson Sumi Systems Limited subsidiaries which have been considered in these consolidated accounts are

as follows:


March 31, 2007 Consolidation

SAKS Ancillaries Limited India 40.01% March 31, 2007

B. Details of Associate Company are as follows:


March 31, 2007 ConsolidationSchefenacker Motherson Limited India 40.01% December 31, 2006Kyungshin Industrial Motherson Limited India 50% March 31, 2007Woco Motherson Limited (FZC) (through MSSL Mauritius Holdings Limited) UAE 33.33% December 31, 2006Woco Motherson Elastomers Limited India 33.33% March 31, 2007Woco Motherson Advanced Rubber Technologies Limited India 33.33% March 31, 2007Balda Motherson Solution India Limited 4 India 40% March 31, 2007

C. Details of Joint Venture Companies which have been considered in these consolidated accounts are as follows:

3 Incorporated on February 23, 2007 and have first financial year closing at December 2007.

4 Ceased to be a subsidiary on June 26, 2006107Together we make it happen





5. Acquisition / Disposal of Investments during the yeara) Incorporation of Motherson Sumi Wiring System Limited (FZC)

During the year, the Company has entered into a Joint Venture Agreement with Sumitomo Wiring Systems Limited andformed a new joint venture company named Motherson Sumi Wiring System Limited (FZC) (MSWS) in United ArabEmirates. MSWS has been registered as a Free Zone Company (FZC) with limited liability in the Sharjah Airport InternationalFree Zone (SAIF Zone) on July 15, 2006. The shareholders of MSWS are MSSL Mideast (FZE) (100% subsidiary of theCompany) which holds 51% and Sumidenso Administration and Finance (Europe) BV (Netherlands) Ltd which holds 49%.MSWS has acquired the GPP business of MSSL Mideast (FZE) in terms of the Business Transfer Agreement entered intobetween MSSL Mideast (FZE) and MSWS.

b) Acquisition of business and assets of ASL Systems Limited (in administration)

On August 4, 2006, the Company through its 100% owned UK subsidiary MSSL GB Limited acquired the business andassets of ASL Systems Limited. ASL Systems was engaged in the manufacture and supply of wiring harnesses and relatedproducts.

c) Incorporation of MSSL Australia Pty Limited and its 100% subsidiary companies Motherson Investments Pty. Limitedand Motherson Elastomers Pty. Limited

On October 6, 2006 the Company, through its 100% owned subsidiary MSSL (S) Pte Ltd, incorporated MSSL AustraliaPty Ltd (MSSL A) with a share capital of AUD 800 thousand. MSSL (S) Pte Ltd holds 80% of the share capital of the MSSLA. Subsequently, MSSL A acquired the assets relating to door trims business from the Huon Corporation in receivership.

Further MSSL A has incorporated its two subsidiaries Motherson Investments Pty Ltd and Motherson Elastomers Pty Ltdon February 23, 2007. Subsequent to the year end, the Company through these subsidiaries has acquired the businessand assets of Empire Rubber, which had been engaged in rubber mixing and manufacture of rubber extruded componentsfrom Huon Corporation Pty Limited (in liquidation), together with transfer of about 100 employees on a going concernbasis.

d) Acquisition of FP Formagrau s.r.o.On December 1, 2006 the Company has, through MSSL GmbH a 100% subsidiary Company, acquired FP Formagraus.r.o. (FPF), a polymer production company in Czech Republic at a total consideration of Euro 1,000 thousand. Consequentto above purchase, the company has recognized the excess of Company’s share in net worth of the FPF over the cost ascapital reserve in the consolidated financial statements.

e) Dilution of shareholding in Balda Motherson Solution India LimitedThe Company had in joint venture with Balda AG set up a joint venture company for the development of precision moulds,design and manufacture of parts for mobile phones including accessories and appliances for mobile phones at Chennai.Consequent to the joint venture, Balda Motherson Solution India Limited was formed in 2005 as a 100% subsidiary ofthe Company with a paid up capital of Rs. 500 thousand. The paid up Share Capital was increased to Rs. 575,200thousand (including Preference Share Capital amounting to Rs. 573,950 thousand) during the year in terms of the JVagreement so as to bring the shareholding of the Company to 40% and shareholding of Balda AG to 60%. Consequentto the dilution of the Company’s holding, investment in Balda Motherson Solution India Limited has been accounted foras a joint venture.

6. Issue of Zero Coupon Convertible BondsDuring the year ended March 31, 2006, the Company issued Euro 50,300,000 Zero Coupon Convertible Bonds due 2010(the “Bonds”). The Bonds are convertible either at the option of the holder at any time on or after August 24, 2005 (or suchearlier date as is notified to the holders of the Bonds by the Company) upto July 6, 2010 by holders into fully paid equity shareswith full voting rights at par value of Re. 1.00 each of the Issuer (“Shares”) at an initial Conversion Price (as defined in the“Terms & Conditions of the Bonds”) of Rs. 111.45 per Share with a fixed rate of exchange on conversion of Rs. 52.01 = Euro1.00. The Conversion Price is subject to adjustment in certain circumstances.

The Bonds may otherwise be redeemed, in whole or in part, at the option of the Issuer, at any time on or after July 15, 2008and prior to July 7, 2010 subject to satisfaction of certain conditions and at their “Early Redemption Amount” (as defined inthe “Terms & Conditions of the Bonds”) at the date fixed for such redemption if the “Closing Price” (as defined in the “Terms& Conditions of the Bonds”) of the Shares translated into Euro at the “prevailing rate” (as defined in the “Terms & Conditions





a) Statutory Audit Fees 11,029 8,504b) Taxation Matters 191 681c) Reimbursement of expenses 710 194d) Others (certification charges and other services) 3,225 2,272

Total 15,155 11,651

8. Earnings per share

Weighted Average number of Equity Shares of Re. 1 /- each (Previous Year Re 1/- each) outstanding at the end of the year 234,889,200 234,889,200Net profit after tax available for equity Shareholders (Rs in thousand) 1,295,192 1,071,198Basic/ Diluted 5 Earnings (in Rupees) Per Share of Re. 1/- each. (Previous Year Re 1/- each) 5.51 4.56

5 Potential conversion of Zero Coupon Currency Convertible Bonds issued is anti-dilutive and accordingly, has not beenconsidered in the calculation of diluted earnings per share.

6 Includes deferred tax liability amounting to Rs. 8,084 thousand consequent to acquisition of FP Formagrau s.r.o.

ii) In view of the Company’s past financial performance and future profit projections, the Company expects to fully recoverthe deferred tax assets.

Timing differences on account of As at Credit/ As atMarch 31, 2007 (Charge) for March 31, 2006

the year

Expenses charged in the financial statements but allowable as deductions in future years under the Income Tax Act (to the extent considered realizable) (48,585) 18,195 (30,390)Difference between depreciation as per financial statement and depreciation as per Income Tax Return 121,655 29,883 151,5386

Net Deferred Tax Liability/ (Asset) 73,070 (48,078) 121,148

9. Deferred Taxi) The break up of net deferred tax liability as at March 31, 2007 is as under:


of the Bonds”) for each of 20 consecutive “Trading Days” (as defined in the “Terms & Conditions of the Bonds”) the last ofwhich occurs not more than five days prior to the date upon which notice of such redemption is published, is greater than130 per cent, of the “Conversion Price” (as defined in the “Terms & Conditions of the Bonds”) then in effect translated intoeuro at the rate of Rs. 52.01 = Euro 1.00.

The Bonds may also be redeemed, in whole, but not in part, at any time at the option of the Issuer at their Early RedemptionAmount, if less than 10 per cent, in aggregate principal amount of the Bonds originally issued is outstanding.

The Bonds may also be redeemed in whole, but not in part, at the option of the Issuer subject to satisfaction of certainconditions including obtaining Reserve Bank of India (“RBI”) approval, at their Early Redemption Amount, on the date fixedfor redemption in the event of certain changes relating to taxation in India.

Unless previously redeemed, converted or purchased and cancelled, the Bonds will be redeemed by the Issuer in Euros onJuly 16, 2010 at 126.77 per cent of its principal amount.

The issuer will, at the option of any holder of any Bonds, repurchase at the Early Redemption Amount such Bonds at suchtime as the Shares cease to be listed or admitted to trading on the BSE and the NSE (as defined in the “Terms & Conditionsof the Bonds”) in respect of the Issuer. These Bonds are listed in the Singapore Exchange Securities Trading Limited (the “SGX-ST”).

7. Payment to the Group’s Auditors:(Figures in Rs. Thousands)




10.The Company has the following provision in the books of accounts as on March 31,2007

Warranty provision relate to the estimated outflow in respect of warranty for products sold by the Company. Due to the verynature of such costs, it is not possible to estimate the timing / uncertainties relating to the outflows of economic benefits.

The Company has the option to buy back the assets at the end of the Finance Lease Agreements.

11.LeasesFor Vehicles

Particulars Minimum Lease Finance Charges Present value ofpayments Lease payments

Current Year Previous year Current Year Previous year Current Year Previous year

Due within one year Nil 10 Nil 4 Nil 6Due within 2 to 5 years Nil Nil Nil Nil Nil Nil




12.Related Party DisclosuresRelated party disclosures, as required by AS18, “Related Party Disclosures”, are given below:

I Relationships where control exists:a. Joint Ventures:

Kyungshin Industrial Motherson LimitedSchefenacker Motherson LimitedBalda Motherson Solution India Limited 7

Woco Motherson Elastomer LimitedWoco Motherson Advanced Rubber Technologies LimitedWoco Motherson Ltd. (FZC)7 Issue of fresh equity shares by the company on June 26, 2006 consequent to which the company became a joint venture instead of a subsidiary.

b. Associate Companies:Saks Ancillaries Limited

c. Key Management Personnel:i) Board of Directors of holding company:

Mr. V C SehgalMr. Toshimi ShirakawaMr. M S GujralMr. Bimal DharMr. H MuraiMr. A YamauchiMr. M MatsushitaMaj. Gen Amarjit Singh (Retd)Mr. Pankaj MitalMr Arjun Puri

ii) Other Key Management Personnel:Mr. Vivek AvasthiMr. Ravindra MathurMr. G.N. GaubaMr. N Ramanathan

Description Opening Additions Utilized/Reversed Closing BalanceBalance during the year during the year

WarrantyCurrent Year 3,611 4,875 5,972 2,514Previous Year 2,994 2,653 2,036 3,611


Schedules forming part of the Consolidated AccountsSchedule XIII – Significant Accounting Policies and Notes forming part of the Consolidated Accounts (Contd.)


iii) Relatives of Key Management Personnel:Mr. Laksh Vaaman SehgalMrs. Renu SehgalMs. Vidhi SehgalMrs. Geeta SoniMrs. Neelu MehraLate Mr. P. AvasthiMrs. P. AvasthiMr. Harjit SinghMs Subina Avasthi

d. Companies in which Key Managerial Personnel or their relatives have control/ significant influence:Motherson Auto LtdMotherson Air Travel Agencies LimitedGanpati Auto IndustriesSouth City Motors Ltd.ASI Motherson Communication Solutions LimitedMotherson Techno Tools LimitedSumi Motherson Innovative Engineering LimitedSWS India Management Support & Service (P) LtdVaaman Auto IndustriesA Basic Concepts Design India Private LtdMotherson Sumi Infotech and Designs LimitedMotherson Engineering Research and Integrated Technologies LimitedMoon Meadows Pvt. Ltd.Sisbro Creations Pvt. Ltd.Motoman Motherson Robotics Ltd.NACHI Motherson Tool Technology LimitedMotherson Consultancy Pvt. Ltd.Samvardhana Motherson Finance Ltd.A Basic Concepts Design Pty LtdATAR Mauritius Pvt. Ltd.Motherson Auto Solutions Pvt. LtdMotherson Machinery and Automations Pvt. LtdSpheros Motherson Thermal System LimitedMotherson Automation Technology LtdMatsui Technologies India LimitedMotherson Moulds and Diecasting LtdASI Motherson Communications Solution Ltd.Webasto Motherson Sunroofs LimitedAnest Iwata Motherson LimitedField Motor Private LimitedAES (India) Engineering LimitedMiyazu Motherson Engineering Design LimitedMotherson Moulds Pvt. LtdAnest Iwata Motherson Coating Equipment Limited

e. Joint Venturer:Sumitomo Wiring Systems Limited, JapanWilhelm Pudenz GmbH, GermanySchefenacker International AG & Co.Kyungshin Industrial Co., KoreaWoco Franz Josef Wolf Holding GmbHBalda AG




III. Details of transactions, in the ordinary course of business at commercial terms, and balances with related partiesas mentioned in I & II above:

S.No. Particulars Parties mentioned Parties mentioned in Parties mentioned Parties mentioned

in 12 (i) (a) above 12 (i) (b) & (d) above in 12 (i) (e) above in 12 (i) (e) above

Current Previous Current Previous Current Previous Current Previous

Year Year Year Year Year Year Year Year

1. Sale of Goods 464,908 277,442 20,981 23,238 387,521 733,275 – –

2. Rendering of Services 19,694 3,508 17,647 9,452 4,719 8,888 – –

3. Sale of Fixed Assets – – – 223 – 5,149 – –

4. Purchase of Goods 19,133 8,295 409,625 390,063 912,790 773,320 – –

5. Purchase of Fixed Assets 723 4,023 41,123 36,715 4,044 26,869 – –

6. Purchase of Services 1,449 266 278,124 248,757 14,986 13,499 4,966 8 4,699

7. Reimbursement (Net) 3,472 (311) 1,995 347 2,430 9,902 – –

8. Investments made during

the year 297,142 32,833 – 12,500 25,000 – – –

9. Purchase of Shares – – – 27,233 – 12,218 – –

10. Sale of Shares – – – – 1,744 22,620 – –

11. Royalty 3,624 4,495 – – 60,452 50,800 – –

12. Remuneration/

Sitting Fees of Directors – – – – – – 18,727 14,850

13. Interest Income 10,024 263 505 162 436 1,076 – –

14. Interest Expense 1,884 – 547 1,693 33 469 – –

15. Dividend Paid – – 77,223 67,150 96,884 82,570 16,3949 14,269

16. Dividend Received 57,763 26,240 151 – – – – –

17. Loans Received during the year 3,472 – 40,000 25,000 11,687 – – –

18. Loans Given during the year 150,594 16,667 13,720 23,360 – – – –

19. Loans Repaid during the year 138 – 30,000 31,860 8,896 119,164 – –

20. Loans Received back

during the year 15,000 – – –– – – –

21. Security Deposits Received 9,535 – 544 1,607 – – – –

22. Security Deposits Repaid – – – 2,400 – – – –

Balances as at year end

23. Investments 446,106 136,781 38,230 38,230 – – – –

24. Loans Payable 20,000 – 10,000 – – – – –

25. Loans Receivable 167,120 31,865 726 – – 12,516 – –

26. Advances Receivable 4,699 26 1,817 7,317 – 22,692 – –

27. Security Deposit Received 2,561 – 2,298 1,960 – – – –

28. Security Deposits Given – – 2,877 7,706 – 1,871 542 542

29. Guarantees Closing 97,500 97,500 – – – – – –

30. Trade Payable 6,378 2,148 124,129 135,027 196,651 106,666 – –

31. Trade Receivable 22,598 22,173 6,449 63,769 31,666 72,543 – –

32. Minority Interest 138,938 23,163 – – – – – –


The corresponding figures of the previous year have been regrouped and reclassified, wherever necessary.

8 Rent of Rs. 4,966 thousand paid to Mr. V.C Sehgal, Mr. P Avasthi, Mr. Laksh Vaaman Sehgal, Mrs. Renu Sehgal, Ms. Vidhi Sehgal& Mrs. Geeta Soni.

9 Dividend of Rs. 16,394 thousand paid to Mr. V. C. Sehgal, Mr. Laksh Vaaman Sehgal, Mrs. Neelu Mehra, Mrs. Geeta Soni, Ms. Vidhi Sehgal, Mr Pankaj Mital, Mr M.S. Gujral, Mr G.N.Gauba, Mr Vivek Avasthi, Mrs. Renu Sehgal, Mrs. Padma Avasthi, Mr Harjit Singh, Ms Subina Avasthi, Mr R. Ganpati





13.Segment Informationa. Information about Primary Business Segments

Automotive Non automotive Unallocated Total


Segment revenue External 13,007,239 8,819,450 2,654,690 1,590,866 (33,003) 86,813 15,628,926 10,497,129Inter segment 135,598 56,990 – – 135,598 56,990Total revenue 12,871,641 8,762,460 2,654,690 1,590,866 (33,003) 86,813 15,493,328 10,440,139Results Segment result 1,498,913 985,691 395,838 345,306 – – 1,894,751 1,330,997Interest expense (net of Interest income) – – – – 237,972 158,251 237,972 158,251Other Unallocable (net of Income) – – – – 33,771 (86,026) 33,771 (86,026)Profit of Associate – – – – 1,703 2,158 1,703 2,158Profit before taxation – – – – – – 1,624,711 1,260,930Provision for taxation – – – – 337,888 169,402 337,888 169,402Net profit after tax – – – – – – 1,286,823 1,091,528– Concern Share 1,295,191 1,071,196– Minority Share (8,368) 20,332Other items Segment assets 8,455,949 6,824,713 2,755,136 1,015,112 1,197,170 2,411,406 12,408,255 10,251,231Segment liabilities 1,756,648 1,497,270 665,005 207,318 6,071,545 5,604,244 8,493,198 7,308,832Capital expenditure 1,869,843 1,039,985 399,766 18,091 – – 2,269,609 1,058,076Depreciation 512,941 440,861 133,423 22,470 – – 646,364 463,331Amortization of Premium on Redemption of Zero Coupon Foreign currency convertible bonds – – – – 170,409 121,322 170,409 121,322


b. Information about Secondary Business Segments

India Outside India10 Unallocated Total


Revenue by geographical markets External 10,002,036 7,095,186 5,524,295 3,258,140 (33,003) 86,813 15,493,328 10,440,139 Total 10,199,128 7,095,186 5,327,203 3,258,140 (33,003) 86,813 15,493,328 10,440,139 Carrying amount of segment assets 7,126,862 5,845,255 4,084,223 2,003,900 1,197,170 2,402,076 12,408,255 10,251,231 Addition to fixed assets 1,437,034 520,955 832,575 537,121 – – 2,269,609 1,058,076

10 Includes Europe, Americas, Asia Pacific, Middle East and Australia

c) Composition of Business SegmentsThe Company is organized into two main business segments, namely:Automotive Wiring Harness, High Tension Cords, Wire, Plastic Components, Rubber Components,

Cockpit AssemblyNon Automotive Wiring Harness, Pen-Stamp Assembly, Plastic Components, Household Wires, Plates, Aerobin

d) Inter Segment Transfer PricingInter Segment prices are normally negotiated amongst the segments with reference to the costs, market prices and business risks, with an overall optimisation objective for the Company.





14.MSSL Tooling (FZE) (MTL) had during the year acquired certain assets of a company under administrator through a relatedparty with an intention to continue supply to the existing customers. However, the operations have not commenced due todelay in receipt of customer orders consequent to shifting of the operations to Sharjah. The management based on thereview of future business plans for the next three years has estimated the value in use lower than the carrying value of theasset and consequently recognised an impairment loss of Rs. 14,534 thousand, included in depreciation charged for theyear. Consequently, the fixed assets of MTL have been carried at recoverable values being the value in use. The managementhas used the discount rate of 6% being the incremental borrowing costs for the company.

15.Interest in Joint VenturesThe Company’s interests, as a venture, in jointly controlled entities as at March 31, 2007 are:



11 In terms of the joint venture agreement with Balda AG, Germany, Balda Motherson Solution India Ltd has issued furtherequity shares on June 26, 2006 reducing the Company’s shareholding to 40%. Consequently, Balda Motherson SolutionIndia Limited has ceased to be a subsidiary Company and has been accounted for as a joint venture of the Company. Hence,the current year’s figures are not directly comparable with the previous year’s figures.

Particulars 2007 2006AssetsFixed Assets 532,085 172,129Capital Work in Progress 78,195 74,384Current Assets 728,967 470,540LiabilitiesSecured Loans 125,906 107,164Unsecured Loans 169,502 16,665Current Liabilities & Provisions 429,447 294,506Deferred Tax (Net) 2,226 1,898Reserves & Surplus 165,790 148,136RevenueSales 1,586,438 1,108,556Other Income 30,483 10,170Expenditure 1,472,680 1,001,282Profit before Tax 144,241 117,444Provision for Tax 51,978 32,898Profit after Tax 92,263 84,546Contingent Liabilities– In respect of Excise, Sales tax & Service tax matters 6,806 4,097– Bank Guarantees 9,588 1,171Capital Commitment 56,154 6,309

Name of the Company Country of % Voting power % Voting powerIncorporation held as at held as at

March 31, 2007 March 31, 2006Schefenacker Motherson Limited India 40.01% 40.01%Kyungshin Industrial Motherson Limited India 50% 50%Woco Motherson Limited (FZC) (through MSSL Mauritius Holdings Limited) UAE 33.33% 33.33%Woco Motherson Elastomers Limited India 33.33% 33.33%Woco Motherson Advanced RubberTechnologies Limited India 33.33% 33.33%Balda Motherson Solution India Limited 11 India 40% 100%

The following amounts represent the Groups share of the assets and liabilities and revenue and expenses of the joint ventureand are included in the consolidated balance sheet and consolidated profit & loss account:




16.The Company has a comprehensive system of maintenance of information and documents as required by the transfer pricinglegislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information anddocumentation to be contemporaneous in nature, the Company appoints independent consultants for conducting a TransferPricing Study to determine whether the transactions with associate enterprises are undertaken, during the financial year, onan "arms length basis". Adjustments, if any, arising from the transfer pricing study shall be accounted for as and when thestudy is completed for the current financial year. However the management is of the opinion that its international transactionsare at arm's length so that the aforesaid legislation will not have any impact on the financial statements, particularly on theamount of tax expense and that of provision for taxation.

17.The corresponding figures of previous year have been regrouped, rearranged wherever necessary to conform to the currentyear’s classification.





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