Dear Shareholders,

The financial year 2010-11 for your company has been a mixed one. We have faced and overcome a number of hurdles in our businesses and simultaneously achieved certain key milestones to bolster our progress.

Our thrust to upgrade, re-vamp, and stay abreast of changes in the business environment have led to some challenging initiatives. The Transformer division executed a carefully planned shutdown of one of its plants. This shutdown was necessary though unfavourable for us, as it had to be carried out in the last quarter of the financial year thus affecting our overall profitability. However, this impediment has fructified into a new, upgraded, state of the art facility that will also be used to meet strict export norms. The Motor business too has faced the challenge of ramping up its range in a short span of time. Over the last 3 years we have tripled the maximum rating of the LT Motor product offering enabling us to quote for larger projects where the extended range is a pre-requisite. Besides our two largest businesses there have been some encouraging developments in our other divisions as well. A significant achievement of the Projects business was receiving our first prestigious order from Power Grid Corporation. This project is under execution now and we hope to make further inroads into this space. The Drives business has successfully signed an agreement with KEB (Germany) to assemble a certain range of products in India. This will help us to be more cost effective and increase penetration in target market segments. Our Elevator systems division has tripled sales and remains market leader for gearless machines in the domestic market.

As the “manufactured in India” tag becomes more visible and credible it is important for us to note the opportunities that come with this development. Export opportunities are on the rise and we are structuring our efforts to tap key markets in a phased manner.

The outlook for the Indian power sector is buoyant but increased competition is putting substantial pressure on margins. The government must do more to see the completion rate of the infrastructure projects rise at a steady and sustainable pace. If this does not happen, the unpredictability that results will lead to harsh cycles of demand supply mismatches in the short run. The long run outlook is positive, and the potential of this sector is exciting. Though challenging, we look forward to embrace the opportunity this provides us.