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Perfect Circle Limited annual report 2003

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Perfect Circle India Limited

Board of Directors Bankers Union Bank of India Deep C Anand Standard Chartered Bank Chairman Auditors Philippe E Roulet Price Waterhouse & Co. Karl Nitsch Chartered Accountants, H R Prasad M K Kukreja C S Patel Solicitors A K Agarwal Udwadia, Udeshi & Berjis, S Maheshwari Mumbai Kamini Banga S C Gupta

Financial Controller & Company Secretary M K Goyal

Corporate Offices Manufacturing Facilities

1 Sri Aurobindo Marg Piston Rings New 110016 20 Ml DC Estate Magnet House Satpur, Nashik 422 007 N M Marg (Maharashtra) Ballard Estate Mumbai 400 038 Castings

Registered & E-34, MIDC Estate Administrative Office Satpur, Nashik 422 007 (Maharashtra) 20 Ml DC Estate Satpur, Nashik 422 007 (Maharashtra)

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Financial Highlights

2002-03 2001-02

Sales (Rs. Million) 588.0 593.3

Profit Before Depreciation & Interest (Rs. Million) 103.4 130.5

Profit Before Tax (Rs. Million) 23.4 42.7

Profit After Tax (Rs. Million) 13.9 29.9

PBDIT as a % to Sales 17.6 22.0

PBT as a % to Sales 4.0 7.2

PAT as a % to Sales 2.4 5.0

Return on Net Worth (ROI) % 3.6 7.6

Face Value per Share (Rs.) 8.0 8.0

Net Worth per Share (Rs.) 93.0 89.0

Earning per Share (Rs.) 3.3 7.2

Dividend per Share (Rs.) 2.4 3.2

Dividend Cover (Times) 1.4 2.2

ANNUAL REPORT 2003

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Company Highlights

» 22% Exports to Sales

« Earning per Share Rs. 3.3

* Consistent dividend paying Company

PERFECT CIRCLE INDIA LIMITED

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the erstwhile Perfect Circle Victor Casting Limited has been operating as 'Perfect Circle India Limited'. Operations

The Company's manufacturing The Casting Plant has a facilities, located in Nashik in the state sophisticated Foundry, where Piston of Maharashtra, consist of a Casting Ring Castings are manufactured by Plant and a Piston Ring Machining the stack moulding process. It is in Plant. Certified for both QS 9000 and this Casting Plant that the first phase ISO 9002, the Company was the first of piston ring manufacturing takes in India in its product category to place in an environment geared to receive the ISO certification as far maintain strict quality control and back as 1993. reduce rejections to the minimum.

With the Indian Perfect Circle India, besides using the witnessing revolutionary changes in semi-finished piston ring castings for the last decade owing to the entry of captive consumption, also exports global majors in India, Perfect Circle them, making the Casting operations Company India has been focusing on the a profit centre. During the year, the upgradation of its manufacturing Company exported the product to Profile facilities and induction of relevant USA, Latin America and France. This technology. As a result, the Company product segment is expected to grow Perfect Circle India Limited is a is today well positioned to cater to and provide good market renowned manufacturer and the largest the needs of the manufacturers of opportunities for the Company in exporter of Piston Rings in India. A new generation vehicles. the future. major supplier to both the Original Equipment Manufacturers and the Aftermarket, the Company is in technical and financial collaboration with Dana Corporation, USA.

After last year's implementation of the Scheme of Arrangement for demerger of the Gaskets business to the new company - Victor Gaskets India Limited -

TOP: A view of the Casting Plant at Nashik BOTTOM LEFT: Inside the Casting Plant of Perfect BOTTOM RIGHT: Furnace-pouring operation in the Circle India Foundry at the Casting Plant

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With the introduction of new addition, the Company has also reduce costs and rejections, improve manufacturing processes and enhanced its product range by process capabilities and streamline investments made in modern acquiring the capability to manufacture logistics. Also implemented was the equipment, the plant has been able to Steel Section Piston Rings, Profile Single Piece Flow concept to reduce increase productivity, ensure Ground Oil Rings, Chrome Plated Rings inventories and increase overall consistency in product quality and and Keystone Rings, among others. efficiency. reduce rejections. With these developments, Perfect Circle India has been able to meet the increasing demand for sophisticated Piston Ring and hi-tech rings, from both domestic Operations and overseas customers. During the year, the Company initiated The high quality piston rings that the the regrouping of self-empowered Company manufactures cater to all teams on manufacturing lines as well segments - OEM, Aftermarket and as sourcing and value engineering to Exports. In the market, the 'Perfect Circle' brand is considered to be at the top end and is the preferred choice of customers.

The constant upgradation of assets and technology has enabled the Piston Ring plant to achieve a high level of productivity with low rejections. In

TOP: The Piston Ring Plant CENTRE: Mr Tom Neusiis, VP & GM, Perfect Circle BOTTOM LEFT: Chrome-plating operation in the Piston Divn. of Dana, USA (2nd from right) and Mr Marcelo Ring Plant Jardim, GM, Perfect Circle Divn., Dana Albarus, Brazil BOTTOM RIGHT: Keystone Grinding machine in the (2nd from left) at the Perfect Circle facility in Nashik Piston Ring Plant

PERFECT CIRCLE INDIA LIMITED

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equipment for Deep Thermal Shock product features, draw attention to Testing to evaluate the performance of manufacturing processes and provide a its products under rigorous conditions. forum for discussion on technical matters, apart from helping to resolve their queries.

Marketing During the year, the Company's distribution system has made a Quality and customer satisfaction form switchover to an internet-enabled the basis of the Company's marketing system, resulting in the improvement strategy. Towards this end, the and automation of many processes, Company has put in place a strong and also facilitating closer interaction sales network, countrywide with the customers. warehousing and distribution facilities, as well as an efficient after-sales service team, supported by market research, development capabilities and specialised sales promotion activities.

Product Within each territory, trained teams of Validation Centre sales representatives, backed by technically qualified service managers, The Company has a Product interact closely with those who make Validation Centre comprising of two the purchase decision. Together they dynamometers for the testing of its conduct education programmes and products. This centre provides service train mechanics in order to highlight to its customers by facilitating quick product development as well as testing and evaluating the performance of engines, fitted with 'Perfect Circle' piston rings.

The Company also has an R&D facility for the testing of materials, a Standards Room, a Metallurgical laboratory and

CENTRE: Mechanics' Training Programme at the TOP: Mr T Akiyama, Staff Manager-Design Group I, Product Validation Centre Suzuki Motor Corp., Japan and Mr Shivakumar B, BOTTOM: At the 'Dealer Meet': The new product Asst. GM (Engg. I), (3ra & 4th from right catalogue of Perfect Circle India being released by respectively) at the Perfect Circle facility, Nashik Mr CS Patel, Chief Operating Officer, Anand Group

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Shareholders

Perfect Circle India has been consistently delivering value to its Shareholders. The Company has paid dividends every year for the last 12 preparing them to take on the years, despite periodic slowdowns in People challenges posed by the competitive the Indian auto industry. Orientation business environment. Also conducted were several other training programmes The Company also arranges annual Perfect Circle India believes that in the areas of process management, plant visits for its Shareholders to training and development of its people problem solving, kaizen, time provide them an opportunity to see are important factors for employee management, productivity improvement the manufacturing facilities and motivation. In keeping with this belief, and waste elimination. operations. On the eve of its last the Company ensures that Annual General Meeting, the opportunities are provided to The Company also helps its promising Shareholders visited Nashik and employees at all levels to enhance their employees to move to positions of were impressed by the Company's knowledge and hone their skills. higher responsibility by sending them production capabilities, excellent Lending support in all this is Anand on deputation to the facilities of its housekeeping and its commitment to Group's technical and management collaborator for training in the area of health, safety and environment. institute, Anand 'IT, which designs and technological developments in conducts programmes to suit the products, processes and equipment. needs of the Company.

Training during the year was focused on initiatives such as Anand Business Leadership Process (ABLP), Six Sigma and QCDGP (Quality, Cost, Delivery, Growth, Productivity/ Profitability). All these were aimed at helping individuals to achieve their business goals, besides

TOP: Training programme for managers BOTTOM RIGHT: Mr Sachin Puri, GM-Marketing, BOTTOM LEFT: Shareholders on a visit to the Perfect Perfect Circle India, receives the 'Anand Engineering Circle facility at Nashik on the eve of the Annual Achievement Award' from Mr Deep C Anand, General Meeting 2002 Chairman-Anand Group

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Responsible Corporate Citizenship

automotive components, modules and As a socially conscious company, complete systems to global vehicle Perfect Circle India believes that it must manufacturers and their related contribute to the development of the aftermarkets. Headquartered in Toledo, society, that it is an integral part of. To Ohio, Dana operates 300 major put its belief into practice, the Company facilities in 30 countries and employs plays an active role in supporting the nearly 60,000 people. welfare work carried out by the SNS Foundation, an NGO - promoted by the Perfect Circle India receives support Anand Group - which takes up from its collaborator on technical developmental work in places where the issues. During the past year, several Group has its manufacturing facilities. senior technical executives of Dana and its affiliates visited the Company's The welfare initiatives include vocational World-class plants at Nashik. Besides, the training to help in the income Expertise Company's managers also visit the generation of the area's poorer facilities of the collaborator for training sections, literacy promotion especially Dana Corporation, USA - the on modern manufacturing processes of the girl child, elimination of child Company's collaborator - with a sales and technology upgradation. labour, environmental issues, and turnover exceeding US $ 9.5 billion, is health and family planning. The one of the world's largest suppliers of Company's employees also come forward to lend a hand in the activities.

BOTTOM LEFT: Mr Bernard Nicolas, Purchasing Director, Perfect Circle Europe (right) and Mr Francois Gateaud, Sales & Marketing Director-Perfect Circle TOP: Mr Tim Seffrin, Director-International, Perfect Aftermarket, in the Piston Ring plant Circle Division of Dana, USA, being welcomed during BOTTOM RIGHT: SNS Foundation-sponsored his visit to Perfect Circle India AIDS Awareness Camp in Nashik

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Working Results at a Glance

Sales (Rs. million) Gross Profit (Rs. million) i8

9 9 5 8

Shareholders' Funds (Rs. million) Distribution of Income (in %)

I 1

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