FAG AR 2007

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Annual Report 2007

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FAG India along with the Railway sector of Schaeffler Group participatedin the International Railway Equipment Exhibition (IREE) held at NewDelhi in February 2007. The exhibits at the booth included Axle BoxBearing with housing, Traction Motor Bearings and the complete unit ofTAROL 6x11 for railway applications like freight cars and locomotives.

IREE 2007

The Will to Win was the theme of 2007 IndustrialDistributor Confluence in Bangkok which wasattended by 50 distributor partners of the FAG Indiadistribution network. The theme was designed toencourage even higher commitment from allparticipants to ensure that the growth targets areachieved. It was an ideal platform for distributors tolearn about new products, systems and services,establish mutual relations and exchange ideas and

expertise. The Managing Director of FAG India,Mr. Biswarup Dhar in his opening speech sharedINA and FAG's expansion plans and threw light onnew emerging technologies, upcoming plants anddevelopment centers. During the application-oriented sessions, case studies presented bydistributors and sales engineers were particularlywell received by the audience. Lectures on specificsolutions for heavy industry applications, windturbines and agricultural machinery as well asvarious products and services from F'IS also metwith keen attention.

The Will to Win

Quality Circle Award

On winning Excellent Category Award at Stateand National Level, QCFI (India) recommendedFAG Team for International Competition - QualityCircle at Beijing, China, in October 2007, where the

FAG Team was honoured with GOLD AWARD.

Lamp lighting ceremony at the inauguration of the confluence. Thistraditional ritual symbolises wisdom and success

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A N N U A L R E P O R T2007

Contents Page No.

General Information 1

Notice to Members 2

Directors' Report 4

Auditors' Report 8

Schedules 12

Ten Years' Highlights 33

Electronic Clearing Service

(Credit Clearing) 36

Registered Office :

Nariman Bhavan, 8th Floor

227, Backbay Reclamation

Nariman PointMumbai - 400 021

General Information

Board of Directors

Chairman Avinash Gandhi

Managing Director Biswarup Dhar

Bernhard Steinruecke

Dr.Vidya Sagar

Dietmar Heinrich

Frank Huber

Thomas Hetmann

Nominee of GIC Moreshwar Garde

Alternate to Mr. Heinrich Kamlesh Tapadar

Alternate to Mr. Huber R. Sampath Kumar

Alternate to Mr. Hetmann Yezad Kapadia

Chief Financial Officer Satish Patel

Company Secretary Raj Sarraf

Bankers Union Bank of India

ICICI Bank Limited

Deutsche Bank

Auditors Mohinder Puri & Co.

New Delhi

Collaborators Schaeffler Group,

Germany

Head Office & Works Maneja, Vadodara - 390 013

Sales Offices Bangalore, Chennai, Kolkata,

Mumbai, New Delhi, Pune.

FAG Bearings India Limited

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NOTICEToThe Member(s)

FAG Bearings India LimitedNotice is hereby given that the Forty Fifth Annual General Meeting of "FAG BEARINGS INDIA LIMITED" will beheld on Thursday, April 17, 2008 at 3.00 P.M. at KAMALNAYAN BAJAJ HALL, Ground Floor, Bajaj Bhawan, JamnalalBajaj Marg, 226, Nariman Point, Mumbai- 400 021 to transact the following businesses:

ORDINARY BUSINESS

1. To receive, consider and adopt the Balance Sheet as at December 31, 2007 and the Profit and Loss Accountfor the year ended on that date along with Directors' and Auditors' Report thereon;

2. To declare dividend for the year ended December 31, 2007.

3. To appoint a Director in place of Mr. Frank Huber, who retires by rotation and being eligible offers himself for

reappointment.

4. To appoint a Director in place of Mr. Avinash Gandhi, who retires by rotation and being eligible offers himselffor re-appointment.

5. To appoint Auditors and to fix their remuneration.

SPECIAL BUSINESS

6. To appoint a Director in place of Mr. Thomas Hetmann, who was appointed with effect from February 14, 2008by the Board as an Additional Director and pursuant to provisions of Section 260 of the Companies Act, 1956read with article 126 of the "Articles of Association" of the Company holds this office upto the date of 45thAnnual General Meeting of the Company. The Company has received a notice from a member under Section257 of the Companies Act, 1956 proposing his candidature for the office of the Director.

To consider, and if thought fit, to pass, with or without modification, the following resolution as an OrdinaryResolution:

"RESOLVED THAT pursuant to applicable provisions of the Companies Act, 1956, Mr. Thomas Hetmann beand is hereby appointed as the Director of the Company".

"FURTHER RESOLVED THAT the Managing Director, the Chief Financial Officer and the Company Secretaryof the Company be and are hereby authorised to take the necessary actions and complete all the legal formalitiesrelated thereto".

Registered Office: By Order of the Board

Nariman Bhavan, 8th Floor, Sd/-227, Backbay Reclamation, Raj SarrafNariman Point, Company SecretaryMUMBAI-400 021Date : February 14, 2008

NOTES:

1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTEINSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER.

2. The instrument of proxy, duly completed, should be lodged at the Registered Office of the Company not lessthan forty-eight hours before the commencement of the Annual General Meeting.

3. The Company has notified closure of Register of Members and the Transfer Books from April 01, 2008 to April 05,2008 (both days inclusive) to determine entitlement of dividend on equity shares. Dividend will be paid to thoseshareholders, whose names appear on the Register of Members of the Company as at the end of business hours

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on March 31, 2008. The dividend will be paid within the specified time limit, after approval by members at theAnnual General Meeting. In respect of shares held in electronic form (demat shares), the dividend will be paid onthe basis of beneficial ownership as per the details furnished by the Depositories for this purpose.

4. a) Shareholders, who have not encashed the dividend warrants for the years 2000, 2001, 2002, 2003, 2004,2005 and 2006 are requested to claim the amount from the Company.

b) Pursuant to provisions of Section 205A read with 205C of the Companies Act, 1956 unclaimed dividendstill the year 1999 were transferred to the Investor Education and Protection Fund in time.

5. Electronic Clearing Service (ECS) has been permitted by Reserve Bank of India in many cities. Shareholdersmay fill up the option form and send it to the Registrars by April 6, 2008.

ANNEXURE TO NOTICE

Explanatory statement under Section 173 of the Companies Act, 1956 relating to Special Business mentionedin the notice convening the 45th Annual General Meeting

ITEM No. 6

Mr. Thomas Hetmann was appointed as an Additional Director, with effect from 14th day of February 2008, by theBoard of Directors to fill the vacancy caused due to the resignation of Mr. Hans-Juergen Goslar. Mr. Hetmann is theChief Financial Officer of Schaeffler Group, Germany, who has been associated with the Group since many yearsand has been instrumental in managing the Financial Affair of the Group.

A brief profile of Mr. Hetmann is as follows :

Full name Mr. Thomas Hetmann

Father's name Mr. Guenter Hetmann

Date of birth March 21, 1962

Director Identification Number 02064801

Present designation Chief Financial Officer, Schaeffler Group, Germany

Functional area Responsible for the financial affairs of entireSchaeffler Group, Germany

Directorship in other Indian Public companies Nil

Shareholding in the Company Nil

His continued association with the Company would be a great advantage. Your directors therefore recommend hiselection to the office of director of the Company. Notice from a member proposing his candidature together with adeposit of Rs. 500/- in terms of Section 257 of the Companies Act, 1956 has been received by the Company.

Except Mr. Thomas Hetmann no other director is interested in the resolution.

A brief resume and shareholding of directors who are being re-appointed have been included in the CorporateGovernance Report.

Registered Office: By Order of the Board

Nariman Bhavan, 8th Floor,227, Backbay Reclamation, Sd/-Nariman Point, Raj SarrafMUMBAI-400 021 Company SecretaryDate: February 14, 2008

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To the members of the Company

Your Directors are pleased to present the Forty Fifth Annual Report of the Company together with the audited financialstatements of the Company for the year ended December 31, 2007.

FINANCIAL HIGHLIGHTS (Rs. in Million)

Year Year2007 2006

TOTAL INCOME (Net) 6516.2 5529.1

Gross Operating Profit(Earning before depreciation, interest and tax) 1412.5 1290.1

Depreciation / Amortization 193.6 183.0

Interest (Net) (22.7 ) (0.7 )Prior Period Adjustments (3.2 ) -

PROFIT FOR THE YEAR BEFORE TAX 1244.8 1107.8

Provision for Tax 449.5 370.8

PROFIT AFTER TAX 795.3 737.0

Balance brought forward 1206.6 619.1

Profit available for appropriation 2001.9 1356.1

APPROPRIATIONS

Proposed dividend 66.5 66.5

Income tax on dividend (*including for an earlier year Rs. 2 million) 13.3 * 9.3Transfer to General Reserve 200.0 73.7

Balance carried to Balance Sheet 1722.1 1206.6

2001.9 1356.1

FINANCIAL AND OPERATIONAL PERFORMANCE

Your Company's sales have been consistently growing at a rate better than the growth of the bearing industry inIndia. Despite sluggish demand in Two Wheeler Industry the Company has realised sales growth of 18% (2006: 32.3%).

The Profit Before Tax (PBT) was higher by 13% (2006: 61.5%).

DIVIDEND

Your Directors recommend for your approval dividend for the year ended December 31, 2007 at the rate of Rs. 4.0(2006: Rs. 4.0) per equity share amounting to Rs.66.5 million (2006: Rs 66.5 million).The Company will pay the income tax on dividend as per the provisions of the Income-Tax Act.

TRANSAFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to provisions of Section 205A read with Section 205C of the Companies Act, 1956 the unpaid / unclaimeddividend pertaining to year ended on December 31, 1999 amounting Rs. 312,647/- (including interest accrued thereon)was lying in the Company's separate unpaid dividend account and remaining unclaimed for a period of seven years,was transferred to the Investor Education and Protection Fund.

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed review of operations, performance and future outlook of the Company is covered under a separate Annexureto this report as Management Discussion & Analysis. (ANNEXURE - I).

Directors' Report

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DIRECTORS

Mr. Frank Huber and Mr. Avinash Gandhi, who retire by rotation and being eligible, offer themselves for re-appointment.

Mr. Hans-Juergen Goslar has resigned from the directorship of the Company with effect from January 12, 2008. Tofill this vacancy the Board has appointed Mr. Thomas Hetmann as an Additional Director with effect from 14th dayof February 2008.

The Board appreciated the contributions of Mr. Goslar during his tenure with the Company.

PARTICULARS OF EMPLOYEES

The statement under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees)Rules, 1975 as amended and forming part of this report is given in Annexure - IV. The Managing Director is theonly employee covered by these Rules. However, pursuant to provisions of Section 219 (1) (b) (iv) of the CompaniesAct, 1956 all reports and accounts are being sent to all the shareholders of the Company except this Annexure -IV. Any shareholder interested in getting a copy of the said statement may write to the Company Secretary at Registeredor Head Office of the Company.

CORPORATE GOVERNANCE

A separate Section on Corporate Governance is included in the Annual Report and the certificate from M/s SamdaniKabra & Associates, Company Secretaries, Vadodara (Gujarat), the Company's Secretarial Auditors confirming thecompliance of conditions on Corporate Governance as stipulated in Clause 49 of the Listing Agreement with StockExchanges is annexed thereto. (ANNEXURE - II)

AUDITORS

The Statutory Auditors, M/s Mohinder Puri & Company, Chartered Accountants, who retire at the conclusion of 45thAnnual General Meeting to be held on 17th day of April 2008 and being eligible, offer themselves for reappointment.A certificate from them has been received to the effect that their re-appointment, if made, would be within the limitsprescribed under Section 224(1B) of the Companies Act, 1956.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

Information required as per Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988 has been given in the Annexure forming part of thisReport. (ANNEXURE - III).

DIRECTORS' RESPONSIBILITY STATEMENT

The directors state that:

i) In preparation of Annual Accounts all applicable accounting standards have been followed.

ii) Accounting Policies as listed in the Schedule 15 to the financial statements have been selected and appliedconsistently. Reasonable and prudent judgments as well as estimates have been made so as to give a trueand fair view of the state of affairs of the Company as on December 31, 2007 and of the profit of the Company

for the accounting year ended on that day.iii) Proper and sufficient care for maintenance of adequate accounting records has been taken in accordance with

the provisions of the Companies Act so as to safeguard the assets of the Company and to prevent and detectfraud and other irregularities.

iv) The annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENTS

Your Directors place on record their sincere appreciation for the wholehearted and continued support extended bythe Schaeffler Group, Suppliers, Customers, Stockists & Importers, Banks and all Employees of the Company duringthe year under report.

For and on behalf of the Board

Sd/-

Avinash Gandhi

Mumbai: February 14, 2008 Chairman

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(a) INDUSTRY STRUCTURE AND DEVELOPMENTS

Indian Bearing market size is estimated at Rs. 54 billion. Approximately 45% of this demand is met throughimports and the balance is met through indigenous products. In domestic market (without Imports), the salesof the organised bearing industry in India are estimated at Rs. 24.0 billion. The bearing industry recorded agrowth of 7% during the year 2007 in terms of sales value. FAG India total sales during the year 2007 shotup by 17%. FAG India's share in the total market is around 13%.

The fortunes of the bearing industry in India are linked to the growth of the automotive industry. Based ondeclared figures, 2007 was not an impressive year. While the Passenger Vehicle and Light Commercial Vehiclesales continued to remain buoyant, the overall automotive industry as such hardly grew. The growth of PassengerVehicles including Utility Vehicles was 13.6% during 2007. While the growth in Light Commercial Vehicle was17.2%, the overall growth in commercial vehicle industry was at 9.7%. The two wheeler industries registereda negative growth of 2.6%. The tractor industry that bounced back in the previous year too showed a negativetrend. The demand from Railways - another important market segment - remained flat during the year.

OEM industries, such as two-wheeler, are facing price competition in their own markets and continue to exert

price pressure on the local bearing suppliers. The growth of Indian middle class with increasing purchasingpower along with strong growth of economy over a past few years will undoubtedly accelerate demand fromthe automotive industry and other sectors like steel, power & heavy engineering, thus providing a favourablemarket environment for the bearing industry.

(b) OPPORTUNITIES AND THREATS

Opportunities

The last four years have witnessed impressive rates of industrial growth. In 2006-07 the industrial growth wasa splendid 11.5%, while the rate of growth of manufacturing was even higher at 12.5%. Though growth ofmanufacturing has slightly decreased in FY 07 on account of slackening of consumer durables sector, the smartgrowth in capital goods is suggestive of significant addition to industrial capacity.

Indian economy seems to grow at around 9% in the FY 08. All economic indicators show that the buoyancyin overall growth trend is expected to continue in the coming year. Demand outlook for the year 2008 is quitepositive. FAG India with its uncompromising commitment to global standards of excellence and vast experience

in Indian market is 'future ready'.

Threats

Over the last few years, there has been sharp increase in the prices of steel which forms the basic materialfor bearing. The overall margins of bearing manufacturers are under severe pressure.

The peak customs duty on imports in India has progressively declined over a decade. There is a likelihoodof government slashing peak customs duty rates further in 2008 to fall in line with Asian levels. The cut induty will make imports cheaper and resultant increase in import volumes especially from China and EasternEurope will intensify of competition for domestic bearing industry.

India has been globally acknowledged as a high growth economy. The highly favourable economic outlookhas attracted many new global bearing players to participate in the fast growing Indian market. Besides, mostof the existing leading domestic players are making investments to enhance the production capacities and benefitfrom the demand buoyancy.

The industry has to be on guard against the menace of counterfeit (i.e. spurious bearings) which has increasedover the last few years, in spite of serious efforts taken by industry to check it.

(c) SEGMENT WISE PERFORMANCE

The business of the Company falls under a single segment i.e. "Ball/Roller Bearings and related components"for the purpose of Accounting Standard AS-17.

(d) OUTLOOK

There has been marked change in the way the Indian economy is viewed, both within the country and in othercountries of the world. This is largely due to the sustained, well directed efforts of the government that haveresulted in globally acclaimed rates of economic growth, increased global competitiveness of Indian industries,strong macro fundamentals and a highly favourable economic outlook. In the face of the huge opportunitiesprovided by the automobile sector, capital goods industry and sizzling Indian economy, the Company expectsbuild up of demand from various industries, which will provide growth to the bearing industry.

(e) RISK AND CONCERNSWhile the overall demand outlook for the year 2008 remains good, the Company expects that there will berisk on its margins on account of intense competition from the unorganized sector in the domestic industry and

MANAGEMENT DISCUSSION AND ANALYSIS(Annexure - I to the Directors' Report)

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flow of cheap imports of bearings from China and other low cost countries. To dilute this risk besides any cyclicfluctuations in bearing demand from Automotive or various other industries, the Company will focus ontechnologically advanced and more profitable products/market segments.

The Company will continue to work in the areas of higher productivity, better efficiency and cost reductionsin order to control costs.

(f) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate Internal Audit System that cultivates reliable financial reporting, safeguard assets,encourage adherence to Management Policies as well as Schaeffler Group Guidelines and Specifications asfar as they are applicable and promote ethical conduct. The strong Internal Control Systems have been designedin such a way that, not only does it prevent fraud and misuse of the Company's resources but also protectshareholders' interest.

The Company has appointed an Audit Committee, which on regular intervals, in co-ordination with Internal andStatutory Auditors review the adequacy of Internal Control System within the Company.

The Company has an independent Internal Audit Department. The internal audit procedures constantly monitorthe controls and any feedback directly reported to the management of the Company. All audit findings are reportedin a structured manner with suggestions and recommendations from the audit department in consideration of'Internal' as well as 'Schaeffler Group' guidelines and procedures. All transactions are authorised as per theSchaeffler Group's Approval and Signature Guidelines, which are being recorded and reported in an organisedmanner.

Based upon the recommendations of Audit Committee, an Annual Audit Plan (AAP) is prepared by the InternalAudit Department, which is reviewed periodically by the top management and the Audit Committee.

(g) FINANCE

The year 2007 has been extremely challenging specially for the Bearing Industry, which has recorded a growthof 7% much lower than expected (2006: 18%). With this at one side where industry was working hard to maintainthe growth rate, it was tough to snatch the desired margin in the highly competitive market. Even in such asituation the Company was able to register growth and crossed the turnover of Rs. 640 Crore but with comparativefewer margins, which resulted in profit before tax growth of 14%.

(h) HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The year 2007 has witnessed Company's constant efforts in strengthening Human Resources, providing thembetter working atmosphere with advanced infrastructure, which helps them exploring their talent. As usual theestablishment has been contributing a lot to the State not only by generating new employment opportunitiesbut also helping various Management & Technical Institutes by providing training to their students in our TrainingCentre. With the end of this year the employees' strength has reached 1282.

Industrial relations during the year continued to be cordial and peaceful. The Directors place on record theexcellent co-operation and contribution made by the employees at all levels of the organization to the continuedgrowth of the Company.

The statement under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars ofEmployees) Rules, 1975 as amended and forming part of this report is given in Annexure - IV. The ManagingDirector is the only employee covered by these Rules. However, pursuant to provisions of Section 219 (1) (b)(iv) of the Companies Act, 1956 all reports and accounts are being sent to all the shareholders of the Company

except this Annexure -IV. Any shareholder interested in getting a copy of the said statement may write to theCompany Secretary at Registered or Head Office of the Company.

(i) CAUTIONARY STATEMENT

Certain statements in the Management Discussion and Analysis describing the Company's objectives, projections,estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicablesecurities laws and regulations. Actual results could differ from those expressed or implied therein. Importantfactors that could make a difference include raw material availability and prices thereof, cyclical demand andpricing in the Company's principal markets, changes in Government regulations and tax regime, economicdevelopments within India and the countries in which the Company conducts business and other incidentalfactors.


Sd/-

Avinash Gandhi

Mumbai: February 14, 2008 Chairman

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CORPORATE GOVERNANCE REPORT(Annexure - II to the Directors' Report)

1. COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE

The core principles of corporate governance as laid down by the Board lay emphasis on integrity andaccountability. The Corporate Governance Code incorporates several practices aimed at a high level of businessethics, effective supervision and enhancement of value for all stakeholders. FAG India's corporate governanceconforms to regulatory and legal requirements, such as the terms of Listing Agreements with Stock Exchanges.The basic philosophy behind an endeavor towards better corporate governance is to enrich the value forstakeholders by achieving business excellence.

2. BOARD OF DIRECTORS

Your 'Board of Directors', closely monitors the performance of the Company and Management, approves andreviews the strategy and determines the remuneration of the managerial personnel based on performance. YourBoard ensures statutory and ethical conduct with high quality financial reporting. It holds itself accountable tothe shareholders as well as other stakeholders for the long-term well-being of the Company.

The Management of your Company is entrusted to the Managing Director, who is assisted by a team of SeniorExecutives having rich experience and expertise in their respective fields.

(A) Composition of Board

The Board consists of eight* members and three* alternate directors, composition of which is in conformitywith Clause 49 of the Listing Agreement and the members are classified and categorized as under:

CategorySr.

Name of Director(s) DINExecutive

Non-Independent

Non-No.Executive Independent

1 Mr. Avinash Gandhi 00161107 - Yes Yes -

2 Mr. Biswarup Dhar 00364780 Yes - - Yes

3 Mr. Hans-Juergen Goslar* 00919939 - Yes - Yes

4 Mr. Frank Huber 00689169 - Yes - Yes

5 Mr. Dietmar Heinrich 00928243 - Yes - Yes

6 Mr. Bernhard Steinruecke 01122939 - Yes Yes -

7 Dr. Vidya Sagar 00047326 - Yes - Yes

8 Mr. Moreshwar Garde 00689103 - Yes Yes -

9 Mr. Sampath Kumar (Alternate) 00495192 - Yes - Yes

10 Mr. Kamlesh Tapadar (Alternate) 00161186 - Yes Yes -

11 Mr. Yezad Kapadia (Alternate) * 00161133 - Yes Yes -

*Mr. Hans-Juergen Goslar has tendered his resignation from the Company's Directorship effective from January12, 2008. Resulting therefrom the office of his Alternate Director Mr. Yezad Kapadia was considered as vacated

with effect from January 12, 2008. A formal noting by the Board is due in the Board Meeting to be held on

February 14, 2008.

Except Mr. Biswarup Dhar, Managing Director, the remaining seven directors are Non-executive Directors. Out

of these, three are 'Independent Directors' and four are 'Non-independent Directors'.

Mr. Avinash Gandhi, a professional having vast experience in Automobile Industry, is the Chairman of the 'Board'

and classified as 'Non-executive and Independent Director'.

Mr. Bernhard Steinruecke, "Director General of Indo German Chamber of Commerce" is a 'Non-executive and

Independent Director'.

Mr. Moreshwar Garde has been nominated on the Board by "General Insurance Corporation of India Limited

(GIC)" and is a 'Non-executive and Independent Director'.

Dr. Vidya Sagar is a Lawyer and Partner in the firm 'Remfry & Sagar', Attorneys-at Law. He has expertise in

Corporate Law as well as Intellectual Property Law and is a 'Non-executive and Non-Independent Director'.

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1. Mr. Avinash Gandhi 9 3 4 Yes

(Chairman) (Including one

Chairmanship)

2. Mr. Biswarup Dhar 1 1 4 Yes

(Managing Director)

3. Mr. Hans-Juergen Goslar 1 - 3 Yes

(until January 12, 2008)

4 Mr. Dietmar Heinrich 1 - 3 No

5. Mr. Frank Huber 1 - 2 Yes

6. Dr. Vidya Sagar 1 2 2 No

7. Mr. Bernhard Steinruecke 5 2 4 Yes

8. Mr. Moreshwar Garde 2 2 4 Yes

(Nominee of GIC) (Including one

Chairmanship)

9. Mr. Yezad Kapadia 2 - 1 @ Yes

(Alternate Director to (By invitation)

Mr. Hans-Juergen Goslar)

10. Mr. R. Sampath Kumar 1 - 2 @ Yes

(Alternate Director to (By invitation)

Mr. Frank Huber)

11. Mr. Kamlesh Tapadar 1 - 1 @ Yes

(Alternate Director to

Mr. Dietmar Heinrich).

No.* ofDirectorships

held (excludingdirectorships

in privatecompanies)

as on 31.12.07

Total* Numberof Membership /

Chairmanshipof committee**

(Other thanPrivate

Companies)as on 31.12.07

Number ofBoard

MeetingsAttended

Attendanceat the

Annual GeneralMeeting held on

April 26, 2007

Name of Member(s)

of the Board

"Mr. Dietmar Heinrich and Mr. Frank Huber are professionals working at senior positions with "Schaeffler KG,

Germany" and are categorized as 'Non-executive and Non-independent Directors'. Mr. Hans-Juergen Goslar

who was also a professional working at a senior position with "Schaeffler KG, Germany" was on the Board

until January 12, 2008 and he was categorized as 'Non-executive and Non-independent Director'. Mr. Kamlesh

Tapadar, Mr. Sampath Kumar and Mr. Yezad Kapadia, in their capacity as Alternate Directors for Mr. Dietmar

Heinrich, Mr. Frank Huber and Mr. Hans-Juergen Goslar, respectively, represented them during their absence

at the Board Meetings."

The 'Board of Directors' is constituted with appropriate combination of Independent, Non-independent Directors,

Executive and Non-executive Directors as per the Clause 49 of the Listing Agreement with the Stock Exchanges.

Details of Directorship of Member(s) of the Board and their attendance at the Board / Committee Meetings

and Annual General Meeting held during the year 2007 are given below:

* Including directorships / alternate directorships, memberships and Chairmanships of committee(s) of theCompany but excluding foreign Companies.

** Committees considered are Audit Committee and Investors Grievance / Share Transfer Committee of

directors of Companies.

@ Number of Board Meetings attended in a capacity of Alternate Director and not as an invitee.

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Directors seeking re-appointment at the 45th Annual General Meeting

Mr. Frank Huber and Mr. Avinash Gandhi, retire by rotation and being eligible offer themselves for re-appointment.

Mr. Frank Huber [DIN: 00689169]

Mr. Frank Huber, aged 52 years, has been a Director since February, 1997. At present, he is a Vice Presidentof Schaeffler KG, Germany and heads the legal function.

He is a Director in the following company :

Sr. Name of Company CIN Position heldNo.

1 FAG Bearings India Limited L29130MH1962PLC012340 Director

He is not a member of any committee. He is not holding any share.

Mr. Avinash Gandhi [DIN: 00161107]

Mr. Avinash Gandhi (69 years) was re-appointed as a Director in the 43rd Annual General Meeting on 20thApril 2006. He is the Chairman of the Board and the Audit Committee of the Company. Mr. Gandhi is B.Sc.in Mechanical Engineering from Birla Institute of Technology, Mesra Ranchi. He was President and Directorof Hyundai Motor India Limited. He had served at very senior positions in reputed organisation like Escorts,Telco and the Indian Ordinance factories. He has experience of over 45 years.

He is a Director in the following Companies:

Sr. Name of Company CIN Position heldNo.

1 FAG Bearings India Limited L29130MH1962PLC012340 Chairman

2 Lumax Industries Limited L74899DL1981PLC012804 Director

3 Fairfield Atlas Limited U34300MH1990PLC055300 Director

4 Uniproducts (India) Limited L45201HR1982PLC014785 Director

5 Panalfa Automotive Pvt. Limited U74899DL1994PTC060689 Director

6 Havells India Limited L31900DL1983PLC016304 Director

7 Continental Engines Limited U34300DL1996PLC081210 Director

8 Mahavir Aluminium Limited U74999DL1979PLC009937 Director

9 Minda Corporation Limited U74899DL1985PLC020401 Director

10 Avinar Consulting Pvt. Limited U74140DL2004PTC127802 Director

11 Panalfa Autoelektrik Pvt. Limited U29221DL2007PTC160549 Director

12 Minda Valeo Security Systems Pvt. Ltd. U34300DL2007PTC157344 Director

13 Alucast Auto Parts Limited U28920KA1995PLC017793 Director

Mr. Gandhi is a member of the following Board Committees:

Sr. Name of Company Name of Committee Position heldNo.

1 FAG Bearings India Limited Audit Committee Chairman

2 Lumax Industries Limited Audit Committee MemberRemuneration Committee Chairman

3 Fairfield Atlas Limited Audit Committee MemberRemuneration Committee Chairman

(B) Non-Executive Directors' Compensation and Disclosures

Except Mr. Biswarup Dhar, Managing Director, the remaining directors are Non-Executive Directors. Non-Executive Directors (except who are in whole-time employment of Schaeffler KG, Germany) are paid sittingfees for attending Board / Committee Meetings and no commission / share of profit is paid to them. Thedetail of compensation paid to them is disclosed under point no 4 of this report.

(C) Board Meeting(s) during 2007

In all, four Board Meetings were held during 2007 on the following dates:

Board Meeting (s) I II III IV

Dates February 8 April 26 July 26 October 25

Start Timing 11.30 AM 11.15 AM 11.45 AM 2.15 PMVenue Mumbai Mumbai New Delhi Vadodara

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The details of attendance of each of the directors at the Board Meeting(s) are given in the table at PointNo.2A. The Board has reviewed periodically the compliance of all the laws applicable to the Company.

(D) Board Procedure

The Notice convening Board Meetings are being sent to each of the directors along with relevant papersseven to ten days in advance of the date of Board / Committee Meetings. To enable the Board to dischargeits responsibilities effectively, the Managing Director briefs the Board at every meeting on the financialperformance of the Company upto the last completed month as against the budget / budget of the year.Presentations are made by the Managing Director about the financial, operational performance and marketscenario. The Board also reviews:

1. Strategy and business plans,

2. Annual operating and capital expenditure budgets,

3. Adoption of quarterly / half yearly / annual results (after recommendation of the Audit Committee),

4. Investment plans of the Company,

5. Major accounting provisions and write-offs,

6. Foreign exchange exposure and risks,

7. Compliance with statutory / regulatory requirements and review of major legal issues and

8. Details of Joint Venture or Collaboration Agreement.(E) Code of Conduct

The Company has laid down a Code of Conduct, under Clause 49 of the Listing Agreement, for all itsBoard Members and Senior Management Personnel for avoidance of conflicts of interest. The declarationswith regard to compliance of Code of Conduct have been received for the year 2007 from all BoardMembers and Senior Management Personnel.

There were no material financial and commercial transactions, in which Board Members and SeniorManagement personnel have personal interest, which could lead to potential conflict of interest with theCompany during the year. The Code of Conduct is also available on Company's website.

3. AUDIT COMMITTEE

A. The Company's Audit Committee has been in existence since 1987, which meets applicable requirementsof the Companies Act, 1956 and Listing Agreement as well. For adoption of changes in members and

sometime in governing regulation, the Committee had been re-constituted from time to time - with the lastreconstitution being on April 20, 2006. The existing Audit Committee consists of the following members :

Sr. Name of Director Acting in the Committee as Category under clause 49No.

1 Mr. Avinash Gandhi Chairman Independent & Non-executive

2 Mr. Bernhard Steinruecke Member Independent & Non-executive

3 Dr. Vidya Sagar Member Non-Independent & Non-executive

4 Mr. Moreshwar Garde Member Independent & Non-executive

The Company Secretary is the Secretary of the Audit Committee.

B. Details of the Audit Committee Meetings held during 2007 are as follows:

Audit Committee Meeting(s) I II III IV

Dates February 8 April 26 July 26 October 25

Start Timing 10.00 AM 10.15 AM 10.30 AM 1.15 PM

Venue Mumbai Mumbai New Delhi Vadodara

Attended by Members Mr. Gandhi Mr. Gandhi Mr. Gandhi Mr. Gandhi

Mr. Steinruecke Mr. Steinruecke Dr. Sagar Dr. Sagar

Mr. Garde Mr. Garde Mr. Steinruecke Mr. Steinruecke

Mr. Garde Mr. Garde

The meetings of the Audit Committee were also attended by the Managing Director, the Chief FinancialOfficer, the Company Secretary, the Internal Auditor and the Statutory Auditors. The Cost Auditor attendedone meeting.

All the members of Audit Committee are financially literate and majority of them have accounting and

financial management expertise.The Chairman of the Audit Committee, Mr. Avinash Gandhi, attended the 44th Annual General Meeting heldon Thursday, April 26, 2007.

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C. Terms of Reference

The terms of reference of this Committee include matters specified in the Companies Act, 1956, ListingAgreement and are specified by the Board in writing. Besides having access to all required information within

the Company, the Committee may obtain external professional advice, whenever required. The Committeeacts as a link between the Statutory Auditors, Internal Auditors and Board of Directors. It is authorised to selectand establish accounting policies, to review reports of Statutory and Internal Auditors, co-ordinate with them todiscuss their observations, suggestions and to strengthen the Internal Control System within the Company. TheCommittee is empowered to review the remuneration payable to the Statutory Auditors.

4. REMUNERATION TO DIRECTORS FOR THE YEAR 2007

Remuneration to the Executive Director

As per the Employment Agreement and approval of the Board in its Meeting held on April 26, 2007, the detailsof Remuneration paid / payable for the year 2007 are as follows:

(Rs. in million)

Salary & Performance Allowance & Company's TotalBonus Perquisites contribution to funds

4.5 1.4 0.9 6.8

Notes:

a) Performance Bonus is variable subject to maximum limit of Rs. 1.35 Million.b) Company's contributions to fund include Superannuation Fund and Provident Fund and exclude the

accruals for gratuity as it is funded on the basis of an actuarial valuation for the Company as a whole.c) The Employment Agreement may be terminated by either party upon giving to the other 12 months' prior

notice.d) The Company does not have any Stock Option Scheme as at December 31, 2007.

The remuneration limit of Mr. Dhar for the period up to and including 2010 will be in accordance with the'Employment Agreement' and the annual increment for the years 2008, 2009 and 2010 will be decided by theBoard of the Company.

Remuneration to the Non-Executive Directors

Directors (except, who are in whole-time employment of the Company or Schaeffler KG, Germany) are paidsitting fees for attending Board / Committee Meetings and no commission / share of profit is paid to them. Thedetails of sitting fees paid to them for attending Board / Committee Meetings during the year are as follows:

No. of Meetings Attended

Name of the Director Board Audit Investor's Grievance / AmountCommittee Share Transfer Committee (Rs.)

Mr. Avinash Gandhi 4 4 - 56,000

Dr. Vidya Sagar 2 2 1 32,000

Mr. Bernhard Steinruecke 4 4 - 56,000

Mr. Moreshwar Garde 4 4 2 64,000

Mr. R. Sampath Kumar 2* - - 20,000Mr. Yezad Kapadia 1* - - 10,000

Mr. Kamlesh Tapadar 1* - - 10,000

Total 248,000

* Number of Board Meetings attended in a capacity of Alternate Director and not as an invitee.

All the directors have been reimbursed expenses incurred by them in discharge of their duties. The payments madeto a director in his individual capacity or to his relatives have been disclosed. However, none of these Directorshas any material pecuniary relationship or transactions with the Company, its Promoters or its Management,which, in the judgment of the Board, would affect their independence. The Company has not entered into anymaterially significant transaction with its promoters, directors or their relatives, or its management, or subsidiariesthat may have potential conflict with the interests of the Company.

Transactions of the Non-Executive Directors or their relatives with the Company are as follows:

1. Professional consultation fees (including service Tax and reimbursement of expenses) paid / payable toMr. Avinash Gandhi is Rs. 5,63,040/-.

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2. Rs. 72,000/- was paid to relatives of Mr. Avinash Gandhi towards rent.

3. Professional consultation fees paid / payable to Mr. Bernhard Steinruecke is Rs.3,00,000/-.

Directors' Shareholding with the Company

Except Mr. Biswarup Dhar and Mr. Kamlesh Tapadar (who hold 450 shares and 75 shares respectively), noother director is having shareholding in the Company.

5. INVESTORS GRIEVANCE/SHARE TRANSFER COMMITTEE MEETINGS

Details of the Investors Grievance/Share Transfer Committee Meeting held during 2007 are as follows:

Meeting(s) I II

Dates February 8 July 26

Start Timing 11.00 AM 11.15 AM

Venue Mumbai Mumbai

Attended by Members Mr. Moreshwar Garde Mr. Moreshwar Garde

Mr. Biswarup Dhar Mr. Biswarup Dhar

Dr. Vidya Sagar

The Company Secretary is the Secretary of this Committee and also appointed as Compliance Officer of theCompany.

The Committee meets to deal with matters relating to transfers / transmission of shares and to monitor redressal ofcomplaints from shareholders relating to transfers, non-receipt of Balance Sheet, non-receipt of dividends declaredetc. During 2007, twelve complaints were received from the shareholders / investors, which were attended andresolved satisfactorily during the year. There was no complaint pending as on December 31, 2007.

6. GENERAL BODY MEETINGS

Details of Annual General Meetings held in last three years are as follows :

Sr. MeetingsNo. Particulars 44th AGM 43rd AGM 42nd AGM

1 Date 26th April, 2007 20th April, 2006 28th April, 2005

2 Start Timing 3.00 PM 3.00 PM 3.00 PM3 Venue Kamalnayan Bajaj Hall, Gr. Floor, Bajaj Bhawan,

226 Nariman Point, Mumbai - 400 021

4 Resolutions Passed

ORDINARY BUSINESS:

1 Adoption of Accounts As at 31.12.06 As at 31.12.05 As at 31.12.04

2 Declaration of Dividend 40 % 35% 35%

3 Re-appointment of Rotational Mr. Goslar Mr. Gandhi Mr. HuberDirectors under section 256 Mr. Steinruecke Dr. Sagar Mr. Morber

4 Appointment of Auditors & to Mohinder Puri & Co. Deloitte Haskins & Sells,fix their remuneration Chartered Accountants, Chartered Accountants, Mumbai

New Delhi

SPECIAL BUSINESS :Appointment of Directors Mr. Heinrich - Mr. Goslarunder Section 257 Mr. Steinruecke

Appointment of Managing Director Mr. Dhar Mr. Jagannath -under Section 198, 269, 309,311 and Sch. XIII

Keeping the Register of Members (RoM) Maintenance of RoM at theof the Company under Section 163 read office of "Intime Spectrumwith Rule 4(1)(b) of SEBI (RTA) Rules 1993 Registry Ltd." (RTA). - -

Fee / Compensation to Non-Executive / - Mr. Gandhi -Independent Directors under clause 49 of Mr. SteinrueckeListing Agreement

No special resolution was passed in any of the last three Annual General Meetings.

No Extraordinary General Meeting of members was held during the last three years. No postal ballots were used for voting at these meetings. At the forthcoming Annual General Meeting there is no item on the agenda requiring postal ballot.

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7. DISCLOSURES

i) There were no materially significant related party transactions that have potential conflict with the interestsof the Company at large.

ii) There have been no instances of any penalties, strictures imposed on the company on any matter relatingto the capital market and listing either by Stock Exchange or SEBI or on any statutory authority duringthe last three years.

iii) The Company has adopted and complied with mandatory requirement as per Clause 49 of the ListingAgreement. Some of the non-mandatory requirements have also been complied with.

iv) The requisite certificates from CEO and CFO were placed before the Board Meetings for consideration.

v) The Company has adequate risk assessment and minimization system in place. The risk managementprocedure is reviewed in the Board Meetings periodically.

Non-mandatory Requirements of Clause 49 {Annexure 1D}

1) The Board

Mr. Avinash Gandhi, being Non-Executive Chairman, is entitled for re-imbursement of expensesincurred in performance of his duties.

2) Shareholder's Rights

A letter from the Chairman, on half yearly financial performance including summary of the significantevents is circulated to all shareholders.

3) Audit Qualification

There has been no Audit Qualification in the Audit Report by the Auditor in year 2007.

4) Whistler Blower Policy

While the Company has not implemented a formal Whistler Blower Policy, employees are notdisqualified from reporting to the Management on any matter concerning unethical behaviour, actualor suspected fraud or violation of the Company's Code of Conduct or ethics policy.

8. MEANS OF COMMUNICATION

Quarterly Results

Pursuant to provisions of the listing agreements, periodical financial results of the Company are being publishedin one widely circulated English newspaper (The Economic Times) and a Vernacular Marathi newspaper(Maharashtra Times). Financial results, as soon as they are approved by the Board, are forwarded to the StockExchanges (BSE & NSE) and also displayed on Company's Website (www.fag.co.in). Along with the financialresults, other information as per the listing guidelines such as Annual Report and Shareholding Pattern, aredisplayed in EDIFAR, which pursuant to listing agreement, would be shifted on website www.corpfiling.co.inunder "Corporate Filing and Dissemination System (CFDS).

The Company does not make any presentation to analysts or to institutional investors. A letter from the Chairmanalong with half-yearly results is sent individually to all the shareholders.

9. GENERAL SHAREHOLDER INFORMATION

i) 45th Annual General Meeting is scheduled to be held

On: Thursday, the 17th day of April 2008

At: 3.00 P.M.

At: KAMALNAYAN BAJAJ HALL, Ground Floor, Bajaj Bhawan, Jamnalal Bajaj Marg,

226, Nariman Point, Mumbai-400 021

ii) Financial YearA twelve month period starting from January 1, 2008 to December 31, 2008.

Financial Reporting for:

(a) 1st quarter ending March 31, 2008 - by the end April 2008,

(b) 2nd quarter & half year ending June 30, 2008 - by the end July 2008,

(c) 3rd quarter ending September 30, 2008 - by the end October 2008,

(d) 4th quarter and year ending December 31, 2008 - by the end Jan /Feb. 2009.

Note: The above dates are indicative.

iii) Date of Book Closure

April 1, 2008 to April 5, 2008 (Both days inclusive)

iv) Dividend Payment Date

The Dividend for the year 2007 shall be declared under agenda item no. 2 of ensuing 45th Annual GeneralMeeting scheduled on April 17, 2008, and shall be paid within the time limit prescribed in the CompaniesAct, 1956.

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v) Listing of Equity Shares on Stock Exchanges

The Equity Shares of the Company are listed on Bombay Stock Exchange Limited (BSE) and NationalStock Exchange of India Limited (NSE). The requisite listing fees have been paid to the StockExchanges upto March 2008.

vi) Stock Code

Bombay Stock Exchange Limited (BSE), Mumbai 505790

National Stock Exchange of India Limited (NSE), Mumbai FAGBEARING

Demat International Security Identification Number (ISIN) in NSDL andCDSL for Equity Shares INE513A01014

vii) Market Price Data

A summary containing monthly High / Low share prices at Bombay Stock Exchange Limited, Mumbai(BSE) and National Stock Exchange of India Limited (NSE) is as under:

Equity Shares

For the Year 2007 Bombay Stock Exchange Limited, National Stock Exchange

(BSE) of India Limited, (NSE)

High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)

January 698.90 635.00 700.00 640.10

February 725.00 630.00 717.00 635.10

March 687.00 560.00 680.00 559.25

April 625.00 565.00 625.00 566.00

May 709.00 593.00 714.90 595.00

June 690.00 610.00 688.00 591.00

July 685.00 631.35 740.00 630.00

August 712.00 613.00 724.95 601.50

September 699.95 600.00 754.90 617.00

October 690.00 571.00 674.00 570.60November 624.00 527.00 714.00 532.00

December 720.00 571.00 724.95 583.00

viii) Stock Performance

The performance of the Company's shares relative to the BSE Sensitive Index for the year 2007is given below:

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ix) Registrar and Share Transfer Agent

The detail is as under:

Name : Intime Spectrum Registry Limited

Address : 308, Jaldhara Complex, 1st Floor, Opp. Manisha Society,

Vasna Road, VADODARA: 390 015

Phone No. : +91-265-2250 241, 3249 857

Fax No. : +91-265-2250 246

E-mail : Mr. Jaydeep Mehta: [email protected]

Website : www.intimespectrum.com

Intime Spectrum Registry Limited was appointed as 'Registrar & Share Transfer Agent' for Company's

Equity shares in physical and demat form.

x) Share Transfer System

Trading of equity shares of the Company is possible in Dematerialised Form. Shares sent for transfer

in physical form are registered on a fortnightly basis and returned within a period of thirty days

from the date of receipt of document, provided all the documents are valid and complete in all

respects. The authority to approve the share transfer / transmission lies with Board of Directors.

Further, with an intention to expedite the process of share transfer / transmission, the Board has

delegated this authority to the Managing Director upto 10000 shares per transfer and to issue

duplicate shares certificates in lieu of originals upto 500 shares.

The Company confirms that there is no share transfer pending as on December 31, 2007 for more

than thirty days from the date of lodgement thereof and all requests for demat / remat received

by the Company / Registrar and Transfer Agent were confirmed / rejected within the specified period

of 15 days from the date of receipt thereof.

xi) Information on Unclaimed Dividend

Pursuant to provisions of the Companies Act, 1956 Company is committed in making timely payment

of dividend. Pursuant to provisions of Section 205A of the Companies Act, 1956 dividend that

remained unpaid or unclaimed for the financial year ended on December 31, 2000 will, as on July

26, 2008, be transferred to "Investor Education and Protection Fund" (IEPF) a fund constituted by

the Central Government under Section 205C of the Companies Act, 1956.

Entitled Members are requested to lodge their claims before the last date for claiming unpaid /

unclaimed dividend as shown in the table below for the dividend of respective years. For the claims

lodged after the last due dates, the Company does not take any responsibility for payment, as the

balance amount on last due dates along with interest earned thereon shall be transferred to the

IEPF fund set up under Section 205C of the Companies Act, 1956:

Details of unclaimed dividend

Year ended on Date of declaration Last date for claiming Amount lyingof dividend unpaid dividend unpaid (Rs.)

as on 31.12.2007

31.12.2000 21.06.2001 26.07.2008 442,216

31.12.2001 03.05.2002 08.06.2009 378,914

31.12.2002 24.04.2003 30.05.2010 463,356

31.12.2003 29.04.2004 04.06.2011 460,021

31.12.2004 28.04.2005 03.06.2012 371,677

31.12.2005 20.04.2006 26.05.2013 361,329

31.12.2006 26.04.2007 01.06.2014 404,500

Total amount lying unpaid as on 31.12.2007 2,882,013

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xii) Distribution of Shareholding

(As on 31st December, 2007)

Year 2007 2006

Shareholder's Category Number of Number of Number of Number ofShareholders % Shares held % Shareholders Shares held

Individuals 7,103 95.48 2,172,056 13.07 7,370 2,586,701

Companies 291 3.92 10,279,076 61.86 300 9,312,278

Financial Institutions and Banks 10 0.13 1,625 0.01 10 1,625

Insurance Companies and LIC 3 0.04 374,448 2.25 3 421,732

Mutual Funds and UTI 12 0.16 2,276,524 13.70 12 1,987,007

Foreign Institutional Investors 20 0.27 1,513,541 9.11 19 2,307,927

TOTAL 7,439 100.00 16,617,270 100.00 7,714 16,617,270

Year 2007 2006

Analysis of Shareholding Number of Number of Number of Number ofShareholders Shares held Shareholders Shares held

1 - 50 2.963 73,321 2,791 75,939

51 - 100 1,584 138,121 1,680 146,990

101 - 250 1,350 232,068 1,490 257,809

251 - 500 741 281,133 825 315,052

501 - 1000 396 30,1709 473 362,382

1001 - 5000 325 69,1845 359 781,199

5001 and above 80 14,899,073 96 14,677,899

TOTAL 7,439 16,617,270 7,714 16,617,270

Note: The information given above in Distribution Schedules is on the basis of a Certificate received fromthe Registrars & Transfer Agents, Intime Spectrum Registry Limited, on which auditors have relied.

xiii) Dematerialization of Shares and liquidity

46.47% of the Paid-up Equity Share Capital is held in Dematerialised form with National SecuritiesDepository Limited and Central Depository Services (India) Limited as on December 31, 2007.

xiv) Outstanding GDRs/ADRs/Warrants or any Convertible instruments, conversion date and likely impacton equity: NIL

xv) Plant Location

The manufacturing activities of the Company are being carried out from plant located at Maneja

in Vadodara, Gujarat State.xvi) Address for correspondence

In addition to the Registrar's details given in (ix) above, shareholders may correspond at the followingaddresses:

Registered Office:

Nariman Bhavan, 8th Floor, 227 Backbay Reclamation, Nariman Point,Mumbai - 400 021

E-mail: [email protected]

Head Office & Works:

Maneja, Vadodara - 390 013

E-mail: [email protected]

In the demat mode, shareholders are advised to correspond with their respective DepositoryParticipants.

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The Management Discussion and Analysis Report for the year ended on December 31, 2007 forms part of theAnnual Report.


Sd/-

Avinash GandhiChairman

Mumbai: February 14, 2008

To,

The Members of FAG Bearings India Limited

Re.: Declaration by CEO under Clause 49(1) (D) (ii) of the Listing Agreement

I, Biswarup Dhar, Managing Director of FAG Bearings India Limited, hereby declare that to the best of my knowledgeand belief, all members of the Board of Directors and Senior Management Personnel have confirmed complianceof Company's Code of Conduct for the year ended on December 31, 2007.

Sd/-

Biswarup DharMumbai : February 14, 2008 Managing Director

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CERTIFICATE

To the Members of FAG Bearings India Limited

We have examined the compliance of conditions of Corporate Governance by FAG Bearings India Limited, for

the year ended on December 31, 2007 as stipulated in Clause 49 of the Listing Agreement of the said Company

with stock exchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the Companys management. Our

examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the

compliance of the conditions of Governance. It is neither an audit nor an expression of an 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.

We state that in respect of investor grievances received during the year ended 31st December, 2007, no investor

grievances are pending against the Company, as per the records maintained by the Company and presented

to the Investors/Shareholders Grievance Committee.

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.

For Samdani Kabra & Associates

Company Secretaries

Sd/-

S.S. Samdani

Partner

Date : 14th February, 2008 FCS/CP No. 3677 / 2863

Place : Vadodara

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CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,FOREIGN EXCHANGE EARNING AND OUTGO

(Annexure - III to the Directors' Report)

The Particulars under the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 areas under:

(A) ENERGY CONSERVATION MEASURES TAKEN DURING THE YEAR 2007

1. Installation of 2 nos. air compressor which leads to higher efficiency and power saving.

2. Installation of new air dryer, thereby usage of only 1 no. 4500 CFM air dryer instead of 2 nos. air dryers.

3. Installation of 4 nos. capacitors in the plant to improve the power factor.

4. As usual, the power factor has been maintained at 0.99 resulting in optimized utilization of power.

(B) TECHNOLOGY ADAPTATION, ABSORPTION & INNOVATION

The year has witnessed some developments mainly from better infrastructure point of view, be it environmentalconditions, replacement of machines with modern technology, roofing etc. The advance equipment and methodshave been adopted in Heat Treatment Section, which has resulted improvement in grinding and overall

productivity.

Around 75 nos. young Engineers have been recruited for very critical and precise operations.

TECHNOLOGY ABSORPTION

a. 53 new types of Bearings have been developed successfully.

b. Improvement in Manufacturing Process Conditions like; illumination, temperature mistake proofing, etc. atHall 1 and DGBB area.

c. Precise machines for critical components of ball inspection are installed to ensure improvement inproductivity.

(C) FOREIGN EXCHANGE EARNING AND OUTGO

Import substitution is used as a measure of cost reduction, where possible.

(Rs. in million)

Particulars Year Year2007 2006

Earnings:

Earning in foreign exchange

Service Income 66.0 69.0

FOB value of exports 896.3 847.8

Total foreign exchange earned 962.3 916.8

Outgo:

Imports CIF value of

Raw materials, Components, Products purchased for Sale, Stores & Spares, 1355.0 1225.8

Capital goods and intangible assets

Expenditure in foreign currency

Interest on foreign currency loans, Fees for use of technology, interest on 193.6 166.1

foreign suppliers credit, professional fees and other expenses

Dividend paid to Shareholders (net of tax) 34.1 34.1

Total foreign exchange used 1582.7 1426.0


Sd/-

Mumbai: February 14, 2008 Avinash Gandhi

Chairman

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To

The Board of Directors

We hereby certify that -

a) We have reviewed financial statements and the cash flow statement for the year ended December 31, 2007

and that to the best of our knowledge and belief

i) these statements do not contain any materially untrue statement or omit any material fact or contain

statements that might be misleading;

ii) these statements together present a true and fair view of the company's affairs and are in compliance

with existing accounting standards, applicable laws and regulations.

b) there are, to the best of our knowledge and belief, no transactions entered into by the company during

the quarter which are fraudulent, illegal or violative of the company's code of conduct.

c) we accept responsibility for establishing and maintaining internal controls for financial reporting, we have

evaluated the effectiveness of internal control systems of the company pertaining to financial reporting and

we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such

internal controls, if any, of which we are aware and the steps we have taken to rectify these deficiencies.

d) We fur ther cer ti fy that -

i) there have been no significant changes in the internal control over financial reporting during the year,

ii) there have been no significant changes in the accounting policies during the year and

iii) there have been no instances of significant fraud of which we have become aware and the involvement

therein, if any, of the management or an employee having a significant role in the company's internal

control system over financial reporting.

For FAG Bearings India Limited

Sd/- Sd/-

Biswarup Dhar Satish Patel

Managing Director Chief Financial Officer

Place : Mumbai

Date : February 14, 2008

CEO AND CFO CERTIFICATE

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We have audited the attached Balance Sheet of FAG Bearings India Limited, as at December 31, 2007 and also the Profit

and Loss Account for the year ended on that date annexed thereto and the Cash Flow Statement for the year ended on thatdate. These financial statements are the responsibility of the Companys management. Our responsibility is to express an

opinion on these financial statements based on our audit.

We conducted our audit in accordance with the 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 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.

1) As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report)

(Amendment) Order, 2004 issued by the Central Government of India in terms of Sub-Section (4A) of Section 227

of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and

5 of the said Order.

2) Further to our comments in the Annexure referred to above, we report that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were

necessary for the purposes of our audit;

b) in our opinion, proper books of account as required by law, have been kept by the Company so far as appears

from our examination of such books;

c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in

agreement with the books of account;

d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this

report comply with the accounting standards referred to in Sub-Section (3C) of Section 211 of the Companies

Act, 1956;

e) on the basis of written representations received from the directors, as on December 31, 2007 and taken on

record by the Board of Directors, we report that none of the directors is disqualified as on December 31, 2007

from being appointed as a director in terms of clause (g) of Sub-Section (1) of Section 274 of the Companies

Act, 1956;

f) in our opinion and to the best of our information and according to the explanations given to us, the said

accounts give the information required by the Companies Act, 1956, in the manner so required and give a true

and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at December 31, 2007,

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

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

For Mohinder Puri & Company

Chartered Accountants

Sd/-

VIKAS VIG

Partner

Membership No.16920

Place: MumbaiDate : February 14, 2008

Auditor's Report to the members of FAG Bearings India Limited

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ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE AUDITOR'S REPORT TO THE MEMBERS OF FAGBEARINGS INDIA LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 2007

( i ) (a) The Company has maintained proper records showing fu l l part icu lars inc luding quant ita tive

details and situation of fixed assets.

(b) The Company has a regular programme of physical verif ication of f ixed assets which, in our

opinion is reasonable. The assets which were to be covered as per the said programme, have

been physically verified by the management during the year. According to the information and

explanations given to us, no material discrepancies were noticed on such verification.

(c) There was no disposal of substantia l par t of f ixed assets dur ing the year.

( i i ) (a) The inventor ies have been physical ly ver if ied by the management during the year at reasonable

intervals.

(b) In our opinion and according to the information and explanations given to us, the procedures

of physical verification of inventori es followed by the management are reasonable and adequate

in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of the inventory, we are of the opinion that the

Company is maintaining proper records of inventory. According to the information a nd explanations

given to us, no material discrepancies were noticed on physical verif ication between the

physical stock and the book records.

( i i i) (a) In an ear lier year, the Company granted unsecured loans to two Companies which have been

covered during the year in the register maintained under Section 301 of the Companies Act,

1956 (the Act). The maximum amount involved during the year was Rs. 61 million and the year-

end balance of loans granted to such parties was Rs. 61 million.

(b) In our opinion, the rate of interest and other terms and condit ions of the above loans are not,

prima facie, prejudicial to the interest of the Company.

(c) The part ies are generally regular in payment of interest to the Company. The principal amount

was not due for repayment as per the rescheduled terms of repayment of the loans.

(d) There is no overdue interest outstanding as at the year end.

(e) The Company has not taken any loans, secured or unsecured from companies, f irms or other

parties covered in the register maintained under Section 301 of the Act. Accordingly, clauses

(iii)(f) and (iii)(g) of paragraph 4 of the Companies (Auditorss Report) Order, 2003 (hereinafter

referred to as the order) are not applicable to the Company.

( iv) In our opinion and according to the information and explanations given to us, having regard to the

explanation that some of the items are of a special nature and comparable alternative quotationsare not available, there is an adequate internal control system commensurate with the size of the

Company and the nature of its business for the purchase of inventory and fixed assets and for the

sale of goods and services. During the course of our audit, we have not observed any continuing

failure to correct major weaknesses in internal control system in respect of these areas.

(v) (a) Based on the audi t p rocedures appl ied by us and according to the in formation and

explanations provided by the management, we are of the opinion, the transactions that need

to be entered into the register in pursunce of Section 301 of the Act have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions

made in pursuance of contracts or arrangements entered in the registers maintained under

Section 301 of the Companies Act, 1956 and exceeding the value of five lakh rupees in respect

of any party during the year have been made at prices which are reasonable having regard

to prevailing market prices at the relevant time.

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(vi) In our opinion and according to the information and explanations given to us, the Company has

complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Act

and the Companies (Acceptance of Deposits) Rules, 1975, with regard to the deposits accepted from

the public in earlier year/s which have remained unclaimed. We have been informed that during theyear, no order has been passed by the Company Law Board or National Company Law Tribunal or

Reserve Bank of India or any Court or any other Tribunal in respect of such deposits.

(vi i) The Company has a dedicated internal audit department carrying out Internal Audits. In our opinion,

the Company has an internal audit system commensurate with the size and the nature of its business.

However, company is taking steps to further enlarge the scope and coverage of internal audit to be

more effective.

(vi i i) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules

made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the

Act and are of the opinion that prima facie the prescribed accounts and records have been made

and maintained. We have not, however, made a detailed examination of the records.

( ix) (a) According to the information and explanations given to us and according to the records of theCompany, the Company is regular in depositing with appropriate authorities undisputed statutory

dues including provident fund, investor education and protection fund, employees state insurance,

income tax, sales tax, value added tax, wealth tax, service tax, octroi, custom duty, excise duty,

cess and other material statutory dues applicable to it except for a delay in deposit of sales

tax at one of the branch.

(b) According to the information and explanations given to us, no undisputed amounts payable in

respect of provident fund, investor education and protection fund, employees state insurance,

income tax, sales tax, value added tax, wealth tax, service tax, octroi, custom duty, excise duty,

cess and other material statutory dues applicable to it were in arrears as at the balance sheet

date for a period of more than six months from the date they became payable.

(c) As explained to us and according to the records of the Company, the fol lowing dues as at theyear end of income tax/ sales tax/ value added tax/ wealth tax / service tax/ custom duty/ excise

duty/ cess have not been deposited on account of dispute:

Name of the Nature of the Due as at Period to which Forum where dispute

Statute Dues the year end the amount is pending

(Rs.) relates

The Income Tax Income Tax 9,814,228 A.Y. 2003-04 Commissioner of

Act, 1961 (penalty) Income Tax (Appeals)

The Central Sales Sales Tax 13,572,126 January 2003 to Joint Commissioner of

Tax Act, 1956 (including interest) December 2003 Sales Tax (Appeals)

The Gujarat Sales Sales Tax 1,085,868 2004 Joint Commissioner of

Tax Act, 1969 (including interest) Sales Tax (Appeals)

The Central Sales Sales Tax 44,154,235 2004 Joint Commissioner of

Tax Act, 1956 (including interest) Sales Tax (Appeals)

The Finance Act, Service Tax 42,597,248 July 2003 to The Company is in

1994 (including penalty) December 2004 the process of filing

the appeal

The Finance Act, Service Tax 500,000 November 1997 Central Excise and

1994 (Estimated) to January 1998 Service Tax AppellateTribunal, Mumbai

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(x) The Company does not have accumulated losses. The Company has not incurred any cash losses during the

financial year covered by our audit and in the immediately preceding financial year.

(xi) As the Company has no amount due to any financial institution, bank or debenture holder, the provisions of Clause

4(xi) of the Order are not applicable to the Company.

(xii) Since the Company has not granted any loans or advances on the basis of security by way of pledge of shares,

debentures and other securities, the provisions of Clause 4(xii) of the Order are not applicable.

(xiii) As the Company is not a chit fund/ nidhi /mutual benefit fund / society, the provisions of Clause 4(xiii) of the Order are

not applicable.

(xiv) Based on our examination of the records and evaluation of the related internal controls, we are of the opinion that

proper records have been maintained of the transactions and contracts of dealings or trading in shares, securities,

debentures and other investments with timely entries in those records. We also report that the Company has held the

shares, securities, debentures and other investments in its own name.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken

by others from banks or financial institutions.

(xvi) Since the Company has not obtained any term loans, the Provisions of Clause 4(xvi) of the Order are not applicable.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the

Company, we report that no funds raised on short-term basis have been used for long-term investments.

(xviii ) According to the information and explanations given to us, the Company has not made any preferential allotment of

shares during the year to parties or companies covered in the register maintained under Section 301 of the Act.

(xix) Since the Company has not issued any debentures, the Provisions of Clause 4(xix) of the Order are not applicable.

(xx) Since the Company has not raised any money during the year by way of public issue, the provisions of Clause 4(xx)

of the Order are not applicable.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial

statements and according to the information and explanations given by the management, we report that no fraud on

or by the Company has been noticed or reported during the course of our audit.

For Mohinder Puri & Company

Chartered Accountants

Sd/-

VIKAS VIG

Partner

Membership No.16920

Place: Mumbai

Date : February 14, 2008

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A N N U A L R E P O R T

2007

Schedule 31.12.2007 31.12.2006(I) SOURCES OF FUNDS

(1) Shareholders ' funds :

(a) Capital 1 166.2 166.2

(b) Reserves and surplus 2 3014.8 2310.1

3181.0 2476.3

(2) Deferred tax liabilities (Net) [Note 19] 66.3 51.8

Total 3247.3 2528.1

(II) APPLICATION OF FUNDS

(1) Fixed assets : 3(a) Gross block 3630.5 3246.0

(b) Less : Depreciation 2318.2 2133.7

(c) Net block 1312.3 1112.3

(d) Capital work-in-progress 103.2 259.9

(e) Capital advances 7.4 19.8

1422.9 1392.0

(2) Investments 4 12.2 26.5

(3) Current assets, loans and advances :

(a) Inventories 5 982.8 918.7

(b) Sundry debtors 6 1046.7 858.2(c) Cash and bank balances 7 639.3 122.9

(d) Other current assets 8 13.1 2.1

(e) Loans and advances 9 317.3 253.7

2999.2 2155.6

Less : Current liabilities and provisions :

(a) Current liabilities 10 1016.4 878.9

(b) Provisions 11 170.6 167.1

1187.0 1046.0

Net current assets 1812.2 1109.6

Total 3247.3 2528.1

Statement of significant accounting policies 15

Notes to the accounts 16

Balance SheetAs at December 31, 2007

(Rs. in million)

Per our report attached Sd/-

For Mohinder Puri & Co. Avinash Gandhi Chairman

Chartered Accountants Biswarup Dhar Managing Director

Satish Patel Chief Financial Officer

Sd/- Raj Sarraf Company Secretary

Vikas Vig

PartnerMembership No. 16920

Mumbai : February 14, 2008 Mumbai : February 14, 2008

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Schedule Year Year2007 2006INCOME

Sales turnover (Gross) 7159.7 6122.5Less : Excise duty 746.7 702.1

Sales turnover (Net) 6413.0 5420.4

Other income 12 103.2 108.7

6516.2 5529.1EXPENDITURE

Manufacturing and other expenses 13 5103.7 4239.0Depreciation / Amortisation [Note 2 (a)(ii)] 193.6 183.0

Interest(Net) 14 (22.7 ) (0.7 )

5274.6 4421.3

PROFIT FOR THE YEAR BEFORE PRIOR PERIOD 1241.6 1107.8ADJUSTMENTS AND TAX

Prior period adjustments [Note 27] 3.2 -

PROFIT BEFORE TAX 1244.8 1107.8Less : Provision for tax

(a) Current tax 423.5 356.0(b) Deferred tax 19.8 (16.5 )(c) Fringe benefit tax 7.2 6.5

Tax adjustments for earlier years (net) (1.0 ) 24.8

449.5 370.8

PROFIT AFTER TAX 795.3 737.0

Balance brought forward 1206.6 619.1

Available for appropriation 2001.9 1356.1

APPROPRIATIONS :

Proposed dividend 66.5 66.5Income tax on dividend (*including for an earlier year Rs.2 million) 13.3 * 9.3Transferred to general reserve 200.0 73.7

Balance carried to Balance Sheet 1722.1 1206.6

Earnings per equity share of nominal value of Rs.10 each :Basic and diluted [Note 22] 47.85 44.35

Statement of significant accounting policies 15

Notes to the accounts 16

Profit and Loss Accountfor the year ended December 31, 2007

(Rs. in million)





Sd/- Raj Sarraf Company Secretary

Vikas Vig

PartnerMembership No. 16920


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2007 2006

CASH FLOW FROM OPERATING ACTIVITIES

Net Profit for the year before tax 1,244.8 1,107.6

Adjustment for non-cash item/items required to be

disclosed seperately:

Depreciation/ Amortisation 193.6 183.0

Interest expenses 4.0 13.3

Loss/ (Profit) on sale / write off of fixed assets(net) 0.3 0.1

Unrealised exchange loss / (gain) (net) (0.1) 0.9

Interest income including interest on investment (26.7) (14.0)

Loss/ (Profit) on sale of investments (net) 0.7 -

Provision for doubtful debts/advances 43.1 -

Provision for Gratuity/leave encashment 11.7 7.0

Provision for warranty 0.9 -

Provision for diminution in value of long term investment 10.6 0.7

Prior period adjustments (3.2) -

234.9 191.0

Operating profit before changes in working capital 1,479.7 1,298.6

Adjustment for changes in Working Capital and Provisions :

Trade and other receivables (222.3) (203.2)

Inventories (64.1) (223.5)

Trade and other payables 153.3 223.5

(133.1) (203.2)

Cash generated from operations 1,346.6 1,095.4

Income tax including fringe benefit tax paid(Net of refunds) (528.0) (395.4)

Prior period adjustments 3.2 -

A Net cash from operating activities 821.8 700.0

CASH FLOW FROM INVESTING ACTIVITIES

Fixed Assets (Note 1) :

Purchase (242.4) (477.1)

Sale 0.2 2.4

Sale of Long term Investment 3.0 -

Interest Received 15.4 14.2

B Net cash used in investing activities (223.8) (460.5)

CASH FLOW FROM FINANCING ACTIVITIES

Increase/(Decrease) in short term borrowings from banks - (111.9)

Interest paid (4.0) (18.3)

Dividend paid (66.3) (58.1)

Tax on dividend paid (11.3) (8.1)

C Net cash used in financing activities (81.6) (196.4)

Net change in cash and cash equivalents (A+B+C) 516.4 43.1

Cash or cash equivalents (Opening balance) (Note 2) 122.9 79.8

Cash or cash equivalents (Closing balance) (Note 2) 639.3 122.9516.4 43.1

CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2007

(Rs. in million)

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Notes:

1. Purchase of fixed assets includes payments for items in capital work in progress and advances of capital

nature.2. Cash and Cash equivalents comprise of :

(Rs. in million)

31.12.2007 31.12.2006

Cash on hand 0.8 0.6

Cheques on hand 17.7 15.3

With scheduled banks on :

Current accounts 140.8 103.4

Deposit accounts 480.0 3.6

639.3 122.9

3. Previous year's figures have been regrouped wherever necessary to conform to the current year's

classifications.





Sd/- Raj Sarraf Company SecretaryVikas Vig

Partner

Membership No. 16920


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1. SHARE CAPITAL

Authorised :20,000,000 Equity Shares of Rs. 10 each 200.0 200.0

Issued :16,818,270 Equity Shares of Rs.10 each 168.2 168.2

Subscribed and paid up:16,617,270 Equity Shares of Rs. 10 eachfully paid [Note 1] 166.2 166.2

2. RESERVES AND SURPLUS

Revaluation reserve account [Note 2 (a)] :Per last Balance Sheet 24.7 25.3Less : Transferred to Profit and Loss Account

for adjustment of depreciation 0.6 0.6

24.1 24.7

Securities premium account :Per last Balance Sheet 200.2 200.2

General Reserve :Per last Balance Sheet 878.7 805.0Add : Transferred from Profit and Loss Account 200.0 73.7Less : Transitional adjustment for leave encashment

liability (Refer Note No.28) (10.3)

1068.4 878.7Profit and Loss Account 1,722.1 1,206.5

3,014.8 2,310.1

Schedules forming part of the accounts

31.12.2007 31.12.2006

(Rs. in million)

Description As at Additions Deductions As at As at Additions Deductions As at As at As atJanuary 1, December 31, January 1, December 31, December 31, December 31,

2007 2007 2007 2007 2007 2006

1 Tangible asset s

a) Land-freehold [Note 2(a)(i)] 19.4 - - 19.4 - - - - 19.4 19.4b) Buildings and roads [Notes 2(a) &(b)] 212.7 16.1 - 228.8 65.7 6.5 - 72.2 156.6 147.0c) Plant and Machinery 2883.2 367.4 9.3 3241.3 1980.3 182.5 9.3 2153.5 1087.8 902.9d) Furniture, fittings & equipment 71.9 9.7 0.9 80.7 35.5 4.1 0.4 39.2 41.5 36.4e) Motor vehicles 10.9 1.5 - 12.4 4.3 1.1 - 5.4 7.0 6.6

2 Intangible assetsa) Software upgradation - acquired 34.8 - - 34.8 34.8 - - 34.8 - -b) Lumpsum fees for technical know-how 13.1 - - 13.1 13.1 - - 13.1 - -

Total 3246.0 394.7 10.2 3630.5 2133.7 194.2 9.7 2318.2 1312.3

(2786.7) (467.3) (8.0) (3246.0) (1955.6) (183.6) (5.5) (2133.7) 1112.3

Capital work-in-progress 103.2 259.9

Capital advances 7.4 19.8

1422.9 1392.0

(Rs. in million)

Gross Block Depreciation / Amortisation Net Block

3. FIXED ASSETS

The figures in the brackets represent previous year's figures.

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31.12.2007 31.12.2006

(Rs. in million)

4. INVESTMENTS (Quoted, unless otherwise stated)

Long term InvestmentsNon-trade:Government Securities-

30,000 Nos. 13.05% Government of India Securities 2007 - 3.7of Rs.100 each

Investments in shares and bonds

5,000 Equity Shares of Rs.25 each fully paid up inCo-op. Bank of Baroda Ltd. (Unquoted) 0.1 0.16 Nos. 11% Bonds 2011 of Rs.500,000 each inSteel Authority of India Limited 3.3 3.3

Trade (Unquoted)1,100,000 shares of Rs.10 each of FAG Roller 11.0 11.0Bearings Private Limited(Company under the samemanagement)

14.4 18.1Current investments (Non-trade)91,001 Nos. 6.75% Tax Free US 64 Bonds 2008 of Rs.100 each 9.1 9.1

23.5 27.1Less:Provision for diminution in value of investments (11.3 ) (0.7 )

12.2 26.5

Aggregate book value of quoted investments 12.4 16.0Aggregate market value of quoted investments 12.1 15.4Aggregate book value of investments - unquoted 11.1 11.1

5. INVENTORIES

Stores and spares 63.0 78.2Loose tools 22.7 20.2Stock in trade :Raw materials and components

FAG AR 2007

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