Ladies and Gentlemen,

This year is very special for us.  Atul Auto celebrates the completion of its second decade this year.  We have achieved, much in these 20 years, but we see it as a journey that’s only just begun.

Having started the company with a small capital of only Two thousand Rupees in 1986, today we have achieved a turnover of Rupees 1680 million.  Its taken hard work, enterprise and the ability to find our niche in segments that’s responsible for this growth.

Atul Auto pioneered motorized rural transport in Gujarat, with multi purpose vehicle called the Khushbu.  The Khushbu has been instrumental in transforming the economy of Gujarat by bridging the rural-urban divide.  Over 1,50,000 Khushbu brand vehicles are ply on the roads of Gujarat.  These vehicles still remain a core means of livelihood for many families.

In early 2000, we identified a niche market in the half tone three wheeler segments.  Infrastructure was becoming better, city traffic was becoming more regulated and the economy was on a boom.  We argued that there would be a void for transportation vehicles in this class.  In 2001, Atul Auto launched its first half ton three-wheeler with the same vision : “to devote ourselves for the betterment and comfort of the common man through advanced technologies, products and services in the automotive field”.

In just 5 years, we have over 60,000 “Atul Shakti” vehicles on Indian roads acquiring a 9.4% market share of its category in the diesel three wheeler segment.  We have been impatient about our growth from the day we launched our Shakti brand, growing our volumes at a compounded annual growth rate of over 77%.  More recently, we have also breached foreign shores and have already had successful trials of the Atul Shakti in Egypt, Nigeria, Kenya and Tanzania.  Apart from continuing our aggressive growth, we expect that this year, we’ll make a strong entry in the export market also.

Considering our robust growth and strong EPS our board has proposed a dividend of 10% this year.

After proving itself as an aggressive adversary, we have now further cranked up the internal growth engines, and are targeting a 21% market share of its category in diesel three wheeler segment by 2010.  In anticipation of this growth, we have set up a new plant at Haridwar with a capacity of 12,000 vehicles per annum on a single shift basis with an initial capex of Rs.100 million.  We expect this plant to go live, latest by August 2006.

The Haridwar unit will give us some distinctive advantages.  Located in a notified industrial area in the fast developing state of Uttaranchal, we will have excise exemption for 10 years, 100% income tax exemption for five years and 30% exemption for the next 5 years.  We also have a concessional Central Sales Tax at 1% and a capital investment subsidy at 15%.  Further, since this unit is closer to our northern markets, we will save significantly on the transportation costs of the vehicles.  Ladies & Gentlemen, I reiterate, we are extremely upbeat and excited about the way the Three Wheeler segment is looking over the next decade and we expect that we will continue to outperform our competition.

However, at Atul Auto we don’t rest; let alone on our laurels.  We believe in looking at new opportunities all the time.  It is my dream, friends, to create an easy-to-maintain, 4-wheeler utility vehicle that will be have the lowest total-cost-of-ownership.  The vehicle that will provide the lowest downtime and therefore, the maximum benefit to the owner.  This project is currently at the drawing board stage and we expect the first Atul 4-wheeler to roll  out in just couple of years.

We live the philosophy with which we make our vehicles.  The Atul Shakti is known to keep tire to tarmac.  They do not rest and they work hard to ensure maximum output for their owner.  We too will not rest.  What are goals to others are but milestones to us.

Regards

J.J. Chandra

Chairman and Managing Director