DIRECTORS' REPORT

Dear Members,

Your Directors have pleasure in presenting the 27th Annual Report and the audited financial statements for the year ended March 31, 2015.

2. Operating Results and Business Operations

During the year under review, your Company's operating and financial performance scaled new heights which can be demonstrated by following highlights:

> Number of vehicles sold increased by 11% to 41,598 (Previous year 37,557)

> Sales of vehicles in overseas market increased by almost 3 times to 1464 vehicles (Previous year 585 vehicles)

> Operating revenue increased by 15% to Rs. 49,280 Lacs (Previous year Rs. 43,013 Lacs)

> Profit before depreciation, finance cost, other income, exceptional items and tax (PBDIT) increased by 28% to Rs. 5,792 Lacs (Previous year Rs. 4,538 Lacs)

> Other income and exceptional items remained at Rs. 586 Lacs and Rs. 165 Lacs respectively (Previous year Rs. 292 Lacs and Nil respectively)

> Profit before tax (PBT) increased by 39% to Rs. 5,925 Lacs (Previous year Rs. 4,275 Lacs)

> Tax expense increased by 44% to Rs. 1,868 Lacs (Previous year Rs. 1,295 Lacs)

> Profit after tax (PAT) increased by 36% to Rs. 4,057 Lacs (Previous year Rs. 2,980 Lacs)

The Company could achieve these results due to increase in efficiency at floor level. The raw material consumption ratio has also improved which was awaited. The operating EBITDA has improved by 125 basis point to 11.82% which was 10.57% in previous year.

The increase in other income is due to settlement of a legal case filed against one of the suppliers which was written off as bad debts in earlier years. The exceptional items include provision for diminution in value of investment of associate and receipt on account of litigation settlement.

The net profit margin reached to 8.28% in FY 2014-15 as against 6.94% during the previous year. In terms of earning per share, it has improved from Rs. 13.58 to Rs. 18.49, up by 36.15% precisely.

3. Transfer to Reserve

The Company proposes to transfer Rs. 406 Lacs to the General Reserve out of amount available for appropriation, and an amount of Rs. 9,231 Lacs is proposed to be retained in the Statement of Profit and Loss.

4. Dividend

In November 2014, the Company paid an interim dividend  of Rs. 2.50 per equity share of Rs. 5/- each. Your Board has recommended final dividend for FY 2014-15 at Rs. 2.50 per equity share of Rs. 5/- whereby making total dividend for the year of Rs. 5 per equity share of Rs. 5/- each (excluding dividend distribution tax) i.e. 100% on paid up share capital of the Company against Rs. 7.50/- per equity of Rs. 10/- each in last year i.e. 75% on paid up share capital of the Company.

The total dividend pay-out (excluding dividend distribution tax) for the current year is Rs. 1,097 Lacs as against Rs. 823 Lacs in the previous year.

The Dividend recommended by the Board of Directors, if approved by the Members at the AGM, will be paid on or after September 21, 2015 but before September 30, 2015 to those members whose names appear on the Company's Register of Members as on close of business hours of August 24, 2015. In respect of shares held in electronic form, the dividend will be payable on the basis of beneficial ownership as at the close of business hours on August 24, 2015 as per the details furnished by the Depositories, viz., National Securities Depository Limited (NSDL)/Central Depository Services (India) Limited (CDSL) for the purpose as on that date.

5. The Company manufactures three-wheeled auto rickshaws targeting the passenger segment and cargo segment. The company manufactures the diesel powered carrier for carrying 3 to 6 passengers and also the CNG and LPG driven vehicles. In cargo segment, the company manufactures vehicles with a rated carrying capacity of up to 0.50 tones. Both these vehicles have been approved by the Automotive Research Association of India.

The company's existing products are various types of Front Engine & Rear Engine Three wheelers under the brand name "Atul Shakti", "Atul Gem" "Atul Smart" & "Atul Gemini -Dz".

The broad categories of the Products are as follow:

1. Goods Carriers

2 Passengers Carriers

3. Special Purpose Vehicle (SPVs)

I. Chicken Carrier

II. Tripper

III. Water Tank Carrier

IV. Soft Drink Carrier

V. Mobile Shop

VI. Hopper

VII. Bio Hazard

VIII. Vegetable vending

Atul Shakti, Atul Gem & Atul Smart (Loading)

It is suitable for transportation of small volumes of cargo from transit station to main oices and vice versa. It has a capacity of 500 kgs and is fitted with 7.5 HP, 4 Stroke air cooled engine. It has distinct advantages over the other pick up vans, which have mostly petrol engines. Other unique features of the vehicle include auto ignition start, fuel deficiency etc. The company has also introduced different types of vehicle to cater to the specific demand of the customers as enumerated above under category  SPVs.

Atul Shakti, Atul Gem, Atul Smart & Atul Gemini-Dz (Passenger Rickshaw)

This vehicle has an approved capacity to carry 3 passengers (excluding driver) or in terms of pay load capacity it can carry 500 kgs and in case of Gemini-Dz can carry 253 kgs. The vehicle is fitted with 7.5 HP, 4 strokes air cooled diesel engine having handle bar, auto start and dry clutch facilities.

6. Quality initiative

The production process is oriented towards production of optimum product. The customer satisfaction is the top priority of the Company. The Company continues to strengthen its drive to improve quality and product ofering while maintaining its low cost product development/ sourcing advantage. To improve the quality of product testing, the Company has imported the product testing machine from Singapore during the year.

7. Capital Expenditure

The Company has completed a process and procedure for acquiring a land measuring 54 acres near Ahmedabad for future expansion. The Company incurred a capital expenditure of Rs. 3,359 Lacs 1057 Lacs in the previous year). The entire capital expenditure was funded out of internal accruals.

8. Liquidity

The Company has maintained its status of "Debt Free Company" in iscal 2015, too. The Company does not have any borrowings at the end of the inancial year. We clearly understand that the liquidity in the Balance sheet has to balance between earning adequate returns and the need to cover financial and business risk. Liquidity also enables us to make a rapid shift in direction, should the market so demand. During fiscal 2015, internal cash flows have more than adequately covered working capital requirements, capital expenditure and dividend payments. As at March 31, 2015, the Company had liquid assets of Rs. 8,917 lacs as against Rs. 8,508 lacs at the end of previous fiscal 2014. Out of these liquid assets, the Company has invested Rs. 2,138 lacs in mutual fund to earn the dividend.

9. Credit rating

CRISIL has rearmed its long term rating of the Company at 'CRISIL A-/Stable'. The rating continues to reflect the Company's above-average financial risk proile, marked by low gearing, above average debt protection metrics, improving market share, established distribution network and eicient working capital management

10. Subsidiaries, Joint Ventures and Associate Companies

The Company doesn't have any subsidiary or joint venture companies. The Company is holding 49.91% of the paid up share capital of Khushbu Auto Finance Limited, a Non-Banking Finance Company. Khushbu Auto Finance Limited is engaged in the business of inancing of three wheelers. Atul Auto Limited is holding 22,96,000 equity share of having face value of Rs. 10/- each in Khushbu Auto Finance Limited. The investment value of the same as on March 31, 2015 is Rs. 98,72,800/­

11. Directors' Responsibility Statement

Pursuant to the provisions of Section 134 (5) of the Companies Act, 2013, the Directors based on the information and representations received from the operating management confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed and there are no material departures from the same;

b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of afairs of the company at the end of the financial year and of the profit and loss of the company for that period

c) the directors have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the directors have prepared the annual accounts on a going concern basis; and

e) the directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively.

f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

12. Extract of the Annual Return

In accordance with section 134(3)(a) of the Companies Act, 2013, an extract of the Annual Return in the prescribed format is appended as Annexure-A to the Board's Report.

13. Numbers of meeting of Board

The Board met eight times during FY 2014-15. The details of which are provided in the Corporate Governance Report. The gap between any two meetings was within the period prescribed by the Companies Act, 2013.

14. Directors

Mr. Hakubhai J. Lalakiya, Mr. Subodhchandra T Shah, Mr. Hemant J Bhatt and Mr. Hasmukh H Adhvaryoo, are Independent Directors of the Company and have been holding the position for last few years. In addition to new provisions of the Companies Act, 2013 made applicable w.e.f. April 1, 2014, the Securities and Exchange Board of India (SEBI) has amended Clause 49 of the Listing Agreement inter alia stipulating the conditions for the appointment of Independent Directors by a listed company. Hence, all four Directors have been reappointed with amended terms and conditions in the 26th Annual General Meeting of the Company held on August 12, 2014.

The Board has also appointed Dr. (Ms.) Margie S Parikh on the Board of the Company w.e.f. January 19, 2015 as Independent Director (Additional) of the Company under section 161 of the Companies Act, 2013. As per provisions of the Act, Dr. Margie S Parikh will hold the position up to conclusion of the 27th Annual General Meeting. The Company has also received the notice under section 160 of the Companies Act, 2013 from the member of the Company proposing her candidature for Director of the Company. The Board recommends the same for your approval.

Mr. J J Chandra, Chairman and Managing Director, retires by rotation and being eligible, has offered himself for re-appointment. The Board recommends the same for your approval.

The Board has accepted the resignation of Mr. S T Shah, Independent Director of the Company at its meeting held on May 9, 2015. Mr. Shah has resigned from the Board due to ailing health with effect from close of business hours on

May 9, 2015. The Board places on record its deep appreciation for the valuable contribution made by him during his tenure as Director of the Company.

15. Declaration of independence

The Company has four Independent Directors on the Board of the Company. The Company has practice to take declaration of independence from all Independent Directors of the Company on his/ her appointment/ re-appointment and also in irst meeting of the Board of Directors every year. All these Directors are abiding to intimate to the Board about any change in their status of independence in the very next board meeting after such change.

The Company has received the declarations from each Independent Director under section 149(7) of the Companies Act, 2013 that he/ she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and clause 49 of the Listing Agreement.

16. Policy on Directors' appointment and remuneration

The Board of Directors has renamed the Remuneration Committee as the Nomination and Remuneration Committee in its board meeting held on May 20, 2014 as required under section 178 of the Companies Act, 2013. Mr. Hasmukh Adhvaryoo is the Chairman of the Committee. Mr. Hakubhai Lalakiya and Mr. S T Shah were the members of the Committee. All three are Independent Directors of the Company.

The Committee has drafted the policy for nomination and appointment of directors on the board of the Company which contains the criteria determining qualiications, positive attributes and independence of a Director. The Committee has also drafted a policy, relating to the remuneration for the Directors, Key Managerial Personnel and other employees. Both these policies have been submitted to the Board for their approval. The Board has approved the same in its meeting held on May 9, 2015. The same has been uploaded on the website of the Company. The same will be reviewed by the Committee on regular basis.

Further, the Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors.

17. Qualification, reservation or adverse remark or disclaimer made by the auditors

The statutory auditors have not qualified the report on the financial statements of the Company for the financial ended  on March 31, 2015. The statutory auditors have not put any adverse remark, reservation or disclaimer that the Board need to reply.

The same is the case for secretarial audit report for the financial year ended on March 31, 2015.

18. Contract or arrangement with related party

The Company has not entered into any contract or arrangement with related party which is not at arms' length requiring approval of shareholders in the general meeting as required under section 188 of the Companies Act, 2013.

The Audit Committee reviews all the transactions with related party on quarterly basis and recommends the same to the Board for their approval.

Your Directors draw attention of the members to Note no. 40 to the inancial statement which sets out related party disclosures.

19. Risk management

The Company has framework for managing its risk. It has led down detail procedure to inform Board member about the Risk assessment and Minimization Procedure. The Company has made the policy in this regard and the same is reviewed periodically to ensure the executive management control risk through means of proper define framework.

20. Internal Financial Control

Adequate internal control systems are in place commensurate to the size and nature of operations. The Company continues to comply with high standards of corporate governance and provide our stakeholders accurate accounting and management information.

The Audit Committee directly oversees the work content of Internal Audit. The scope of work and coverage are periodically monitored and specific issues are looked into as needed.

21. Corporate Social Responsibility

The Corporate Social Responsibility Committee ("the CSR Committee") has been formulated by the Company which is headed by Mr. J J Chandra, Chairman and Managing Director of the Company. Mr. Hakubhai Lalakiya and Mr. Hasmukhbhai Adhvaryoo, Independent Directors of the Company are members of the Committee.

The Committee has recommended to the Board, a CSR Policy indicating the activities to be undertaken by the Company and specifying its implementation schedules and monitoring process. The same has been approved by the Board of Directors of the Company. One can access the same on website of the Company.

The CSR activities of the Company focus on quality health, quality education and environmental friendly production process. In addition to these three focus area, the Company also undertake need base initiatives in compliance with the schedule VII of the act.

The annual report on CSR in the format specified under rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been annexed to this report as Annexure-B:

22. Particulars of employees

Except Managing Director and Whole-time Directors, there is no employee in the Company who have been paid the remuneration in excess of the limit specified in rule 5(2)(i) and (ii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

None of the employees of the Company was in receipt of remuneration in financial year 2014-15 which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company.

The details required to be disclosed as per rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been detailed as Annexure-C.

The Company assists and supports the individuals who believe that they have been subjected to coercive, disruptive behavior with appropriate support and remedial action.

The Company has been working towards creating and maintaining a safe working environment wherein all employees treat each other with courtesy, dignity irrespective of their gender, race, and religion.

23. Health, Safety, and Environment

The Company is taking continuous steps and also developing environment friendly processes for effective resource management with specific focus to energy, water and basic raw materials. Monitoring and periodic review of system  regarding health, safety and environment is done on a continuous basis with emphasis and focus given to safety at workplace.

24. Listing Status

The Company is listed on BSE Limited and National Stock Exchange of India Limited.

25. Corporate Governance

Your Company has always practiced sound corporate governance and takes necessary actions at appropriate times for meeting stakeholders' expectations while continuing to comply with the mandatory provisions of corporate governance.

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as the Statutory Auditors' Certificate regarding compliance of conditions of Corporate Governance forms part of the Annual Report.

26. Conservation of energy, research and development, technology absorption, foreign exchange earnings and outgo

The particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo in terms of Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 for the year ended March 31, 2015 are annexed to this report as Annexure-D.

27. Statutory Auditors

M/s Maharishi & Co., Chartered Accountants, who are the statutory auditors of the company, hold office, in accordance with the provisions of the Act till the conclusion of the forthcoming annual general meeting and are eligible for reappointment. M/s Maharishi & Co., Chartered Accountants, has sought the re-appointment and has confirmed that their re-appointment if made shall be within the limits of section 139(1) of the companies Act, 2013. The audit committee and the board of directors recommended the re-appointment of M/s. Maharishi & Co., Chartered Accountants, as the Statutory Auditors of the company for the fiscal year ending on March 31, 2016.

28. Secretarial Auditors

The Board has appointed Ms. Nayna Parasmalji Chopra, Practising Company Secretary, to conduct the Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith as Annexure-E to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

29. Other Disclosures:

The Company has not entered into few transactions and hence no disclosure is required. The list of such transactions is as under:

> The Company has not granted any loan or provided any guarantee or made any investment exceeds the limit specifies in section 186(2) of the Companies Act, 2013. Hence no approval from the shareholders in this regard is required.

> Your Company has not invited/ accepted any Fixed Deposits under the provisions of section 73 of the Companies Act, 2013 and the Rules made there under.

> No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

> During the year under review, there were no cases iled pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

> No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the inancial position of the Company.

> The Company is not required to get its cost records audited for the financial year 2014-15.

Acknowledgements

The Directors wish to convey their appreciation to business associates for their support and contribution during the year. The Directors would also like to thank the employees, shareholders, customers, suppliers, alliance partners and bankers for the continued support given by them to the Company and their confidence reposed in the management.

For and on behalf of the Board Of

ATUL AUTO LIMITED

J. J. Chandra

Chairman and Managing Director

[DIN: 00057722]

 Date : May 9, 2015

Place : Shapar (Dist. Rajkot)