RISHABH PRECISION BEARINGS LTD CHAIRMAN'S STATEMENT Dear Members, 1. The Financial Year 1997-98 was not satisfactory year for more than one reason. Economic situation remained bleak. Rupee Currency is trading at an all time low against Dollar. The crisis in South East Asia had added further fuel and adversely affected Indian Economic scene also. Consequently there was adverse Impact on Engineering and Automotive Industries. Due to this production and profitability of our Company were under tremendous pressure. Company had to, under prevailing circumstances, lower its prices In view of recession in several business activities more particularly in automobile and Engineering Industries. 2. The Economic growth in terms of GDP has accelerated notably to 5% in 1997-98 compared to the Previous Year from 7.5% in 1996-97. The slowdown in demand can be due to several factors which includes sharp declaration in exports, substantial uncertainty in domestic and International environments, tightening of money and credit policies and such related factors. The reduction in, domestic Investments/savings gap during 1996-97 and low inflation rate during 1997-98 support such a demand side explanation. Few things of recovery were, however, observed in the rise in sanctions and disbursements of All India Financial Institutions and rise in stock prices for very small period during March & April, 1998. Although the recovery of Markets need to be sustainable over a period of time, if needs to adjust with changes that are taking place internationally, in South East Asian, Russian and .Japanese economies. 3. In general recession the Bearings always required, however when all Industries run in normal course of business including Engineering Industries and in particular Automobile Industries for heavy and light vehicles including of two wheeler segments which are also in very bad shape in which the leading Bearing manufacturers also have reduced the price considerably, your company is also not exception which has been affected badly with price structure and profitability was reduced significantly. In a year of lackluster activities levels, your company has embarked on an extensive exercise and to overcome the difficult adverse domestic conditions the Company has adopted various measures to improve profitability through (1) Cost Control, (2) Optimum utilisation of Man Power (3) Improved working Capital management (4) Increasing productivity at shop floor and (5) Better price realisation in addition to placing a greater thrust on penerating domestic market and brand building exercise to leverage the reputation. Further, new opportunities and high growth areas are being evaluated for concentration in terms of value added assignments by focusing and exploring various alternatives and thus increasing the business of the Company. The current economic environment remains continue to be adverse, however, your company has vision to be No. 1 in the Industry and barring unforeseen circumstances, your company would perform better in medium to long term. CHAIRMAN.