JWL Kovis India Ltd

Dear Shareholders,

The macroeconomic and industrial scenario in the country during the year under review has been extremely challenging. An environment of reducing GDP growth, high interest rates and persistent inflation has put considerable pressure on your Company's performance with sales and profits not growing during this period. Your Company's Engineering Segment (comprising CNC Machines and Heavy Engineering) that is strongly linked to the automotive, wind energy and infrastructure sectors faced a significant slackening of demand due to head winds faced by these industries.

For the first time in many years, the auto industry has registered a huge drop in growth, thereby impacting your Company's CNC gear machine sales, the auto OEM’s and ancillary industry that are directly affected by this slump in vehicle demand. Your Company's heavy CNC machines, normally purchased by Railways, PSU's and large private sector customers, also suffered a paucity of orders because of deferred capital investment programs due to reduced Government spending.

The Heavy Engineering Division was badly affected by the slump in wind turbine component orders due to a policy change by the Government in the 2012 budget, resulting in a significant drop in the industry demand and the consequential fall out on your Company. Fortunately, some of this has been made up by new business such as metro rail chassis supplies and other engineering areas unrelated to the wind turbine industry.