Dear Shareholders,

Your Company"s performance for the year under review has been quite satisfactory with sales growing 24% and net profits also by 24%. This has prompted your board to increase the dividend to 30% from 27% in earlier years.

The Company"s operating (EBITDA) margins are quite healthy at 26% of sales despite the auto division not yet yielding positive margins. However a large part of this is utilized in servicing the significantly increased interest burden thereby putting pressure on net profits. The high interest burden is due to the large capital expansion program undertaken by the Company for its various businesses. Interest costs were also higher during the year due to the unexpected rise in interest rates on account of the RBI"s market policies. We are working on ways to reduce the Company"s overall debt through monetizing its land as well as efficiently using working capital etc.

In the engineering segment, the CNC machine"s product mix changed to a lesser number of larger value machines with greater technical complexity. In the engineering business introduction of new products like the metro rail bogie chassis for BEML and gear box housings for Siemens helped diversify the activity solely from wind energy equipment manufacturing.

In the auto segment, the BSIV petrol version of the Premier RiO was introduced and the BSIV diesel version is in an advanced stage of preparation for commercial launch by Aug #12. The Company has entered into a 3 year engine supply contract with FIAT India for its highly successful and popular small diesel engine used by several other leading car manufacturers in India. This should help improve demand and sales for the otherwise well accepted compact SUV.

Although the current economic environment is extremely challenging for the sectors the Company operates in, particularly capital goods, I am hopeful that the current year will eventually deliver satisfactory results.

The Company continues to invest in R&D and develop its bank of intellectual property. In the past 5 years the Company has successfully filed more 19 Patents. This activity is pursued vigorously every year as part of the core strategy. Similarly, extensive investment is also made in developing human capital through a year round training and skill development program. The Company also has a wide range of CSR initiatives in line with national objectives.

I take this opportunity to thank all the Company"s stakeholders- employees, bankers, shareholders, suppliers, dealers and business associates- for their unstinted support in achieving this result. I remain very confident and optimistic that Premier will grow vigorously, in sales and profitability, over the long term.

With regards,

Maitreya Doshi
Chairman