SONA KOYO STEERING SYSTEMS LIMITED Regd. Office : UGF - 6 Indraprakash, 21 Barakhamba Road, New Delhi 110001. CHAIRMAN'S SPEECH     New Delhi 30th July 1999.       Ladies and Gentlemen,           On behalf of the Board of Directors and my own, I welcome you to the 1999 Annual General Meeting of Sona Koyo Strering System Limited. The notice convening this meeting, the audited accounts of SONA and the Director's report have been with you for sometimes and with your permission. I take them as read. I appreciate your having taken the time to e with us this morning. Before I start, I wish to take this opportunity on all our behalf to salute all the brave solders who have fought to defend our motherland. To pay our sincere homage to all the martyrs who have laid down their lives in Kargil. I would request all of us should stand up and observe a silence for a minute, in Prayer.   ECONOMY After two years of lower growth, termed "Recessionary", the Indian Economy appears to e bottoming out. There are positive signs of growth in certain sectors of the economy and it is expected that the economy will grow by more than 6% compared to 5.5 % last year. Whilst, the first quarter of the current financial year has brought unusually goo news, with the inflation below 2 % Corporate profits up (20%) Passenger Car Sales up (22%) Commercial Vehicles up (25%) Comet Sector up (23%) Industrial Growth Rate in excess of 6% and the Sensex breaking the 4700 barriers, yet the problem relating to deficit financing of the Government of India still needs urgent management with a strong political will. The major tak ahead of the new Government is joint to the dis-investment in Public Sector Undertakings, besides the Financial Sector and Labour Law reforms. As we enter the new millennium I see great hope of India getting to the much-awaited TAKE OFF stage. The indicators of strong flow of foreign investments, the open debase on politically sensitive issues like dis-investments and subsidies will create the correct environment for this TAKE OFF, which will make us the 5th largest economy by 2015. THE INDIAN AUTOMOTIVE INDUSTRY The automobile industry is one of the sectors, which has shown excellent results in the first Quarter. This is in sharp contrast to 1998 -99 which saw the Passenger Car Sales decline by 2% and Commercial Vehicle sales dropping by more than 15 %. After two very difficult years which saw low capacity utilization and price cuts, the auto component manufacturers have reason to smile and cheer. Though the current figures inspire optimism, I feel this growth is primly due to the price cuts by MUL and the nee cars in the subcompact segment. For this current trend to continue and gain momentum the government has to intimate major policy measures, policy measures, in the form of reduction in the duties levied on cars and increasing the expenditure on infrastructure projects, which can only come from dis-investment of PSU's The high duties make even the small cars unaffordable to the Indian middle class which is a huge market. I would reiterate that the Indian Government use the automotive industry to create jobs and industrialize the economy future, by immediate reducing excise duties from 40% to 25% Though it is difficult to achieve the growth rates of the mid nineties again, we expect the Car Market to grow by 15 to 20 % in the current year. OPERATION In the first quarter of the current financial year, your Company ha achieved a 40 % increase in turnover of Rs. 49 crores compared to Rs. 35 crores last year. The increase in the sales has resulted in the Net Profit surge by 68 % from Rs. 109 lacs to 183 lacs. Sales continue to improve and SONA will achieve a turnover of RS. 69 crores in the first four months of this financial year compared to 46 crores of last year, an increase of 50 %. If the current financial continues, we expect to achieve a turnover of Rs 190 crores, exceeding the target or Rs. 172 crores we had set at the beginning of the year. In the last few years SONA has invested in new projects and also increase its capacities. The dept level has gone up and the net profit is reduced by higher interest outflows. The stagnant market in the late two year h resulted in lower capacity utilization which has eroded shareholder value. Today, SONA is well poised to take advantage of the volume growth. Hyundai its new customer has already notched up a 10% share of the market. The performance will improve further next yea as we would be supplying to both Toyota and M M for a new segment of vehicles, the MUV's. These tie ups will help SONA increase its market share further I had communicated to you last year that SONA will benefit fro KOYO's world wide operations. SONA is currently developing products for KOYO's facilities in Europe and would be exporting to Thailand and Japan this year. Your Company is likely to reap the benefit of increased ale both within and outside India in the next two years. Though higher sales will improve our profits substantially, the following measure are also being taken to increase Shareholder Value : Plugging back of cash into the Company's Operations, (No investments in group companies ) Reduce the interest burden substantially, by paying off high cost dept. SONA is planning for a Redeemable Preference Share allotment to Koyo Seiko. Usage are our commitment to improve satisfaction of Customers, our Employees, our Suppliers and most important our Shareholder.   THE NEW MILLENNIUM The future in the new millennium will belong to Companies that are successful at continual change and to those who focus on efforts that provide the greatest leverage for the value creation. An organization which leverages the Knowledge of its employees would gain the competitive edge. At SONA we are creating an enabling environment at all levels on a sustainable basis to help individuals achieve Company's Mission. In the last two years we have emphasized on continuous training, education and information sharing amongst employees. Currently the efforts are towards building system through which the employees are able to pick up and use information to continuously improve Shareholder Value. With the innovative management practices SONA is today a leader in the steering Gear and Column business with more than 60 % market share of the Indian Passenger Car and Utility Vehicle Segment . We intend to further consolidate our position and achieve higher growth rates throughout employees empowerment and creation of knowledge synergies, so that we retain our Number One Position.   ACKNOWLEDGEMENT I wish to place on record our sincere thanks to our main customer and partner Maruti Udyog Ltd. and also to Eicher Motors Ltd. TELCO, Hyundai Motors (India),Ltd, Hindustan Motors Ltd. and Koyo Seiko Co. Ltd. My deep gratitude to the members of Sona Parivar, who are fully dedicated to make SONA a strong enterprise, and to our Vendors, Bankder and Financial Institution for Helping us in the direction. Last but not the least, my sincere thanks to my colleagues on the Board for their valuable advise and support, and to our esteemed Shareholder for their confidence in the management of the Company.     Thank you, Dr. Surinder Kapur   Note : This does not purport to be a record of the proceedings of Annual General Meeting.