A Mid Year Review and the Road ahead

It gives me immense pleasure and pride to keep you posted of recent milestones and developments at your Company.

I am enclosing our half yearly results for your perusal. You will note that sales has grown by 43% and pre-tax profit by 51%. While such high growth rates would be unreasonable to sustain every quarter, the figures as at 30th November show that your Company has grown by 35 %. This is far in excess of automotive growth @ 16 %, during the same period. I wish to reiterate that this shall continue to be the aim of your Company.

Performance of your Company has been heartening with this in the background and continued high commodity prices. I expect that the growth prospect for the balance year to be equally robust.

OPERATIONS:

During October, Cable division achieved new milestone of crossing 4 million cable production and sales. Having established an annual capacity of 50 million cables / year, this amounts to reaching the full capacity of all the plants of your Company. Added to this, three of our units in Manesar, Chakan and Bangalore crossed 1 million production and sales of cables in the month of October. Suprajit is currently assessing enhancing capacities for the coming year. The Speedometer division, which had a modest growth last year is back to high growth mode this year.

I have pleasure in informing you that a comprehensive ERP project from Oracle is under implementation, which will be in place by March 2006. It will add value and strength to Company’s operations.

Your Company has, as in the past, relentlessly initiated effective steps to continue to grow faster than the industry. Your Company has also taken certain management initiatives like strategic business plan, TPM / lean manufacturing practices to drive efficiencies and effectiveness through the organization. Continued customers confidence in us and improved export sales will drive your Company’s growth.

THE ROAD AHEAD:

Exports:

Exports continue to be a future growth area of the Company. To reiterate our earlier commitment to have significant presence in the export markets, your Company has taken various initiatives. The recent breakthrough with Textron – USA and Piaggio – Italy is an indication of our ability to get new customers. Our marketing alliance partners in USA are expected to bag significant new businesses. This may necessitate setting up of an exclusive plant for export of cables for the North American market. To this end, your Company has taken steps to acquire additional land in Bangalore to meet such business opportunities.

Global customers need close interactions. It would be very challenging to provide close customer support out of India. It is our view that to have a strong presence in the global market, it is necessary to be close to the customers, at least to the extent of front ending in terms of marketing, techno commercial, Engineering and logistic support. Your Company is seriously pursuing opportunities to acquire such capabilities through acquisition of a cable company overseas. While such acquisition will give the much needed front-end to support the customer, the manufacturing can be outsourced to India for better margins and profitability. This will give a true global reach and perspective to your Company in its quest to expand its business globally.

The JV with Carclo plc will get into production in January / February 2006. The building is ready and equipments are at site. New contracts are bagged from major customers in the European Union for the JV with CTP Gills, Carclo subsidiary, acting as our techno-commercial front end and the JV being projected as a low cost manufacturing base. Such businesses are in addition to outsourcing existing business of CTP Gills Cables. The capacity of the plant is estimated at about 10 million per year.

Your Company has recently initiated a market survey to assess the feasibility of setting up a manufacturing facility in Indonesia. If any of the major Indian 2 wheeler customers decide to invite us to setup a plant in Indonesia to support their plans and subject to a positive feedback from the market survey, your Company may consider pursuing a project in Indonesia. This will not only be for the Indonesian market, but could be for the ASEAN region, as well, in future.

China is another significant opportunity with low cost manufacturing base. While your Company has certain imports from China for cost competitiveness, an initial work of assessing feasibility of setting up a plant in China is being initiated.

Needless to add, these plans are long-term in nature of your Company and may not materialize in the immediate future. However, the vision of your Company to be a global player in the automotive cable business with the Mantra to “Grow profitably, be Globally competitive and supply to Global customers” continue to drive Suprajit in its quest to expand its activities. I am confident that in the next 5 years time, with your good wishes, Suprajit will emerge, in its own way, a globally competitive automotive cable manufacturer with presence in multiple geographic regions.

I seek your continued support in our endeavour to make Suprajit a globally competitive manufacturer in terms of Quality, Cost, Delivery and Development.

I take this opportunity to wish you and every member of your family a Happy and Prosperous New Year.

With warm personal regards,

Yours Sincerely,

K. AJITH KUMAR RAI
MANAGING DIRECTOR