The Directors have pleasure in presenting the Forty Fourth Annual Report and audited accounts for the financial year ended 31st March, 2016.

FINANCIAL RESULTS

The summarized financial results are:

Rs.Million

DIVIDEND

Your Directors recommend a dividend of Rs.1/- per share of Rs.1/- face value for the year ended 31st March 2016 and the total dividend payout is Rs.114.095 Million including dividend distribution tax.

APPROPRIATION

(Rs. In Million)

AUTO INDUSTRY

During the year, the Auto Industry domestic market grew by 3.78% and exports by 1.91%. The overall growth was 3.49% as against 8.32% in the previous financial year.

The performance as per Society of Indian Automobile Manufacturers (SIAM) is:

OPERATIONS

For the financial year 2015-16, our Company's domestic sales increased to Rs.9,799.203 Million from Rs.7,842.345 Million, a growth of 25%, despite a growth of only 3.49% by the auto industry. The growth is on account of successful new launches during the festive season in two wheeler segment & growth in M&HCV segment, where Price is supplying the Speed Limiters. New legislation mandated all new Commercial Vehicles to be fitted with Speed Limiters effective 1st October, 2015. Price is the only approved source by ARAI for all OEM fitments.

Our export sales decreased by 13.53% to Rs.1,005.282 Million from Rs.1,162.545 Million. There was a steep production drop in two wheelers of our Overseas OEM

Customers Kawasaki Thailand / Indonesia and Piaggio Italy. In addition, there was a drop in the export sales to Europe since the economy there is yet to fully recover.

The overall sales of the Company increased by 20% to Rs.10,804.485 Million from Rs.9,004.890 Million.

The company was able to achieve profit before tax after exceptional items of Rs.601.517 Million against loss of Rs.225.317 Million incurred during the previous year. This was achieved by several operational improvements and cost reduction measures.

For the ensuing year 2016-17, the Company's business is expected to grow higher than the market, mainly due to new business generated. The company has embarked upon further improving operational efficiency, efforts to control cost and expects to improve profits for the year 2016-17.

SUBSIDIARY COMPANIES

PT Pricol Surya Indonesia

The Company's customers are 2 Wheeler manufacturers to whom Instrument Clusters are supplied.

In the financial year 2015-16 the company has achieved a sales of Indonesian Rupiah 172,406 Million (Rs.848.236 Million) as against the previous year sales of Indonesian Rupiah 190,739 Million (Rs.964.183 Million) a decrease of 9.61% in Indonesian Rupiah. The sales drop in INR terms was 12% mainly due depreciation of Indonesian Rupiah.

This fall in sales is mainly due to the drop in sales of two wheelers in Indonesia market. Even though there is steep fall in sales the company due to their cost control measures was able to contain its losses to Rs.28.571 Million as against the previous year loss of Rs.118.862 Million.

The outlook for the year 2016-17 is good as seen from the order inflow from customers. Efforts are being made to add new products in the current year and the company has received enquiries for new clusters and oil pumps. Coupled with various cost cutting measures the company is confident of making profits in 2016-17, if the market continues to grow and the economic condition of the country remains stable.

Pricol Asia Pte Limited, Singapore

This purchasing arm of our Company mainly assists in global procurement of raw materials and components to supply our Company and associate companies.

In the financial year 2015-16, the Company achieved sales of Rs.1,236.453 Million as against the previous year sales of Rs.1,043.079 Million. The company made a profit of Rs.21.808 Million during the year 2015 - 16 as against Rs.10.257 Million in 2014 - 15.

Pricol Espana Sociedad Limitada, Spain It is an investment arm of Pricol to acquire companies in Europe and America. During the financial year, the company has incurred a loss of Rs.2.964 Million mainly due to bank charges. It is a onetime charge. Its income mainly from interest from Pricol do Brasil stood at Rs.10.371 Million. Pricol do Brasil Componentes Automotives LtdA, Brazil

Pricol do Brasil Components Automotives LtdA (PdB) serves wide range of Domestic and International customers such as Volkswagen, Fiat, Fiat Powertrain, General Motors, Harley Davidson, Mack Trucks etc. PdB has a strong backward integrated facility with diverse manufacturing capabilities (Die Casting, Machining and Assembly) and extensive Testing and Validation facilities to provide end to end solution and add value to the Customer.

R&D capabilities are another strong area of PdB and several new programs are on the 1st stage of development, such as :- Electric Coolant Pump, Electric Vacuum Pump, Electric Coolant Valve, Variable Flow Oil Pump, Variable Flow Water Pump, Solenoid Valve and Electric Oil Pump.

During the financial year 2015-16, the country went through a political crisis and the economy ended up in de-growth of 5.9% and industrial production had a de-growth of 9.8%. Automotive industry had a dip of 25.6%, which had seriously affected PdB's sales growth in Brazil. The sales went down from previous year BRL 79.454 Million (Rs.1,711 Million) to BRL 69.060 Million (Rs.1,303 Million) a drop of 13.08% (Pricol took over the Company in January 2015). In the current year PdB embarked upon severance of excess employees and reduced manpower by 68 employees. This has resulted in net increase of employee cost after considering the cost savings in employee cost due to reduction in manpower to the tune of BRL 2.616 Million (Rs.50 Million). During the year, the company has ended with a loss of BRL 24.361 Million (Rs.459.682 Million).

Outlook for the financial year 2016-17 is again a drop of around 15% in the automotive industry which will have an impact on Auto ancillaries.

PdB is working on various cost reduction initiatives such as materials and employee costs, together with sales improvement plans (Increasing the share of business with current major OEM's - GM, Fiat & Volkswagen), price increase from customers, tapping the aftermarket business in Brazil, USA and Europe, to catch up the drop in OE market sales. New products sales for export and aftermarket sales will be the focus areas for PdB. As a result, business in more diversified markets and product variety should support for PdB's growth in the future. Coimbatore Metal Works Limited (Formerly, Pricol Castings Limited)

On 22nd January, 2016 the company sold its 100% shareholding of its Wholly Owned Subsidiary Company, M/s. Coimbatore Metal Works Limited for a consideration of Rs.47.488 Million excluding bank liability of Rs.82.512 Million which has been taken over by the buyer.

Integral Investments Limited

A Wholly Owned Subsidiary made a profit of Rs.0.251 Million during the financial year 2015-16.

The parent company, Pricol Limited proposed to sell its 100% shareholding in the Company and identified a prospective buyer. The Company had obtained approval of Reserve Bank of India (RBI) for the proposed sale since it is a Non-Banking Financial Company (Non Deposit Taking). The sale is expected to be completed by July 2016.

Pricol Pune Limited (Formerly, Johnson Controls Pricol Private Limited)

Consequent to change in status (Private Limited to Public Limited) and name of the Company, presently it is known as Pricol Pune Limited. The face value of the equity shares of the company had been sub-divided from Rs.10/- each to Rs.1/- each.

The Wholly Owned Subsidiary Company supplies Instrument Clusters to 2 Wheelers by Bajaj Auto in the Western Region and Personal Passenger Car and Utility Vehicles manufactured by Renault Nissan, Tata Motors, Mahindra & Mahindra, General Motors India and FIAT India.

The sales increased from Rs.967.708 Million to Rs.1,216.415 Million due to better market conditions as well as sales to Kwid model of Renault. The company made an operational profit before exceptional item of Rs.68.394 Million as against the previous year loss of Rs.66.901 Million before amortisation of goodwill of Rs.60.169 Million.

Consequent to purchase of 50% shareholding held by Johnson Controls Enterprises Limited, UK by Pricol Limited, the company sold its Renault lines to Visteon Technical and Service Center Private Limited towards goodwill and transfer of technology in relation to products manufactured for Renault Nissan for a profit of Rs.82.500 Million.

The company made a net profit of Rs.89.425 Million during the financial year 2015-16 against the net loss of Rs.127.070 Million.

AMALGAMATION

On 27th January, 2016, the Board approved the amalgamation of Pricol Limited (Pricol) with its Wholly Owned Subsidiary Company, Pricol Pune Limited (Pricol Pune), an auto component Company, w.e.f. 1st April, 2015 ("Appointed Date") by way of Scheme of Amalgamation, subject to all relevant approvals.

By integrating the related auto component businesses of Pricol and Pricol Pune, the Company would be in a position to offer a wider portfolio of products and services to its customers. The amalgamation would provide a high level of synergistic integration of operations, better operational management and provide value addition to existing and future orders of both the companies by integrating the respective technical, financial and other expertise and resources.

As part of the proposed Amalgamation, all assets (including intangible assets not recorded by Pricol) and liabilities of Pricol as on the Appointed Date shall stand transferred to and vested with Pricol Pune. By amalgamation of Pricol into Pricol Pune, the combined entity would be able to reflect the true net-worth in the financial statements (as all assets, tangible and intangible, including those not recorded in the books of Pricol would be recorded in the books of Pricol Pune at their respective fair values). This would enable greater realisation of potential of the businesses of both the companies and result in enhanced value creation for the Company, their shareholders, lenders and employees.

Upon amalgamation, Pricol will cease to exist and as consideration equity shareholders of Pricol shall receive equity shares of Pricol Pune in the ratio of 1:1. Pursuant to amalgamation, equity shares of Pricol Pune held by Pricol shall be cancelled. Pursuant to Amalgamation, the shareholding of Pricol Pune shall be the mirror image of Pricol's shareholding pattern. The name of “Pricol Pune Limited” will be changed to “Pricol Limited.”

The Company had filed the Draft Scheme with BSE Limited (Designate Stock Exchange) and National Stock Exchange of India Limited as per SEBI circulars, for their 'No-objection' to the Draft Scheme. The Stock Exchanges had given their 'No-objection' to the draft scheme. Secured creditors of the company had given their no objection for the amalgamation.

The Company had filed necessary applications with Honourable High Court of Madras for getting their approval. As directed by the Honourable High Court, the company had already forwarded Notice to the shareholders to get their approval through postal ballot / e-voting by way of special resolution.

OUTLOOK, OPPORTUNITIES, CHALLENGES, RISKS & CONCERNS

The growth recorded in automotive industry was almost flat at 1.8% for the first half of 2015-16.This trend got reversed starting from 3rd quarter through the 4th quarter of the year on account of successful new launches.

The momentum picked up in two wheeler segment especially Scooters and M&HCVs during 3rd and 4th quarter to continue in 2016-17, according to SIAM reports. The overall industry growth in 2016-17 will be led by Scooter segment (17-19%) followed by M&HCV (12-15%). The advancement of sales due to implementation of BS-IV on Pan India basis effective 1st April, 2017 will also result in higher growth in Auto industry.

Key concerns for auto industry in 2016-17 will be increase in vehicle cost due to the new Infrastructure Cases announced in the recent budget and firming up of steel prices.

Pricol being market leader in Speed Limiting Devices hopes to benefit from the recent notifications in some of the States on retro-fitting of speed limiters in used commercial vehicles.

Pricol is expected to outgrow the auto industry on account of large basket of products that serve different segments within the industry.

RISK MANAGEMENT

The Company has adopted a Risk Management Policy, for identifying and managing risk, at the strategic, operational and tactical level. The Risk Management policy has been placed on the website of the Company and the web link there to be http://www.pricol.com/Risk-Management-Policy.pdf. Our risk management practices are designed to be responsive to the ever changing Industry dynamics.

At present the Company has not identified any element of risk which may threaten the existence of the Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company's internal control systems have been strengthened taking into account the nature of business and size of operations to provide for:

- Reliability and integrity of financial and operational information;

- Effectiveness and efficiency of operations and assets;

- Compliance with applicable statutes, policies, listing requirements and management policies and procedures.

The Company, through its own Corporate Internal Audit Department, carries out periodic audits at all locations and all functions and brings out any deviation to internal control procedures. The observations arising from audit are periodically reviewed and compliance ensured. The summary of the Internal Audit observations is submitted to the Audit Committee. The Audit Committee at its meetings regularly reviews the financial, operating, internal audit & compliance reports to improve performance. The heads of various monitoring / operating cells are present for the Audit Committee meetings to answer queries from the Audit Committee.

FINANCE

During the year the Company has not accepted / renewed any fixed deposit from public. The total deposits remained unpaid or unclaimed as at 31st March, 2016 is Nil. There is no default in repayment of deposits or payment of interest thereon during the year.

The Company undertook several steps to keep a control over borrowings and cost of borrowings.

ICRA has reaffirmed the credit rating of “A-” for Long term fund based facilities and “A2 ” for short term fund based & non fund based facilities.

The particulars of Loans, Guarantees and Investments made by the Company under Section 186 of the Companies Act, 2013 are given in Note No. 2.50 to the Financial Statements.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of the business. During the year there were no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with the interest of the Company at large.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

There are no significant and material orders passed by the Regulators / Courts / Tribunals which would impact the going concern status and the Company's operations in future.

DIRECTORS

As per the provisions of Section 149 of the Companies Act, 2013, Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Company's Directors retirement policy at the age of 70, the Members of the Company had at the AGM held on 8th August 2014, re-appointed the independent directors as mentioned below:

Mrs. Sriya Chari (DIN: 07383240) was appointed as an Additional (Independent) Director of the Company by the Board of Directors at its meeting held on 27th May 2016 and whose term of office expires at this Annual General Meeting ('AGM'). The Board recommends the appointment of Mrs. Sriya Chari as an Independent Director of the Company to hold office for a term of 5 (five) consecutive years commencing from 27th May 2016 to 26th May 2021.

All Independent Directors have given declarations that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013.

None of the Directors of the Company have resigned during the year.

Mr. Vijay Mohan and Mrs. Vanitha Mohan who are NonIndependent Director's retire by rotation at the ensuing Annual General Meeting and are eligible for reappointment.

In line with the Company's Directors retirement policy at the completion of age 70, Mr. D.Sarath Chandran retires from the Board, with effect from 27th May 2016. The Board places on record its warm appreciation for the contributions rendered by him from 1980 when he first came on to the Board of the Directors of our Company.

EVALUATION BY THE BOARD

The Board has made a formal annual evaluation of its own performance, Committees of the Board, Independent Directors and Individual Directors of the Company.

The Board's performance was evaluated based on the criteria like Structure, Governance, Dynamics & Functioning, Approval & Review of Operations, Financials, Internal Controls etc.

The performance of the Independent Directors as well as Individual Directors including the Chairman of the Board were evaluated based on the evaluation criteria laid down under the Nomination and Remuneration Policy and the Code of Conduct as laid down by the Board.

The Committees of the Board were evaluated individually based on the terms of reference specified by the Board to the said Committee. The Board of Directors were satisfied with the evaluation process which ensured that the performance of the Board, its Committees, Independent Directors and Individual Directors adhered to their applicable criteria.

KEY MANAGERIAL PERSONNEL

The Key Managerial Personnel of the Company as stipulated under Companies Act, 2013 are Mr. Vikram Mohan, Managing Director, Mr. S. Shrinivasan, Chief Financial Officer & Mr. T.G.Thamizhanban, Company Secretary. Mr. J. Sridhar, Chief Financial Officer of the Company has retired from the services of the Company with effect from 31st August 2015 on attaining Superannuation. The Board placed its appreciation for the services rendered by Mr. J. Sridhar during his tenure as Chief Financial Officer of the Company.

STATUTORY AUDITORS

M/s. Haribhakti & Co. LLP the Statutory Auditors of the Company was re-appointed as Statutory Auditors of the Company, for the second term of 5 consecutive years, to hold office from the conclusion of the 43rd AGM held in the year 2015 to the conclusion of the fifth consecutive AGM to be held in the year 2020 (subject to ratification of the appointment by the members at every AGM held after the ensuing AGM).

M/s. Haribhakti & Co. LLP are eligible for ratification of appointment and have confirmed that their appointment, if approved, will be in compliance with Section 141 of the Companies Act, 2013.

Your Board recommends the ratification of appointment of M/s. Haribhakti & Co.LLP, as Statutory Auditors of the Company, to hold office from the conclusion of this AGM to the conclusion of the next AGM.

COST AUDITORS

The Board of Directors at its meeting held on 27th May 2016 appointed M/s. STR & Associates, Cost Accountants, as the Cost Auditors for conducting the Cost Audit for the financial year 2016-17. A resolution seeking members' ratification of the remuneration payable to Cost Auditor is included in the AGM notice dated 27th May 2016. The Cost Audit Report will be filed within the stipulated period.

SECRETARIAL AUDIT

The Company had appointed M/s. P. Eswaramoorthy and Company, Company Secretary in Practice to undertake the Secretarial Audit of the Company for the financial year 2016-17. The Secretarial Audit Report is annexed herewith as “Annexure A”.

CSR INITIATIVES

Pricol's Corporate Social Responsibility (CSR) activities reflect its philosophy of enhancing value to the society and the environment around us. The contribution in this regard has been made to the registered trust which is undertaking these schemes in addition to the CSR activities directly undertaken by the Company. The Annual Report on CSR activities is annexed herewith as “Annexure B”.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 is annexed herewith as “Annexure C”.

EXTRACT OF THE ANNUAL RETURN

The extract of the Annual Return in Form No.MGT-9 is annexed herewith as “Annexure D”.

DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

Management and Union Representatives meeting is being conducted every month and the issues raised in the meetings are redressed immediately. Periodical review of the issues is being carried out to ensure its completeness. This has improved the overall peaceful Industrial Relations situation. The participation from the operators has improved considerably during the year. The number of people employed as on 31st March 2016 is 5,100.

Management is keen to implement the terms of the Long Term Productivity Linked Agreement with the Labour Unions entered into between the Management and the respective union representatives at the Plants I & III, Coimbatore and Plant II, Gurgaon without any deviation and delay.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this policy. The Company has not received any sexual harassment complaint during the year 2015-16.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is annexed herewith as “Annexure E”.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(3)(c) of the Companies Act, 2013, the Directors would like to state that:

a) in the preparation of annual accounts for the financial year ended 31st March 2016, the applicable accounting standards have been followed;

b) they had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for the year under review;

c) they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) They had prepared the annual accounts for the financial year ended 31st March 2016, on a going concern basis;

e) They had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively and

f) They had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

CORPORATE GOVERNANCE

Your company reaffirms its commitment to good corporate governance practices. The company complies with corporate governance requirements specified in regulation 17 to 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Pursuant to Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Report on Corporate Governance which forms a part of this Report, has been annexed herewith as “Annexure F”.

The Managing Director and Chief Financial Officer have certified to the Board with regard to the financial statements and other matters as required under Regulation 17 (8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Practicing Company Secretary's Certificate regarding compliance of conditions of Corporate Governance, is made a part of this Directors' Report. All the board members and senior management personnel have affirmed compliance with the code of conduct for the year 2015-16.

CAUTIONARY STATEMENT

Management Discussion and Analysis forming part of this Report is in compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and such statements may be “forward-looking” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include economic conditions affecting demand / supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and other incidental factors.

ACKNOWLEDGEMENTS

The Board takes this opportunity to place on record appreciation to Customers, Distributors, Dealers, Suppliers, Shareholders, Bankers and Government authorities for their continued support and co-operation during the year under review. The Directors also wish to place on record their appreciation to the employees at all levels for their continued co-operation and commitment.

For and on behalf of the Board

Vijay Mohan

Coimbatore Chairman

27th May, 2016 (DIN: 00001843)