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10 The baancing poe is the key to waking the tightrope. In street circuses in India, young girs and boys wak the tightrope at heights of up to 50 feet. As there are no safety nets, the baancing poe is the ony too and source of security. A high degree of ski and agiity is essentia to use it. To wak ta, you need agiity and ski!

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13 Dear Sharehoders, It gives me great peasure to interface with you once again, having competed another eventfu year in , eventfu both for the Nation and for your Company! There is a new and a-pervading sense of optimism about the Indian Economy. Our country has become attractive as a market and as an investment destination due to consistenty high growth rates in industria production in the recent past. This is aso refected in the overa GDP growth which was above 7 percent for the third consecutive year in In the manufacturing sector, India, with its comparative cost advantages and skied workforce, continued to attract investor interest. There is a firm expectation that competitiveness earned through productivity improvement and innovation wi hep India emerge as a major manufacturing hub for the goba marketpace. More specificay, the automotive industry, the most reevant user-industry for your Company, maintained its robust growth record. However, the upward trend in oi prices and the comparativey higher rates of infation in the country are among a few causes for concern in this context. Our core competencies in technoogy and the carity in our ong-term vision about your Company continue to pay a steering roe in our exciting journey towards becoming a reputed Indian organisation with a goba outook and market eadership in each of our chosen business segments. Truey, the year marked a very testing time for Tube Investments in terms of externa market environment. There has been increased competition in the vaue-added tubes segment; our major customers were under pressure to reduce costs and consequenty there were expectations of price economies from us; voatiity in stee prices and suppy chain uncertainties had their own impact. Besides, we faced intense competition in the goba markets from the Chinese suppiers, especiay in drive chains. The market for the cyce industry, on the other hand, is amost stagnant over the past three years and competition has intensified due to excess capacity. In the background of these externa factors, however, our competencies in engineering and technoogy, process efficiencies in the shopfoor and internationay benchmarked quaity systems heped us to succeed in retaining or improving our market shares in most of our business segments. The Business Teams in Tube Investments focused on interna factors and worked on things that we had contro over. In the process, we have achieved significant improvements in quaity and deivery standards through the year under review, which have been appreciated by our important customers. Aso, striking a baance between the priorities for near and ong-term vaue-creation opportunities, we made adequate investments throughout the year in the areas of capacity enhancements, technoogy upgrades and modernisation eading to productivity gains. We have ambitious investment pans on the anvi for the year as we to sustain our momentum in growth in the coming years. In order to everage the inherent advantages of China as a country, we are setting up a green fied precision tube manufacturing pant there, based on in-house technoogies. China today is an opportunity both as a market and as a sourcing option and this cannot be overooked by your Company in the context of our goba aspirations. The biggest chaenge today In the ight of these facts, I submit, whie we try to take our organisation to the goba arena, we are aways conscious of our humbe roots and our positive reputation. We are, as aways, fuy committed to the vision and the vaues of the Murugappa Group, of which we are an integra part. As the engineering fagship of the Group, Tube Investments is strategicay positioned to spearhead the group's initiatives in the automotive and engineering markets wordwide. The biggest chaenge today is to find the appropriate baance between our vaues, competencies, and resources on the one hand and the emerging opportunities on the other. I woud ike to assure you that we have the imagination and capabiity to make your Company a high-performance organisation fuy geared to reap these opportunities. Yours sincerey, M A Aagappan Chairman is to find the appropriate baance between our vaues, competencies, and resources on the one hand and the emerging opportunities on the other. 11

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15 Corporate Information M A Aagappan, Chairman BOARD O DIRECTORS M M Murugappan, Vice Chairman Sumit Banerjee, Managing Director Ama Gangui D Jayavarthanaveu Pradeep Maick Ram V Tyagarajan S Sandiya R Srinivasan Tapan Mitra S Suresh 'Dare House' 234, N S C Bose Road, Chennai COMPANY SECRETARY REGISTERED O ICE Engineering Division: PLANTS Tube Products of India, Avadi, Chennai Tube Products of India, Ambattur, Chennai Tube Products of India, Shirwa, Satara District Tube Products of India, Mohai Meta ormed Products Division: TIDC India, Ambattur, Chennai TIDC India, Kazipay, Medak District TI Meta orming, Tiruninravur, Chennai TI Meta orming, Kakkaur TI Meta orming, Bawa TI Meta orming, Hao Cyces Division: TI Cyces of India, Ambattur, Chennai TI Cyces of India, Nashik TI Cyces of India, NOIDA TI Cyces of India, Durgapur DELOITTE HASKINS & SELLS Chartered Accountants AUDITORS Bank of America BANKERS Bank of Baroda Standard Chartered Bank State Bank of India The Hongkong & Shanghai Banking Corporation Limited 13

16 Management Discussion And Anaysis OVERVIEW Tube Investments of India Limited (TI) has three major operating segments, viz., Engineering (stee tubes & strips), Meta ormed Products (meta chains & car doorframes) and Bicyces. TI is a pioneer and market eader in high-end Cod Drawn Weded (CDW) tubes. Enjoying a sizeabe share of the Indian auto market, it has subsequenty increased its exports to deveoped markets. TI is the second argest suppier of automotive chains to two wheeer manufacturers with a major share of the repacement market. In Industria Chains, TI is a suppier to major chain manufacturers in Europe, thereby aspiring to become a tier-1 suppier to the OEMs. TI is a market eader in meta formed car doorframes catering to a majority of the auto manufacturers. In stee strips, TI is one of the most reiabe sources aside from the integrated stee mis. In Cyces, TI is the second argest payer in India and a eader in the specias segment, which addresses needs of the younger generation. Over the ast few years, the Indian economy has been growing at a heathy rate, with the automobie sector outstripping this pace. During this period, your Company has made concerted efforts to aign its business with this sector, capitaising on the obvious growth opportunities. Today, the Indian auto sector accounts for more than 60 percent of your Company s turnover and profitabiity. Looking ahead, the Company has aso set its goas on raising exports from the current eves of 11 percent to 25 percent of its saes. TI currenty has on-going business-driven R&D projects in the fied of new generation stees, their processing and meta forming. It has aso estabished an Engineering Design Centre (EDC) to compement the R&D initiatives. The EDC concentrates on deveopment of tooing for new products, product & process modeing for hydroforming and ro-forming of tubes. TI aso has strategic investments in the fast paced financia services sector. Choamandaam MS Genera Insurance Company Limited is a 74 percent owned subsidiary of TI. Besides, TI hods percent equity in Choamandaam MS Risk Services Limited, a Company engaged in consuting services in the areas of risk assessment and mitigation. TI aso has percent equity hoding in Choamandaam DBS inance Limited, one of the we known NB Cs in India. Business Review: ENGINEERING Industry Scenario The product categories of the engineering division are weded precision stee tubes and stee strips. Market size of the precision tubes in India is presenty estimated to be around 3.25 akh tonnes per annum. Cod Drawn Weded (CDW) and Eectric Resistance Weded (ERW) precision tubes have extensive appications in the auto industry. There are four major payers in the market and TI is the pioneer in the critica auto appications segment. The growth in this business is directy proportionate to the growth in the Indian auto sector. The increase in auto component exports from India to goba markets has been encouraging. Stee strips comprise of narrow (beow 350 mm) and wide (350 mm to 1000 mm) width categories, The user industries are automobies, bearings, cyces, fine banking, stamping, chains and genera engineering. The size of our addressabe market is estimated to be around 12 akh tonnes per annum. The industry has about 10 payers, each with a regiona focus. TI has a dominant share in Southern India. Whie integrated stee mis have an advantage in terms of cost and voumes, our strength ies in our abiity to hande a variety of grades and sizes with ower voumes and smaer order quantities. 14

17 Tube Investments of India Limited Operationa Review of In the year under review, turnover of the Engineering business was Rs Cr. Profit before interest and tax (PBIT) was Rs Cr., an increase of percent over ast year. In the tubes market, TI maintained its eadership position through high quaity standards and deivery capabiities whie increasing its market share in the category. TI has embarked on new initiatives that foster ong term reationship with key customers through cose interactions in product deveopment and process improvements. In the year under review, capacity expansion pans in TI were deayed on account of statutory cearances. With these cearances now in pace, TI s capacity enhancement pans are back on track and are expected to start deivering resuts from New initiatives incude dedicated manufacturing ines for key products and change in its ogistics pans to meet demanding schedues of the customers. As regards export of tubes to USA, TI is revisiting its distribution strategy in ine with its increased capacity and technica capabiity. TI has aso increased its focus on the fast growing ASEAN market and the quaity conscious European market. In Strips, TI is reaigning production of wide width and narrow width strips to achieve better production panning, inventory management and reduction in overheads. The Engineering business won the EEPC award for best exporter from southern India, in recognition of achieving highest export performance during in the category of prime meta ( errous & Non errous). Voatiity in the price of stee is a major concern for the business, which has surfaced once again after a brief period of stabiity. METAL ORMED PRODUCTS Industry Scenario Meta forming is a muti-faceted industry. TI is engaged in the manufacture of chains, cod ro-forming of car doorframes and fine-banked components. Chains can be categorised into automotive and industria chains. TI is one of the major suppiers of automotive chains for two-wheeers in India. Automotive chains are aso marketed in the repacement market through a wide deaer network. Industria chains cater to the needs of the cement, fertiizer, stee, sugar, eevators and power transmission industry in genera. TI is one of the two major payers in India in this fied. India s voume of exports is at present ow compared to the size of the internationa market and there are opportunities here for a quaity and cost eader. In Ro-forming, TI s focus is on the manufacture of modespecific car doorframes. TI is one of the two major payers in India for ro-formed car doorframes. The chaenge in this business is in meeting the quaity standards of the car manufacturers as we as their precise deivery requirements. Aso, success here is directy associated with the success of the specific car modes being serviced by your Company. In ine Banking, TI s focus is on manufacture of sprockets, power-transmission reated products and other auto components. ine banking is considered a high potentia business in view of its reevance to the growing Indian auto industry, athough currenty the market size is sma. Operationa Review In the year under review, turnover of Meta ormed Products business was Rs Cr. Profit before interest and tax (PBIT) was Rs Cr. an increase of percent over previous year. In automotive chains, the market was characterised by aggressive pricing strategy of competitors and aftermarket imports from China. With sustained efforts, our exports showed improving trend in the atter part of the year. In doorframes, the overa off-take by the customers was marginay higher than in the previous year. Considering its technica capabiities and cost effectiveness, your Company intends to put up a car doorframe pant near 15

18 Annua Report Pune to cater to the requirements of another major car manufacturer. The existing pants at Nemiicherry (near Chennai) and Bawa are aso geared to take up the manufacture of doorframes for new car modes of existing customers, with the hep of sizabe investments. A new hydro-forming faciity has been commissioned at the pant in Kakkaur (near Chennai) to cater to the auto component requirements invoving intricate vaue-based designs. Hydro-forming, as a process route of meta forming, is expected to offer a reiabe aternative to mutipe and compicated meta fabrication processes to meet emerging design requirements of auto and auto component manufacturers. CYCLES Industry Scenario India is the second argest manufacturer of bicyces in the word with an annua production of 9-10 miion bicyces. Though the bicyce industry in India is argey organised, the presence of smaer payers in the unorganised sector has been increasing. There are three major payers in the organised sector, whie Ludhiana is the main hub for manufacture of cyces and components in the unorganised space. Cyces can be primariy cassified into 2 segments standards and specias. The standard cyces are used for ight transportation of humans and goods. Specia category bicyces are differentiated by design & features and cater to the needs of kids, students and younger generation consumers, as we as heath & eisure segments. Overa, the organised sector of the bicyce industry has witnessed a decine in demand growth in the past few years. Increased urbanisation, improved pubic transport and increased affordabiity of motorised vehices are the primary causes for this downward trend. One other major factor that affects the bicyce industry is non avaiabiity of road-space for the bicyces. The bicyce however, continues to be the first vehice of a chid and a utiity product for the rura popuation. Apart from this, there has aso been an encouraging trend in usage of cyces for heath and eisure activities. Review of performance In the year under review, turnover of the bicyce business was Rs Cr. Profit before interest and tax (PBIT) was Rs Cr. a decrease of percent over ast year. Introduction of new modes, vendor, brand & distribution management are the key imperatives for success in this business. The stiff competition and decining demand encouraged indiscipine in the distribution system and ed to higher deaer outstanding and bad debts. TI s efforts in the ast year have been to reduce exposures to the market and bring down stock eves with deaers and to move coser to the market through monitoring of actua saes to the end customers. These efforts heped us to rationaise the deaer network, and improve deaer outstanding from 65 days to 42 days. Other major payers have foowed suit in these directions, recognising your Company as the eader in this initiative. However, proiferation of unorganised payers has aso eft its impact on the market. Institutiona orders, with ow margins, accounted for neary 10 percent of TI s voume. These factors have contributed to the drop in TI s saes and profits. To improve cycing habits, TI associated itsef during the year with the Cycing ederation of India for organising cycing events and aso organised other appropriate events to promote and encourage cycing among the urban youth. inancia Review and Anaysis ixed Assets Gross fixed assets totaed at Rs Cr. with addition of Rs Cr. during the year. Capita work-in-progress at the end of the year aggregate to Rs Cr. Capita 16

19 Tube Investments of India Limited spending was mainy towards increase in capacity and modernisation/productivity improvements in the engineering and meta-formed product segments. The investments were met fuy through interna cash accruas. Depreciation During the year, in ine with the Company s poicy, a higher rate of book depreciation amounting to Rs Cr. was charged in respect of assets specific to car doorframes, reating to oder modes as we as to other redundant assets. Working Capita In view of the exacting deivery norms of customers, contro on working capita is a continuous chaenge. Sundry debtors were reduced by Rs Cr. Net working capita for the Company was at Rs Cr. at the year end. through cose monitoring of funds and prudent mix of foreign currency oans/buyers credit. Interest cost was ower at Rs Cr. on account of retirement of oans and better credit management. inancia condition and Liquidity The credit rating of P1+ and AA/stabe was reaffirmed during the year. The Company s debt equity ratio improved from 0.51 in to 0.46 in Cash generated from operations grew from Rs Cr. to Rs Cr. On behaf of the Board inance charges The year saw hardening of interest rates by amost 2 percent but TI s average rate of interest was 5.68 percent, as against 6.82 percent during This was achieved Chennai 27th Apri 2006 M A Aagappan Chairman 17

20 Annua Report Risk Anaysis and management Risk is inevitabe in any business. Risk management refers to the forma processes whereby risks associated with the businesses are managed precisey and transparenty. Your Company beieves that risk management strengthens the process of decision making, panning and impementation. It aso beieves that risk management enhances the success rate in investments, strategy & poicy impementation and other entrepreneuria initiatives. Naturay, this has to work within the norma constraints of time, efficiency and cost. The Company has an estabished risk assessment and minimisation procedure. Some of the risks associated with the business and the reated mitigation pans are discussed hereunder. The risks given beow are not exhaustive and the evauation of risk is soey based on management s perception. A. Engineering Business Risk Why Considered as Risk Mitigation Pan/Counter Measure User Industry Concentration Risk Over 60 percent of the revenue emanates from auto sector, a sow down woud adversey affect revenues. The requirements of other industries viz., texties machine, spinde, agro impements /accessories, machine toos, hydrauic tubing etc., are being tracked. There are pans to increase the share in the boier tubes business and the eectronic and white goods industry. Raw Materia Risk There are issues reative to avaiabiity of specia grade, inconsistency in quaity and the price of stee. Procurement of stee from mutipe sources in India and sourcing from overseas are some of the steps taken. Quartery price agreements are being worked out with the suppiers to mitigate price voatiity. Technoogy obsoescence Risk The focus of the business is on high-end ERW tubes and CDW tubes. Invention of cheaper aternatives for auto appications woud adversey affect the revenue stream. Continuous efforts are on for cost reduction. The R&D department continuousy tracks emerging products and technoogies and heps business in making timey investment in new process technoogies. Product Portfoio Risk In stee strips, there is a constant threat from integrated stee mis. The strategy is to focus on niche segments with wide range of grades & sizes, where the business is more competitive. Import Risk Imports from China and other ASEAN countries at competitive prices and possibiity of further reduction in import duty. Strong customer reationships and cost competitiveness are the two pronged strategies of the business to reduce this possibiity. 18

21 Tube Investments of India Limited B. Meta ormed Products Risk Why Considered as Risk Mitigation Pan/Counter Measure Competitive Risk Cheaper imports of chains from China. In export of specia chains aso, there is competition from Chinese manufacturers, who hitherto concentrated on high-voume standard chains. Reduction in costs, investment in technoogy and foray into vaue added specias. Product Portfoio Risk Entry of new payers and avaiabiity of cheap Chinese aternative woud commoditise the standard chains. Reduce cost and move to specias/vaueadded chains. Business Interruption Risk Doorframes are suppied on JIT basis to the assemby ine of the customers. Continuous avaiabiity of skied abour is the key. Deveopment of mutipe categories of abour and conversion of ski oriented operations to non-ski operations, wherever possibe, are some of the steps taken to ensure continuous suppy. Mode Risk Doorframes reated investments are generay mode-specific. aiure of a mode woud render the assets non performing ones. Since the business caters to most of the eading car manufacturers and that too, for a variety of modes, faiure of a mode woud be made up in other modes. User Industry Risk Sow down in automotive industry. Broad base the customer base. Raiways, eectrica and defence sector are areas of potentia. Raw Materia Risk uctuation in price. There is a transparent pricing mechanism with the customers. C. Cyces Risk Why Considered as Risk Mitigation Pan/Counter Measure Product obsoescence Risk In the ast few years, there has been a fa in the demand for bicyces in India. The eve of penetration of bicyces in India is sti considered as ow. Efforts are aso on to encourage cycing in heath and eisure segments. Sourcing Risk aiure on the part of the critica and dedicated vendors with regard to quaity or suppies. Rationaisation of vendors, viabiity check and reationship management. Low entry barrier Risk In the recent times, sma un-organised sectors have become a force. Deveop category-specific and regionspecific strategy to improve market share. Continuous increase in vaue proposition. Trade channe Risk The retai outets in most cases remain unattractive and there is reuctance on the part of the deaers to invest in modernisation. The business has adopted a poicy of Seing through rather than seing in, which emphasises on actua/secondary saes rather than primary saes. 19

22 Annua Report D. Genera Risk Why Considered as Risk Mitigation Pan/Counter Measure HR Risk Abiity to attract best taent, especiay the best crop of engineering/ management graduates from premier institutions, is critica. The mitigation pan incudes corporate image buiding, institutiona tie-ups and better pay packages. The Company has a transparent Performance Management System Reward & Recognition poicy. Interna Contro Risk The businesses of the Company are growing and have mutipe ocations. The Company s growth and profitabiity coud be adversey affected, if interna processes and contros are not in pace. The Company has adequate interna contro systems considering the nature of business, size and geographica spread. These systems are reguary reviewed and improved. The Company aso has an interna audit system with cear focus on assuring the adequacy of such systems. On behaf of the Board Chennai 27th Apri 2006 M A Aagappan Chairman 20

23 Sharehoders Information REGISTERED O ICE 'Dare House', 234 NSC Bose Road, Chennai ANNUAL GENERAL MEETING Day : riday Date : 28th Juy, 2006 Time : 4.00 p.m. Venue : T T K Auditorium, The Music Academy, T T K Road, Royapettah, Chennai TENTATIVE INANCIAL CALENDAR Annua Genera Meeting - 28th Juy, inancia reporting for the first quarter ending 30th June, th Juy, inancia reporting for the second quarter ending 30th September, st October, inancia reporting for the third quarter ending 31st December, Last week of January, inancia reporting for the year ending 31st March, Apri / May BOOK CLOSURE OR DIVIDEND riday, the 14th Juy, 2006 to riday, the 28th Juy, 2006 (both days incusive). DIVIDEND The Board of Directors has recommended the payment of a dividend of 60 per cent. Considering the proposed sub-division (stock-spit) of the equity shares of the Company, the proposed fina dividend amounts to Rs per equity share of Rs.2/- each. The dividend on equity shares wi be paid to those members whose names appear in the Register of Members as on 28th Juy, 2006 and the same wi be paid on or before 4th August, In respect of shares hed in eectronic form, the dividend wi be paid on the basis of beneficia ownership as per detais furnished by the depositories for this purpose. LISTING ON STOCK EXCHANGES AND STOCK CODE Nationa Stock Exchange - TUBEINVEST The Stock Exchange, Mumbai Madras Stock Exchange - TIN GLOBAL DEPOSITORY RECEIPTS Luxembourg Stock Exchange Listing fee for the year ended 31st March, 2006 has been paid to a the stock exchanges. MARKET PRICE DATA AND COMPARISON High and Low during each month in ast financia year Nationa Stock Mumbai Stock Exchange Exchange Month HIGH LOW HIGH LOW Rs. P Rs. P Rs. P Rs. P Apr May Jun Ju Aug Sep Oct Nov Dec Jan eb Mar

24 Annua Report REGISTRAR AND SHARE TRANS ER AGENTS Karvy Computershare Private Ltd "Karvy House" 46, Avenue 4, Street No.1 Banjara His, Hyderabad and Phone Nos and ax : Contact Person : Mr. Md. Mohsinuddin - Manager SHARE TRANS ER AND INVESTOR SERVICE SYSTEM A committee of the Board constituted for this purpose approves share transfers in the physica form on fortnighty basis. The Board has aso authorised Chairman / Managing Director / Company Secretary to approve the transfers / transmissions. SHAREHOLDING PATTERN AS ON 31st MARCH, 2006 Category No of shares hed% of sharehoding A Promoter's Hoding 1,57,76, B Non-Promoter Hoding 1. Institutiona Investors a) Mutua unds and UTI 25,89, b) Banks, inancia Institutions, Insurance Companies 17,29, c) oreign Institutiona Investors 26,89, Others a) Private Corporate Bodies 38,84, b) Indian Pubic 68,28, c) NRI / OCB 1,06, d) Bank of New York (GDR hoders' Depository) 33,51, Grand Tota 3,69,56,

25 Tube Investments of India Limited DISTRIBUTION O SHAREHOLDING AS ON 31st MARCH, 2006 Category No of hoders % to Tota No of shares % to Tota , ,86, , ,13, ,86, ,57, ,80, ,84, ,97, above 10, ,17,49, Tota 17, ,69,56, NOMINATION ACILITY The sharehoders may avai of the nomination faciity under Section 109A of the Companies Act, The nomination form ( orm 2B) aong with instructions wi be provided to the members on request. In case the members wish to avai of this faciity, they are requested to write to the company's registrar M/s Karvy Computershare Pvt Ltd. DEMATERIALISATION O SHARES The shares of the Company are compusoriy traded in demateriaised form. The code number aotted by Nationa Securities Depository Limited (NSDL) and Centra Depository Services (India) Ltd to Tube Investments of India Ltd is ISIN INE 149A GDR DETAILS As at 31st March 2006, 33,51,850 GDRs were outstanding representing an equa number of underying equity shares. MEANS O COMMUNICATION The quartery resuts are being pubished in the eading nationa Engish newspapers (The New Indian Express, The Economic Times and Business Standard) and in one vernacuar (Tami) newspaper (Dinamani). The quartery resuts are aso avaiabe on the Company's website The Company's website aso dispays officia press reeases, sharehoding pattern and presentations made to the anaysts and brokers. RESOLUTION PASSED BY POSTAL BALLOT In May 2006, a specia resoution for amendment to the Cause V of the Memorandum of Association and Artice 5 of Artices of Association was passed by posta baot. Mr. R Sridharan, Practicing Company Secretary conducted the posta baot as per the procedure aid down in Section 192A, read with the Companies (Passing of Resoutions by Posta Baot) Rues, The detais of the resut for the above were as foows: Number of vaid votes 2,19,84,356 votes Number of votes in favour 2,19,70,898 votes Number of votes against 13,458 votes The sharehoders approved the resoution with requisite majority, through posta baot. GENERAL BODY MEETING Last three annua genera meetings The date, time and venue of the ast three annua genera meetings are given beow: Year Date Time Venue p.m. T T K Auditorium, Music Academy T T K Road, Royapettah, Chennai p.m. Same as above p.m. Same as above 23

26 Annua Report LIST O PROMOTERS BELONGING TO THE MURUGAPPA GROUP 1. EID Parry (India) Ltd at its subsidiaries 2. Godavari ertiisers & Chemicas Ltd 3. Parry Chemicas Ltd 4. Parry Enterprises India Ltd 5. Parry Agro Industries Ltd 6. New Ambadi Estates Pvt Ltd and its subsidiaries 7. Ambadi Enterprises Ltd and its subsidiaries 8. Carborundum Universa Ltd and its subsidiaries 9. Choamandaam DBS inance Ltd and its subsidiaries 10. The Coromande Engineering Company Ltd and its subsidiaries 11. AMM Arunachaam & Sons P Ltd 12. AMM Veayan Sons P Ltd 13. MM Muthiah Sons P Ltd 14. Murugappa & Sons 15. Kadamane Estates Company 16. Yenoorkhan Group Estates 17. AMM oundation amiy for this purpose incudes the spouse, dependent chidren and parents. 18. AMM Medica oundation 19. AMM Educationa oundation 20. MM Muthiah Research oundation 21. AR Lakshmi Achi Trust 22. Presmet Pvt Ltd 23. TII Sharehoding Trust 24. M V Murugappan and famiy 25. M V Subbiah and famiy 26. M A Aagappan and famiy 27. A Veayan and famiy 28. M M Murugappan and famiy 29. M M Venkatachaam and famiy 30. A Venkatachaam and famiy 31. S Veayan and famiy 32. Arun Aagappan and famiy 33. M A M Arunachaam and famiy 34. Any company / entity promoted by any of the above. PLANT LOCATIONS TI Cyces of India Post Bag No.5 Ambattur Chennai Te : (044) ax: (044) TI Cyces of India Pot No. E - 8, MIDC Maegaon, Sinnar Nashik District Te : (02551) ax : (02551) TI Meta orming Chennai - Tiruvaur High Road Tiruninravur RS PO Te : (044) , , ax : (044) TI Meta orming Bawa Pant, Pot Nos Bawa Investate Riwari District Te : (01284) , ax : (01284) TI Cyces of India A-32, Phase II Extn Hoisery Compex Opp. NEPZ Dadri Road Gautam Budh Nagar Noida Te : (0120) /203 ax : (0120) Tube Products of India Avadi, Chennai Te : (044) ax : (044) TI Cyces of India Jadavendrapanja Avenue Durgapur Te : (0343) / TI Meta orming Pot No B & C Hao Industria Area / Estate Bock No. 32 & 34, Viage Dunia Tk Hao Dist Panchmahas, Baroda Te : (02676) ax : (02676) TIDC India Ambattur Chennai Te : (044) ax : (044) TI Meta orming 80/81, SIDCO Industria Estate Kakkaur Thiruvaur Ph. (044) Tube Products of India Shirwa Post, Khandaa Tauk Satara District Te : (02169) ax : (02169) Tube Products of India - EOU Avadi, Chennai Te : (044) ax : (044) Tube Products of India A-16 & 17, Industria oca Point Phase VI, SAS Nagar Mohai Te: (0172) Tube Products of India Ambattur Chennai Teefax : (044) TIDC India Kazipay Viage, Pot No.1 Jinnaram Manda Medak District Te : (08458) ax : (08458) COMPLIANCE O ICER Mr. S Suresh Company Secretary Tube Investments of India Limited 'Dare House' 234, N S C Bose Road, Chennai e-mai: sureshs@tii.murugappa.com Phone: (044) ax : (044) CONTACT ADDRESS or a matters reating to Annua Report: Company Secretary Tube Investments of India Limited 'Dare House' 234, N S C Bose Road Chennai e-mai: sureshs@tii.murugappa.com Te: (044) ax: (044) or a matters reating to investor services: Karvy Computershare Pvt Ltd "Karvy House" 46, Avenue 4, Street No.1 Banjara His,Hyderabad e-mai : maimanager@karvy.com and mohsin@karvy.com Te : (040) and ax: (040) Contact Person: Mr. Md. Mohsinuddin - Manager 24

27 Report on Corporate Governance The Company beieves that the fundamenta objective of corporate governance is enhancement of ong-term sharehoder vaue, whie keeping in view the interests of a stakehoders. The Company's corporate governance practices emanate from its commitment towards discipine, accountabiity, transparency and fairness. Key eements in corporate governance are timey discosure, estabishment of interna contros and high standard of accounting fideity, product and service quaity. The Company aso beieves that the growth in sharehoder vaue, as refected in the financia performance of the Company, was possibe because of the good practices foowed over the years. BOARD O DIRECTORS The Board provides eadership, strategic guidance and objective judgement on the affairs of the Company. The key to good corporate governance is a proper composition of executive and non-executive Directors and the extent of their independence. The Board incudes exceent, professionay accaimed non-executive Directors, who understand their roe of addressing issues put forward by the management and impartiay discharging their fiduciary responsibiities towards the sharehoders. The independent Directors provide their independent judgement, externa perspective and objectivity on the issues which are paced before them. The Company's commitment to good governance practices aows the Board to effectivey perform these functions. The Board consists of 10 members with knowedge and experience in different fieds viz., engineering, manufacturing, finance and business management. The Chairman and Vice-Chairman beong to the promoter group and Mr. Sumit Banerjee is the Managing Director. The remaining Directors are independent non-executive Directors. The Chairman, whie ensuring good corporate governance practices, ensures that timey and reevant information is made avaiabe to a the Directors in order to enabe them to contribute during meetings and discussions. The Board, in order to be effective, has constituted an Audit Committee, a Remuneration & Nomination Committee and an Investors' Grievance Committee. Your Company has a we-estabished practice with regard to deciding the dates of meetings and aso the issues and matters to be paced before the Board in advance. The annua caendar for the meetings of the Board is finaised eary on, in consutation with a the Directors on their avaiabiity. There are a minimum of 5 Board meetings each year. Evoution of strategy, annua business pans, review of actua performance and course correction, as deemed fit, constitute the primary business of the Board. The roe of the Board aso incudes de-risking, strategic investment, divestment and business reorganisation. The matters such as capita expenditure, recruitment of senior eve personne, safety & environment, HR reated deveopment, compiance of statutes, forex exposures are aso reviewed by the Board from time to time. There were 6 meetings of the Board during the financia year The dates of the Board meetings, detais of attendance and the number of directorships / committee memberships hed by them as on 31st March, 2006 are provided in the Tabe 1 of the annexure to this report. AUDIT COMMITTEE The audit committee pays an important roe in financia reporting of performance and review of interna contro procedures. The Company has an independent audit committee. The committee consists of 4 members, a being nonexecutive Directors, with 3 of them being independent. Mr. Tapan Mitra, an independent Director, is the Chairman of the Audit Committee. A the members of the committee have exceent financia and accounting knowedge. 25

28 Annua Report The roe of the audit committee, in brief, is to review financia statements, interna contros, accounting poicies and interna audit. The quartery financia resuts are paced before the audit committee for its review, suggestions and recommendation(s), before taking the same to the Board. The statutory audit pans and progress are shared with the committee for its review. The interna audit pans are drawn in consutation with the Managing Director, Chief inancia Officer, Heads of business and the audit committee. The committee reviews the observations of the interna auditors periodicay. The committee aso provides guidance on compiance with accounting standards and accounting poicies. The statutory and interna auditors attend the audit committee meetings. The committee aso tracks the impementation of its guideines / suggestions through review of action taken reports. The committee met 6 times during the year ended 31st March, The composition of the audit committee and the attendance of each member at these meetings are given in Tabe 2 of the annexure to this report. REMUNERATION TO DIRECTORS The success of the organisation in achieving good performance and good governing practice depends on its abiity to attract quaity individuas as executive and non-executive Directors. The compensation to the Managing Director comprises a fixed component and a performance incentive by way of commission. The compensation is determined, based on eves of responsibiity and scaes prevaiing in the industry. The commission is aso determined based on certain pre-agreed performance parameters. The Managing Director is not paid sitting fees for any Board / committee meetings attended by him. The terms of empoyment provide for termination of service by either party upon giving three months notice. The compensation to the non-executive Directors takes the form of commission on profits. Though the sharehoders have approved payment of commission up to 1 per cent of the net profits of the Company for each year cacuated as per the provisions of Companies Act, 1956, the actua commission paid to the Directors is restricted to a fixed sum. The sum is reviewed periodicay taking into consideration various factors such as performance of the Company, time spent by the Directors for attending to the affairs and business of the Company and the extent of responsibiities cast on the Directors under various aws and other reevant factors. urther, the aggregate commission paid to a non-executive Directors is we within the imit of 1 per cent of the net profits as approved by the sharehoders. The nonexecutive directors are aso paid sitting fees as permitted by government reguations for a Board and committee meetings attended by them. The roe of the remuneration & nomination committee is to recommend to the Board, the appointment / reappointment of the executive / non-executive Directors. The Committee has aso been vested with the authority to determine the periodic increments in saary and annua incentive of the executive Directors. The increments and commission of executive Directors are determined on the basis of a baanced score card with its four components viz., company financias, company scorecard, strategic business unit score card and persona objectives being given appropriate weightage. The members eect one amongst themseves as Chairman for each meeting. The Committee met 5 times during the year ended 31st March, The composition of Committee and the attendance of each member at these meetings are given in Tabe 3 of the annexure to this report. The detais of remuneration paid / provided for the year ended 31st March, 2006 to the Managing Director is given in Tabe 4 of the annexure to this report. The detais of remuneration paid / provided to non-executive Directors are given in Tabe 5 of the annexure to this report. 26

29 Tube Investments of India Limited SUBSIDIARY COMPANY Choamandaam MS Genera Insurance Company Ltd (CMSGICL) is the ony subsidiary of the Company. Mr. M A Aagappan, Chairman and Mr. R Srinivasan, independent Director are aso hoding the positions of Chairman and Director respectivey on the Board of CMSGICL. The quartery/annua performance of CMSGICL is paced before the Board for its review. The Minutes of the Board meetings of CMSGICL are aso paced at every Board Meeting. DISSEMINATION O IN ORMATION Your Company is conscious of the importance of timey and proper dissemination of adequate information. A press reease is given aong with the pubication of the quartery / annua resuts expaining the business environment and performance. This is being provided to enabe the investing community to understand the financia resuts in a better and more meaningfu manner. The press reease incudes non-financia aspects such as deveopment of new products, change in market share, price movement of raw materias and generay the business condition. The quartery and audited financia resuts are normay pubished in Business Standard, The Economic Times, The New Indian Express and Dinamani. Press reeases are given to a the important daiies. The financia resuts, press reeases, sharehoding pattern and the presentations made to the Anaysts & Brokers are posted on the Company's website i.e., The Company's commitment to transparency is refected in the information-rich annua report, investors' meets, periodic press reeases and continuous updation of the website. INVESTORS' SERVICE Your Company prompty attends to investors' queries or grievances. In order to provide timey services, the power to approve transfer of shares has been deegated by the Board to the shares and debentures committee. The Board has aso authorised the Chairman / Managing Director / Company Secretary to approve the transfers / transmissions. Share transfer requests are processed within 15 days from the date of receipt. Karvy Computershare Private Limited, Hyderabad is the Company's share transfer agent and depository registrar. The sharehoders / investors grievance committee was constituted to specificay focus on investor service eves. This Committee has prescribed norms for attending to the investors' services and these norms are being reviewed periodicay. Mr. M M Murugappan, a non-executive Director is the Chairman of the sharehoders / investors' grievance committee. The members of the committee are in reguar and cose communication with each other and attend to the investors' compaints / grievance periodicay. The Committee met twice during the year ended 31st March, The composition of the Committee and their attendance at the above meetings are given in the Tabe 6 of the annexure to this report. The Company received 39 queries / grievances during the year ended 31st March, 2006 and a of them were resoved to the satisfaction of the investors. There were no queries to be repied / sorted out as at 31st March, There were no transfers pending as at 31st March, STATUTORY COMPLIANCE The Company attaches highest importance to the compiance of statutes. Every function/department of the business is aware of the requirements of various statutes reevant to them. The Company has systems in pace to remain updated with the changes in the statutes and the means of compiance. An affirmation regarding compiance of the statutes by the Heads of businesses and functions are paced before the Board on a quartery basis for its review. 27

30 Annua Report INTERNAL CONTROL The Company is conscious of the importance of the interna processes and contros. The Company has a robust business panning & review mechanism and has adequate interna contro systems commensurate with the nature of business, size and geographica spread. These systems are reguary reviewed and improved. The Managing Director and Chief inancia Officer (C O) of the Company have certified to the Board, on matters reating to financia reporting and reated discosures, compiance with the reevant statutes, accounting standards and the adequacy of interna contro systems. WHISTLEBLOWER POLICY In ine with the Company's commitment to the highest possibe standards of ethica, mora and ega business conduct and its commitment to open communication, a 'Whistebower Poicy' has been framed. The poicy appies to a the empoyees, suppiers and vendors and the same is put up on the Company's website. COMPLIANCE O CORPORATE GOVERNANCE NORMS The Company has compied with a the mandatory requirements of corporate governance norms required to be compied during the financia year. As regards nonmandatory requirements, the Company has a Remuneration and Nomination committee as detaied earier. A haf-yeary newsetter from the Managing Director highighting the significant achievements during the six months was sent to a the sharehoders of the Company encosing the financia resuts for the haf-year ended 30th September, on the website of the Company. A decaration of such affirmation certified by the Managing Director is annexed to this report. OTHER DISCLOSURES A management discussion and anaysis report highighting individua businesses has been incuded in the annua report. A detaied note on the risks associated with the business and the reative mitigation pans are incuded in the Management Discussion and Anaysis, annexed to the Directors' Report. Reated party transactions during the year have been discosed as a part of the accounts as required under AS 18 issued by the Institute of Chartered Accountants of India. There have been no instances of non-compiance by the Company or penaty or strictures imposed on the Company by the stock exchanges or SEBI or any statutory authority on any matter reated to capita markets during the ast three years. GENERAL SHAREHOLDERS IN ORMATION A separate section has been annexed to the annua report furnishing various detais viz., ast three annua genera meetings, AGM time and venue, share price movement, distribution of sharehoding, ocation of factories, means of communication etc. On behaf of the Board The Board of Directors has aid-down a Code of Conduct for a the Board Members and the senior management of the Company. The Code of Conduct has been posted Chennai M A Aagappan 27th Apri 2006 Chairman 28

31 Annexure to the Corporate Governance Report (A) BOARD MEETING DATES AND ATTENDANCE The Board of Directors met six times during the financia year The dates of the Board meetings were 29th Apri, 2005, 16th June, 2005, 29th Juy, 2005, 27th October, 2005, 25th January, 2006 and 23rd March, The attendance of each Director at the meetings, the ast annua genera meeting and number of other directorships / committee memberships hed by them as on 31st March, 2006 are as foows: TABLE 1 S. Name of Director BoardTota Number of Tota Number Attendance at No. of No. meetings Directorships (a) of committee ast AGM shares attended (out of which as memberships (b) hed as (no of Chairman) (out of which as on 31st meetings Chairman) March, hed) Mr. Adhiraj Sarin (c) 4 (5) NA NA Present 6, Mr. M A Aagappan 6 (6) 13 (3) 7 (3) Present 2,55, Mr. Ama Gangui 4 (6) 8 5 (2) Not present Dr. D Jayavarthanaveu 4 (6) 11 (9) 2 Present Mr. M M Murugappan 4 (6) 10 (6) 4 (3) Present 2,95, Mr. Pradeep Maick 3 (6) 6 8 (3) Not present - 7. Mr. Ram V Tyagarajan 3 (6) 6 (2) 3 (1) Not present - 8. Mr. S Sandiya 5 (6) 5 (3) 2 Present - 9. Mr. R Srinivasan 6 (6) 10 5 (2) Present Mr. Sumit Banerjee (d) NA NA NA NA Mr. Tapan Mitra 6 (6) 3 3 (3) Present - (a) Excudes foreign companies, private imited companies, aternate directorship and companies registered under Section 25 of the Companies Act, (b) Incudes ony membership in Audit and Investors' Grievance Committee. (c) Mr. Adhiraj Sarin, Managing Director resigned w.e.f. 1st ebruary, (d) Mr. Sumit Banerjee was appointed as Managing Director w.e.f. 17th Apri, (B) COMPOSITION O AUDIT COMMITTEE AND ATTENDANCE The Committee met six times during the year ended 31st March, The composition of the audit committee and the attendance of each member at these meetings are as foows: TABLE 2 Name of the Member Mr. M A Aagappan (a) Number of meetings attended (number of meetings hed) Mr. M M Murugappan (b) 4 (6) Mr. Pradeep Maick 4 (6) Mr. R Srinivasan 6 (6) Mr. Tapan Mitra 6 (6) (a) Mr. M A Aagappan was appointed as member w.e.f. 23rd March, (b) Mr. M M Murugappan ceased to be a member w.e.f. 23rd March, NA 29

32 Annua Report (C) COMPOSITION O R & N COMMITTEE AND ATTENDANCE The Committee met five times during the year ended 31st March, The composition of the remuneration and nomination committee and the attendance of each member at these meetings are as foows: TABLE 3 Name of the Member Number of meetings attended (Number of meetings hed) Mr. M A Aagappan 5 (5) Mr. Ama Gangui 4 (5) Mr. Tapan Mitra 5 (5) (D) REMUNERATION O EXECUTIVE DIRECTORS The detais of remuneration paid / provided to the Managing Director is as foows: TABLE 4 Amount in Rs. Name of the Director Saary Commission (a) Aowance Perquisites & Contributions Tota Mr. Adhiraj Sarin 22,99,695 20,00,000 (b) 39,19,495 11,74,037 93,93,227 (a) (b) Commission wi be paid after the adoption of accounts by the sharehoders at the annua genera meeting. Provisiona and subject to determination by remuneration and nomination committee. The actua commission wi be determined by the board / remuneration and nomination committee. (E) REMUNERATION O NON-EXECUTIVE DIRECTORS The detais of commission / sitting fees provided / paid to non-executive directors for the year ended 31st March, 2006 are as foows: TABLE 5 Amount in Rs. Name of the Director Commission (a) Sitting fees Tota Mr. M A Aagappan 2,00,000 2,00,000 4,00,000 Mr. Ama Gangui 2,00,000 1,00,000 3,00,000 Dr. D Jayavarthanaveu 2,00,000 60,000 2,60,000 Mr. M M Murugappan 2,00,000 1,40,000 3,40,000 Mr. Pradeep Maick 2,00,000 85,000 2,85,000 Mr. Ram V Tyagarajan 2,00,000 45,000 2,45,000 Mr. S Sandiya 2,00,000 75,000 2,75,000 Mr. R Srinivasan 2,00,000 1,50,000 3,50,000 Mr. Tapan Mitra 2,00,000 2,00,000 4,00,000 (a) Provisiona and subject to determination by the Board. Commission wi be paid after the adoption of accounts by the sharehoders at the annua genera meeting. 30