1. FINANCIAL RESULTS

                                                            Rs. in Lacs
Particulars                                        2001-02      2000-01

Sale of Products and other Income                   29,572      117,745

EBIDT (Earnings before Interest Depreciation &
Tax)                                              (10,125)       13,353

Interest                                            13,221       13,004

Provision for Depreciation                           9,173       19,998

Previous year adjustment                                 -          (7)

(loss) after tax for the year                     (32,519)     (19,642)

Balance brought forward from the
previous years                                    (39,053)     (19,411)

Balance carried forward                           (71,572)     (39,053)

The year under review was very difficult year for the Company. During the year Company produced 7668 cars and sold 8231 cars with the total turnover of Rs. 29,572 Lacs. Loss for the year was Rs. 32,519 Lacs The Company is presently observing non-production schedule.

General Motors Company, USA, while finalising the takeover Agreement with Daewoo, Korea, has not included the Company in its buying list, though it has agreed to reserve the right of first refusal. To ensure the continuous flow of the Spare Parts and Services, your company has entered into an agreement, with newly formed GM Daewoo Auto & Technology Co. Korea on 02/10/02, which is yet to be approved by the Board.

After the recall of the loan in April 2002, Financial Institutions have filed recovery suits against the Company. DRT, Mumbai, has appointed the Receiver on the assets of the Company. Further, pursuant to the order dated 8/8/2002 of Honble DRAT, Mumbai, in the case of ICICI Ltd. v/s DMIL & others, DRT Receiver has initiated the process of sale of assets of the Company and a public notice initiating the bids has been published in newspapers 22/11/02.

Director General of Foreign Trade (DGFT) has also revoked on 22/05/02 the extension of period granted to the Company for fulfillment of the Export obligation Special leave petition of the Company is pending before the Honble Supreme Court of India and Honble Supreme Court has granted an ad-interim order in favour of the Company directing not to encash Bank Guarantees in respect of the license of more than Rs. 100 crores.

In view of minimum operational level, critical situation of the Company and also in view of sale of the companys assets under the direction of DRT-Mumbai, there appear to be no alternative for the company but to resort to the closure of the plant and reduction of manpower.

3. DIRECTORS

Mr. M. Sudhendranath, Mr. Anand Gore and Mr. Rajeev Arora have been nominated by ICICI Bank Ltd. w. e. f. 25.04.02, Mr. O. P. Singal, Mr. S. K. Gautam, Mr. K. L. Garg, Mr. K. P. S. Dagur have been nominated by IDBI w. e. f. 06.05.02 and Mrs. H. S. Advani and Mr. N. E. Ookabhoy have been nominated by Exim Bank Ltd. w. e. f. 07.05.02 as Directors on the Board of the Company.

Mr. Y. T. Cho resigned as Managing Director & CEO w. e. f. 30.06.2002 and from the directorship w. e. f 18.09.02, Wg. Cdr (Retd) H. D. Talwani, Director resigned from 01.01.02 and Mr. Vivek Khanna, Director, resigned w. e. f. 28.09.02 from directorship of the Company. The Board has placed on record its deep appreciation for the valuable contribution made by them. Mr. D. W. Kim has been appointed as Managing Director & CEO w. e. f 1.10.2002 and Mr. Y. J. Kim, Mr. M. H. Jung and Mr. K. Y. Song were appointed as additional directors w. e. f 25.04.02 and being eligible, offer themselves, for reappointment.

4. LISTING REQUIREMENT

The Companys shares are listed at New Delhi, Mumbai, Chennai and Calcutta Stock Exchanges. The Company has paid the listing fees to the Sock Exchanges. As per Clause 32 of the Listing Agreement, Cash Flow Statement is appended with the annual accounts of the Company.

5. FIXED DEPOSITS

The Company has neither invited nor accepted any fixed deposit during the year within the meaning of Section 58A of the Companies Act, 1956 and the rules made thereunder. There were no deposits for which payments were claimed but not paid. In compliance of Section 205C of the Companies Act, 1956, the Company has deposited Rs. 7.28 lacs unclaimed maturity amount lying with the Company for more than 7 years, with the Investor Education and Protection Fund.

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

A statement giving details of conservation of energy, technology absorption and foreign exchange earnings and outgo is given at Annexure `A to the Report.

7. INDUSTRIAL RELATIONS

During the year, industrial relations of the Company continued to be cordial. With a view to reduce the cost, the Company has also entered into an agreement with Workers Union for the purpose of informal lay off during non-production days. The Agreement would be valid uptill January 2003. As per said Agreement, workers will sacrifice 39% of their remuneration for the non working days and will be paid the full remuneration for the working days

The particulars of employees as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, are forming part of the Directors Report for the year ended 31st March, 2002, and annexed as Annexure `B of the report.

8. DIRECTORS RESPONSIBILITY

Pursuant to Section 217 (2AA) of the Companies (Amendment) Act, 2000, the Directors confirm that:

1) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures.

2) Accounting policies have consistently been applied and disclosed alongwith the material departures and adjustments and estimation have been made with rational and prudence, 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 loss of the Company for the year under review which is subject to contingency as explained in the addendum to the Directors Report attached as annexure - C with this report.

3) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. However, worn out & depleted LCV - Machinery & Equipment which was lying for many years, was partialy disposed off by the Company under the Management Sanction. As the same was not taken up with Fl(s) and the Board of Directors, it is placed before this AGM for Shareholders approvals.

4) The Directors have arranged preparation of the accounts for the financial year 31st March, 2002, on the going concern basis.

9. AUDITORS & THEIR REPORT

Your Board of Directors recommend the re-appointment of M/s V. Malik & Associates, Chartered Accountants, who have expressed their willingness and eligibility, as Statutory Auditors at the ensuing Annual General Meeting.

M/s. K. L. Jaisingh & Co., Cost Accountants, have been appointed as Cost Auditors of the Company for the year 2002-03.

The Auditors observations are suitably replied and explained in the addendum to the Directors Report, annexed as Annexure `C.

10. CORPORATE GOVERNANCE

Report on status of the compliance with the Corporate Governance under the Listing Agreement with the Stock Exchanges is enclosed as Annexure `D

11. ACKNOWLEDGEMENT

During this crucial time, your Directors wish to place on record their sincere appreciation for the support and co-operation received from the Central Government, State Government of U. P., District Administration, Customers, Shareholders, Bankers, Financial Institutions and Vendors of the Company.

The Directors also thank the employees at all levels for their co-operation, dedication and sincere efforts.

ANNEXURE TO THE DIRECTORS REPORT

Information in accordance with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, and forming part of the Directors Report for the year ended March 31st, 2002.

A. ENERGY CONSERVATION

Energy Saving Activities were taken up on continuous basis all through the year. Following activities were completed during this period.

a) Power supply source changed from Power Plant Diesel Generator to Car Plant Diesel Generator set resulting in an expected cost saving of approx. Rs. 30 to Rs. 35 lacs p. m.

b) Twin lights of all offices and other areas reduced to single light.

c) One out of four street lights have been activated, only emergency lights made operational during non production hours.

d) Operation of airconditioner have been monitored and controlled to reduce energy cost.

e) Close Energy Audit has been conducted to curb any excess energy unit and cost.

B. TECHNOLOGY ABSORPTION RESEARCH & DEVELOPMENT

1. SPECIFIC AREAS IN WHICH R&D ACTIVITY WAS CARRIED OUT

* Development of Matiz-LPG variant with the Italian kit to provide alternate fuel option to customer. Testing of car on Indian roads and at ARAI, Pune have been completed. Final CMVR certificate is awaited.

* Development of Matiz CNG has been undertaken during the period.

* Continuous value engineering and increased localization to improve cost effectiveness.

a) Awards and recognitions

* DMIL R&D is re-recognized by Department of Science & Technology under Ministry of Industry for its in-house R&D activities.

* Rectification of the quality systems laid by DMIL for continuously meeting customer and product requirements by external agency TUV Suddeutschland is under process.

b) Activities to ensure meeting vehicle regulations released by Ministry of Surface Transport, for example

* Development of rear seat belt is under testing with ARAI Pune.

* Development of new warning triangle and spare headlamp bulbs.

* Development of auto dipper, however this regulation was dropped by Ministry of Surface Transport.

c) Development of gasoline tank of five liters capacity for Cielo - CNG.

2. TECHNOLOGY TRANSFER, ABSORPTION, ADAPTION AND INNOVATION

a) Development of Matiz-l I with more appealing changes in the Body enhanced braking and improvement in the emission performance.

b) Regular updation of Matiz design with the support of Daewoo Motor Company, Korea.

3. BENEFITS DERIVED AS A RESULT OF ABOVE R&D ACTIVITIES

Above R&D activities have helped us in fulfilling environmental, technological advancement and product economies responsibilities by:

a) Increased product competitiveness in the market.

b) Introduction in near future of Matiz with alternate fuels.

c) Timely meeting of the government regulation applicable from time to time.

4. FUTURE PLAN OF ACTION

Close coordination with supplier for development and implementation of high security futuristic registration plate.

EXPENDITURE INCURRED ON R & D

- Capital: Nil

- Revenue: Rs. 27,032,398

- R&D expenditure as percentage to turnover: 0.916%

TECHNOLOGY TRANSFER, ABSORPTION, ADAPTATION & INNOVATION

* Technical data, drawings and documentation received from Daewoo Motors Co. Ltd., have been provided to vendors and production for transfer and adaptation, on going basis.

* Modification of the technology to suit the domestic and exports market is a continuous process.

BENEFITS

* Indigenisation of various components to reduce of all segments.

* Modification in the Companys product to suit the need of the domestic and export market, with minimum cost escalation.

* Faciliating development of components/system for meeting regulatory requirements.

FOREIGN EXCHANGE EARNINGS AND OUT GO:

1. Activities relating to exports, initiatives to increase exports, development of new export markets for products, services and export plans:

Special emphasis has been given to export. Continuous efforts for exploration and development of new markets are on.

2. Total foreign exchange used and earned:

                                                            Rs. in Lacs

a. Earnings in foreign Currencies                                540.32

i) import of goods                                              3429.32

ii) Interest, Travelling & Ors.                                  202.68

                                         For and on behalf of the Board

New Delhi                                      M. H. JUNG     D. W. KIM
25.11.02                                         Director      MD & CEO