Ann: Message from Chairman, page-24

"Historically Powereagle margins were around 8% - international margins varied between 20-25%".

Hi Sentabool,

Ive been trying to get an early understanding of where we are heading.

I hope you are right about the 20% to 25%. If thats the case we are flying down the road to profit.

My research indicates that Hero in India wins GP margins between 10 and 15% and Honda consistently wins 20%.

VMT best recent was 2015 when it hit 16.7 %. For the last 18 months it has been 13%

Marketing, admin and Corporate expenses have been consistently in the range of 5 to 6%

The operating expenses which have some pretty big fixed cost components were 3.3% in 2015. Since then sales have fallen off and substantial costs of building the international distribution network have been incurred, which i guess is what caused operating expenses to rise to 14.9% in the first half.

If you are right about GP and if operating expenses normalise at around 5%, once we reach critical volumes, we should see EBITDA in the 10 to 15% of sales range.

The forecast of break even EBITDA for 2018 could well prove to be a new era of under promising and over performing.