RSE - Reporte de Sustentabilidad de Indústrias Romi Brasil 2009

8/7/2019 RSE - Reporte de Sustentabilidad de Indstrias Romi Brasil 2009

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2009 ANNUAL REPORT

INDSTRIAS ROMI S.A.

STRENGTH AND INNOVATION

TO OVERCOME THE CHALLENGES

OF AN ADVERSE SITUATION


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INDSTRIAS ROMI S.A. 2009 ANNUAL REPORT 3

2009 ANNUAL REPORT

4 Message from Management

6 Industry Profile

9 Organization Profile

12 Our markets

13 Machine Tools

14 Plastic Processing Machines

15 Rough and Machined

Cast Iron Parts

16 Operating performance

16 Net Operating Revenue

18 Margins

18 Net Result

19 Performance of Business Units

22 Distribution of Results

23 Investments

24 Corporate Governance

28 Capital Market

29 Fiscal Council

29 Internal Controls

29 Code of Conduct

30 Relationship with Stakeholders

30 Relationship with Employees

30 Relationship with Suppliers

31 Relationship with Investors31 Relationship with Customers

32 Relationship with the Community

34 Awards and Acknowledgments

37 Time line

45 Sustainability Indicators

80 Financial Statements

INDEX


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4

MESSAGE FROM MANAGEMENT

The changes in the economic scenario in the last months of 2008 demanded a great effort

from the Company in rationalization of processes and continuous search for improvement.

The current scenario is different from that, but our search for excellence is even still more

important due to the changes that the year 2009 imposed to the market, in terms of

competitiveness and quality.

This year of 2009 the Company reinforces its values of solidity (strength) and innovation,

even in an adverse scenario the Company made the following accomplishments:

(I) beginning of operation of the new foundry, in Santa Brbara dOeste, State of So Paulo,

Brazil, with capacity of 10 thousand metric tons; (II) beginning of operation of the new heavy

machine tools plant unit, diversifying the line of products of machine tools; (III) acquisition

of technology for manufacturing of PET blow molding machines (poli etilen tereftalat),

expanding the line of blow molding machines of plastic processing unit; (IV) acceptance

into the select group of companies with high commitment to sustainability and corporate

governance practices, comprising the portfolio of the So Paulo Stock, Commodities and

Futures Exchange (BM&FBOVESPA)s Corporate Sustainability Index (ISE).

SergioRoberto Novo

Chief FinancialOfficer

Hermes AlbertoLago Filho

Machine Sales& MarketingDirector

Williamdos Reis

Vice-President& IndustrialDirector

Jos CarlosRomi

R&DDirector

Luiz CassianoRando Rosolen

Controllerand InvestorRelations

Livaldo Aguiardos Santos

Chief ExecutiveOfficer


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We believe that the scenario for 2010 is of resumption of economy

growth. Romi is prepared and already have developed new markets,

products and services, to maximize the results with the resumption

of such growth. As a consequence, we continue to be focused on the

search and use of better forms of work, more efficient processes and

reduction of costs and expenses, through continuous improvementof production and administrative processes, always keeping our

competitiveness. The year 2010 will also be a year of celebration,

since Romi will reach 80 years since its foundation, an expressive

figure that represents the Companys strength.

Our business, which stand out for its pioneering and innovation, has

been part of Brazils growth during these 80 years and, currently,

begin to mark global presence, through operations a manufacture unit

in Italy and also sales and technical assistance in several countries

in Europe and in the United States.

Our developmentis based on therespect to ourstakeholdersand the accurateunderstanding ofwhat the marketseeks in termsof excellence

of products andservices.

Livaldo Aguiar dos Santos

Chief Executive Officer


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The capital goods industry, in view of its cyclical characteristic and because it is correlated

with the investment level of other industries, is one of the first that suffers the impacts

of the demand drop and the returns to the normal levels is usually slowly. However,

the Company has noted a gradual recovery of its businesses since the second half of

2009, mainly due to the following reasons: (I) reduction of interest rate for fixed capital

investment by the BNDES (National Bank for Economic and Social Development) in July

2009, which has been extended to December 2010, (II) improvement of the industryconfidence level; and (III) inventory resupply in the economy.

The world economy downturn affected more the industrials than the service and trade

companies. Economy data for the fourth quarter of 2009 released by the IBGE (Brazilian

Institute of Geography and Statistics) indicated a positive variation of the Industrial GDP

(Gross Domestic Product), of 4.09%, and of the Gross Fixed Capital Formation (GFCF),

of 3.6%, after four consecutive quarters of strong negative variations, corroborating the

prospects of resumption of growth.

INDUSTRY PROFILE

GDP - INDUSTRIAL GDP - FIXED CAPITAL FORMATION


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We analyzed the GFCF indicator together with the Installed Capacity Utilization

Rate (ICUR) prepared by Fiesp (So Paulo State Industry Federation), according

to the chart below. The main industries that demand our products suffered important

reduction in the utilization of their installed capacity during the last quarter of 2008

up to the second quarter of 2009.

From that moment on, we can already notice a recovery in these indicators and,in certain cases, at historical utilization rates. The Industrial GDP and the Gross

Fixed Capital Formation are important drivers of the Companys growth.

NUCI - INSTALLED CAPACITY USAGE LEVEL (FIESP)


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8

Romi Industrial ComplexSanta Brbara dOeste, SPBrazil

Romi Machine Tools Ltd.Erlanger, KY, USA

Romi Italia srlGrugliascoItaly

Romi Europa GmbHGross Gerau,Germany


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We are the largest Brazilian manufacturer of machine tools and plastic

processing machines and market leaders, in terms of net operating

revenue, and we believe we are an important producer of rough andmachined cast iron parts in the country. We manufacture high quality

and last generation technology products, and we are continuously

investing in research and development of new products and production

processes. Operating since 1930, we have already manufactured and

sold more than 149,000 machines along our history, having exported

more than 28,500 machines. Our customers are from the most varied

industries, including, among others, manufactures and suppliers of

the heavy and light automotive chain, consumer goods in general,

agricultural machines and implements, and industrial machines and

equipment for energy, medicine and aerospace.

We currently have 11 manufacturing plants, in more than 150 thousand

m2 of built-up floor space, 9 of which in the city of Santa Brbara

dOeste, State of So Paulo, Brazil, and 2 in the region of Turin, Italy.

COMPANY PROFILE

(continues)


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10

(continuation) COMPANY PROFILE

As the machines we manufacture integrate the production line of our customers, we

believe that they play an essential role in the results of our customers and their growth

and success, as well as in the economic development of the country as a whole. We haveconsistently posted a growth above the Brazilian GDP: in 2007 and 2008 our consolidated

net operating revenue had an increase of 15.1% and 10.15%, respectively, in nominal

terms, whereas the Brazilian GDP grew, on average, 5.4% in the same period. In 2009,

in view of the world economic downturn that affected most industries of the global

economy, our business was also affected and there was no growth of revenue, as well as

there was no growth of the Brazilian GDP.

We have considerably invested in research and development of new products in the last

years, an average of 4.1% to 4.8% of the consolidated net operating revenue. Currently

we have a research and development team of around 223 highly qualified professionals,among engineers, designers and technicians.

New products andtechnology research

Design and manufacture ofhigher productivity machines


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In 2007, 2008 and 2009, our research and development expenses totaled R$ 77.8 million,

with the purpose of developing new products and continuously improving and updating

the existing products, both in regard to technological advances and productivity gains,such as optimization of using of new materials and industrial processes. In 2007, 2008 and

2009, our net operating revenue from new products was approximately R$234 million,

R$270 million and R$299 million, accounting for, on average, 37.1%, 38.8% and 62.7%

of the net operating revenue, respectively, for the mentioned three year periods. We

considered as new products all those launched in the last 3 years prior to the year-end.

We have a increased our presence in the international market. Our exports totaled R$ 82

million, or 13% of our net operating revenue for the year ended December 31, 2007, R$

108 million, or 16% of our net operating revenue for the year ended December 31, 2008

and R$ 62.7 million, or 13% of our net operating revenue for the year ended December31, 2009.

Romi is the largest Brazilian manufacturer of machine tools and plastic processing machines,and also a major producer of rough and machined castings


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12

OUR MARKETS

MACHINE-TOOLS

R$ 310,7 MM*

65%

25%

10%ROUGH AND MACHINED CASTINGS

R$ 44,9 MM*PLASTICPROCESSINGMACHINES

R$ 119,8 MM*

*12M09 NET REVENUE


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MACHINE TOOLS

We are in the machine tools market, more specifically in the market of machine tools with

chip-cutting capability. This category includes engine lathes, horizontal CNC lathes, turning

centers and medium-sized machining centers.

We also manufacture vertical lathes and extra-heavy duty lathes to order. The machine

tools we produce are used mainly by the industrial sector in the manufacture of metal

parts, such as shafts, gearboxes, wheels, transmission pulleys and parts of machines.

Our major customers are companies that provide machining services, manufacturers

of auto parts, capital goods and consumer goods. We held a share in the Brazilian marketof approximately 33% in 2009, in the segment of machine tools in which we operate.

(continues)

METAL CHIPING

TURNING MILLING

ENGINELATHES

CNC LATHES

HEAVYWEIGHTMACHININGCENTERS

LIGHTWEIGHTTURNINGCENTERS

EXAMPLES OF PARTSPRODUCED IN OUR MACHINES

OUR CLIENTS BUSINESS SECTORS

MACHINING AND TOOLING SHOPS, PARTS MAKER FOR THE AUTOMOTIVE, AVIATION,OIL/ENERGY/SUGAR AND ALCOHOL INDUSTRIES, CAPITAL GOODS AND OTHER


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(continuation) OUR OPERATING MARKETS

PLASTIC PROCESSING MACHINES

We manufacture plastic injection molding machines and blow molding machines,

which are used in the manufacture of the most varied products, such as automotive lights,

motorcycle fenders, plastic chairs and buckets and mobile handset bodies, and among ourmajor customers are manufacturers of autoparts, consumer goods and packaging.

We believe that our share in the Brazilian market of plastic injection molding machines

where we operate is of approximately 30%.

PLASTIC PROCESSING MACHINES

INJECTION MOLDING BLOW MOLDING

INJECTION MOLDING MACHINES

EXAMPLES OF PARTSPRODUCED IN OUR MACHINES


SERVICE PROVIDERS, PACKAGING MANUFACTURERS FOR THE FOOD, CLEANING AND CHEMICAL SECTORS, AMONG HOUSEWARES, FURNITURE,HI-TECH PARTS FOR THE AUTOMOTIVE AND CAPITAL GOODS, CONSTRUCTION SECTORS AND OTHERS

PLASTIC BLOWMOLDING MACHINES

PET BLOW MOLDINGMACHINES


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We are an important Brazilian manufacturer of rough and machined cast iron parts,

holding a share of approximately 4% of the domestic market in the segments where we

operate. Our rough and machined cast iron parts are designed mainly for the heavy andlight automotive chain, wind power energy and capital goods industries.

ROUGH AND MACHINED CAST IRON PARTS

FOUNDRY

ROUGH CASTINGS MACHINED CASTINGS

PARTS PRODUCED OF GRAY, NODULARAND VERMICULAR IRON CAST

EXAMPLES OF PARTSPRODUCED


PARTS FOR AUTOMOTIVE INDUSTRIES (CARS AND COMMERCIAL), ENERGY, AGRICULTURE AND CAPITAL GOODS, AMONG OTHERS

CNC MACHINING CASTS


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OPERATING PERFORMANCE

The consolidated net operating revenue in 2009 posted a 31.7%

decrease when compared with 2008, reaching R$ 475.4 million.

This decrease is a result mainly of the downturn of the industrial

activity in Brazil since the last quarter of 2008.

Sales in the foreign market accounted for 13% (US$ 32.2 million),

compared with the 16% (US$ 57.8 million) in the same period

of 2008. In 2009, Europe accounted for 62.7% (43.3% in 2008),

the U.S. accounted for 27.3% (41.9% in 2008), Latin America reached

8.7% (13.7% in 2008), and other countries 1.3% (1.1% in 2008).

NET OPERATING REVENUE


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NET OPERATING REVENUE - (R$ MILLIONS)

NET OPERATING REVENUE - PARTICIPATION OF EXPORTS - 2009

EXPORT DESTINATION - 2009

EXPORTS (US$ MILLIONS) AND

PERCENTAGE ON NET OPERATING REVENUE

(continues)


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In 2009, the Companys gross margin posted a reduction in relation to 2008, reaching

31% against 40.2% in 2008. The operating margin in 2009 posted a reduction of 16.3

percentage points over the prior year, reaching 1.9% (18.2% in 2008). These reductions

resulted from the economic slump started in the last quarter of 2008, which caused a

lower export volume.

Nevertheless, the Company noted a gradual recovery of its margins during the year, and

has reached in the last quarter of 2009 an operating margin of 10.1%, 3.6 percentage

points higher than in the last quarter of 2008 (6.5%), mainly due to the increase in

revenue volume in the quarter.

In 2009, EBITDA reached R$ 29.1 million, with a margin of 6.1%.

MARGINS

NET RESULT

In spite of the world economic downturn faced by the Company, in 2009, net income

reached R$ 12.8 million. In the last quarter, with the gradual recovery of the economy,

net income was R$ 17.1 million, reversing the accumulated negative result of the first

nine months of 2009.

(continuation) OPERATING PERFORMANCE


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EBITDA (R$ MILLION) AND EBITDA MARGIN (%)

NET INCOME (R$ MILLION) AND NET MARGIN (%)


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The Companys operations, products and services are organized into three Business

Units. The Machine Tools Unit, which includes the lines of Engine Lathes, CNC

(computerized numerical control) Lathes, Turning Centers, Machining Centers and Vertical

and Horizontal Heavy and Extra-Heavy Duty Lathes, is the Companys largest business

unit, accounting for 65.3% of the Net Operating Revenue in 2009.

The Plastic Processing Machines Unit, accounting for 25.2% of the Net Operating

Revenue, manufactures plastic injection molding machines with clamping forces from

40 up to 4,000 metric tons, in Brazil, and up to 5,500 metric tons in Italy, and blow

molding machines for parts of up to 100 liters.

The Rough and Machined Cast Iron Parts Unit has capacity to produce approximately

50,000 metric tons per year of gray, nodular or vermicular cast iron, with individual weight

of up to 25,000 kg, having contributed with 9.4% of the Net Operating Revenue in 2009.

PERFORMANCE OF BUSINESS UNITS


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PLASTIC PROCESSING MACHINES - SECTORS

PACKAGING 26% 21%

SERVICE 13% 15%

AUTOMOTIVE 17% 22%

CONSTRUCTION 6% 8%

HOUSEWARES 11% 9%

OTHER 27% 25%

SECTOR

2009 2008

NOI - %

ROUGH AND MACHINED CASTINGS - SECTORS

AUTOMOTIVE (COMMERCIAL) 58% 38%

ENERGY 23% 15%

AGRICULTURAL 14% 14%

AUTOMOTIVE (CARS) 1% 24%

CAPITAL GOODS 4% 9%

SECTOR

2009 2008

NOI - %

HIGH

FLAT BED CNC LATHES

HEAVYWEIGHT CNC LATHES

MACHINING CENTERS

CNC COMBINATION LATHES

SLANT BED CNC LATHES

ENGINE LATHES

2009 NOI - MACHINE TOOLS 16% 12% 13% 4% 9% 5% 10% 31%

2008 NOI - MACHINE TOOLS 21% 17% 14% 7% 7% 6% 4% 24%

SERVICES

AUTOMOTIVE

CAPITAL

GOODS

HYDRAULIC

EQUIPMENT

TOOLING

AGRICULTURAL

EQUIPMENT

ENERGY

OTHER

MODERATE LOW

MACHINE TOOLS


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DISTRIBUTION OF RESULTS

IN 2009, THE COMPANY DISTRIBUTED

R$ 9.7 MILLION, REPRESENTING

A GROSS VALUE OF R$ 0.13 PER SHARE


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Investments in property, plant and equipment in 2009 totaled R$ 51.8 million, a 58.0%

drop in relation to 2008 (R$ 123.3 million). These funds were used to conclude the

investment projects of Paradiso (specifically, to conclude the expansion of the heavy

machine unit) and Vulcano (implementation and start-up of the new foundry).

Investments in technology, research and development in 2009 amounted to

R$ 22.7 million (4.8% of the consolidated net operating revenue), evidencing that,

even with the world economic downturn, the Company remained committed with

innovation and new products development.

Net operating revenue from new products in 2009 was R$ 299 million, accounting

for an average of 62.7% of the consolidated net operating revenue.

INVESTMENTS


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CORPORATE GOVERNANCE

Good Corporate Governance practices are essential to keep the

interests of minority, controlling shareholders, and management aligned

and, thus, balancing the Companys control and management. In line

with this objective, the Company adhered to the Corporate Governance

of BM&FBovespa New Market in 2007 and amendment its by-laws, to

ensure to minority shareholders higher protection than that usual in the

Brazilian market or required by Brazilian corporate laws.

By adhering to the differentiated level of Corporate Governance

of the BM&FBovespa New Market, the Company joined a select group

of companies that committed to offering a free float above 50% of the

capital stock, a single class of shares, adhering to the BM&FBovespa

Arbitration Chamber regulation, and granting tag along of 100%, taking

part in the BM&FBovespas Diffentiated Tag Along Shares Index (ITAG).

The Companys financial statements are prepared and presented in

(1)Romi and Chiti Families

OWNERSHIP STRUCTURE

FNIX (1 ) ROMI/CHITIFAMILIES

FUNDAOROMI

FREE FLOAT

36,3% 9,2% 1,9% 52,6%


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accordance with Brazilian (BRGAAP) and international (IFRS International Financial

Reporting Standards) accounting principles, and Romi was one of the first publicly-traded

companies in Brazil to publish full Financial Statements in IFRS. The Company was also

part of the select group of publicly-traded companies in Brazil that early adopted (in 2009)

the accounting pronouncements issued by the Accounting Pronouncements Committee

(CPC) in the preparation of the financial statements.

The Companys financial statements are audited by Deloitte Touche Tohmatsu, having been

audited with an unqualified opinion, and having received a favorable opinion of the Fiscal

Council. The auditors did not provide any non-audit service exceeding 5% of the amount

paid for the audit services.

(continues)


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(continuation) CORPORATE GOVERNANCE

AMRICO EMLIO ROMI NETO

CHAIRMAN

CARLOS GUIMARES CHITI

VICE-CHAIRMAN

PAULO ROMI

MEMBER

MNICA ROMI ZANATTA

MEMBER

BOARD OF DIRECTORS (1)

PAOLO GUGLIELMO BELLOTTI

MEMBER

(INDEPENDENT MEMBER)

PEDRO MADER MELONI

MEMBER


ALEXANDER BIALER

MEMBER



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Note 1: Elected by the AGM (Annual General Meeting) of 03/24/2009, with term of office up to the 2010 AGM

Note 2: Elected by the AGM (Annual General Meeting) of 03/24/2009, with term of office up to the 2010 AGM

Note 2: Curriculum Vitae found on the Companys website www.romi.com

DIRECTORS (2)

LIVALDO AGUIAR DOS SANTOS

CHIEF EXECUTIVE OFFICER

WILLIAM DOS REIS

VICE-PRESIDENT &INDUSTRIAL DIRECTOR

JOS CARLOS ROMI

R&D DIRECTOR

SERGIO ROBERTO NOVO

CHIEF FINANCIALOFFICER

HERMES ALBERTO LAGO FILHO

MACHINE SALES &MARKETING DIRECTOR

LUIZ CASSIANO RANDO ROSOLEN

CONTROLLER ANDINVESTOR RELATIONS

ADVISORY BOARD (1)

CARLOS CHITI

CHAIRMAN

ROMEU ROMI

VICE-CHAIRMAN

ANTONIO CNDIDO DE AZEVEDO SODR FILHO

MEMBER

EINAR ALBERTO KOK

MEMBER


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CAPITAL MARKET

At the end of 2009, the Companys common shares (BM&FBovespa:

ROMI3) were quoted at R$ 11.73 and had a positive variation of 54.3%

in relation to the end of 2008. The Bovespa Index, in the same period,had a positive variation of 82.7%. The Companys market capitalization

at December 31, 2009 was R$ 877 million and the average daily trading

volume in 2009 was R$ 1.1 million.

The Company closed the year 2009 taking part in the following

BM&FBovespa Indexes: Itag (Differentiated Tag Along Index), INDX

(Industrial Sector Index), IGC (Differentiated Corporate Governance

Share Index) and ISE (Corporate Sustainability Index).


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FISCAL COUNCIL

Irrespective of Management and External Audit, the Fiscal Council is composed by

three members, responsible for reviewing the managerial activities and the financial

statements, reporting their findings to shareholders. With a term of office of one year,

elected at an AGM (Annual General Meeting) held on 03 / 2009, the members of the

Fiscal Council cannot take part in the Board of Directors, Board of Executive Officers

or staff of the Company or of any other group company, nor can be spouses or relatives of

the Companys management.

The Company has an internal audit, reporting to the Chief Executive Officer and focusedon the Companys internal controls (financial and operations). The internal audit

is responsible for assessing the compliance with work standards and established policies,

and for monitoring the efficiency and operation of the adopted systems.

INTERNAL CONTROLS

The Companys businesses are driven by a set of values that adhere to the highest

ethical and moral standards, formalized in a Code of Ethics and Business Conduct. All

management, employees and trainees of Romi are responsible for disseminating these

values, in the conduct of the Companys businesses.

CODE OF CONDUCT


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RELATIONSHIP WITH STAKEHOLDERS

RELATIONSHIP WITH EMPLOYEES

The Company values the quality of life of its employees and the maintenance

of an increasingly motivating work environment. To ensure the fulfillment of this objective,

it monitors and deals with all aspects related to the assessment and maintenance

of a good work climate and satisfaction, through ongoing organizational climate survey.

With the purpose of aligning the interests of employees and the market, the Company

adopts a variable compensation policy that includes profit sharing, built to stimulate high

performance goals and to foster a culture of excellence in the business.

In 2009, the amount spent by the Company on salaries and benefits was R$ 191 million

against R$ 219 million in 2008.

RELATIONSHIP WITH SUPPLIERS

The Company seeks to develop solid medium and long-term relationship with suppliers.

The Company adopts a policy of supporting the development of suppliers, through

qualification in the requirements for each product and service in its supply chain.

In order to enable a continuous performance improvement and competitiveness increase,

the Company maintains a program for ongoing assessment of suppliers, analyzingcompanies in terms of quality, health, safety and environment. To assess

all these aspects, ISO 9001 and ISO 14000 certifications, as well as supply histories,

are considered.

The Company has 1,692 suppliers, and total purchases of products and services in 2009

amounted to approximately R$ 257 million.


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RELATIONSHIP WITH INVESTORS

In 2009, the Company held public meetings organized Brazils major cities, as well

as quarterly conference calls to discuss its results, in order to promote a more

comprehensive dissemination of information to the market, standing out for their

quality and transparency. The conference calls and public meetings are disclosed in

the Companys Corporate Events Calendar, which can be accessed on the website.

(www.romi.com)..

The Company also participated in international conferences organized by financial

institutions, besides visits to investors in the United States and Europe.

RELATIONSHIP WITH CUSTOMERSThe Company seeks to strengthen the relationship with customers by identifying their

needs through its commercial organization, by means of ongoing surveys that point to

their perception of quality of the product and service offered.

(continues)


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Determined to be a social transformation agent, the Company develops initiatives

that foster the development of the community in which it is inserted.

The Company sponsors the Romi Foundation, a social organization that has the mission

of fostering social development through education and culture.

Since 2003, besides earmarking 1% of the Income Tax due for the Children and

Adolescents Fund (FDCA), the Company adopted an incentive program with its

employees so that they could also earmark the portion to which individuals are entitled.

The program has presented a praise-worthy result, and in 2009 the Companys employees

earmarked R$ 118 thousand for FDCA.

The Company, with its constant concern about the alignment of all employees to

the Companys objectives and strategy, within an ethical environment, of continuing

professional development aimed at and ensuring well-being and quality of life of

employees, provides a series of benefits.

RELATIONSHIP WITH THE COMMUNITY

(continuation) RELATIONSHIP WITH STAKEHOLDERS


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ROMI - SOCIAL PERFORMANCE DATA - R$ THOUSAND 2009 2008 CHANGE %

NUMBER OF EMPLOYEES 2,296 2,896 -20.7%

PAYROLL AND RELATED CHARGES 152,163 191,644 -20.6%

TAXES AND CONTRIBUTIONS PAID 93,571 154,621 -39.5%

INVESTMENTS IN TRAINING 1,137 2,722 -58.2%

TRANSPORTATION, MEALS AND HEALTH CARE 9,391 11,721 -19.9%

EMPLOYEES ENTERTAINMENT 132 241 -45.2%

EMPLOYEES PENSION PLAN 3,369 4,999 -33.2%

ENVIRONMENT 1,622 1,082 49.9%

PROFIT SHARING 1,105 13,016 -91.5%

SOCIAL INVESTMENTS 501 1,660 -69.8%

EMPLOYEES DONATION - FUND FOR THE CHILDREN RIGHTS 118 157 -24.8%


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AWARDS AND ACKNOWLEDGMENTS

INCLUSION ON THE ISE PORTFOLIO

In 2009, the Company was included in the BM&FBovespas

2009/2010 ISE (Corporate Sustainability Index) portfolio, an indicator

composed of shares of companies with high level of commitment to

sustainability and corporate governance practices.

The ISE portfolio currently comprises 43 companies, and the Company

is the only one of the machinery and services industry.

PPR AWARD

For the sixth consecutive year, Romi was awarded the PPR -

Plsticos em Revista Top Equipamentos prize, in the category Injeo

Nacional, one of the most important in the industry. With this another

achievement, the Company reaches Top Fora de Srie, an award

granted to companies winning it for five prior editions. Romi also won

this year in the Sopro Nacional category.


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CAR OF THE YEAR AWARD

Mr. Carlos Chitti, 95 years old, who together with Mr. Amrico Emlio

Romi, is the founder of Indstrias Romi, was one of the persons who

received homage in the 43th edition of the Carro do Ano (Car of The

Year) award, promoted by the magazine Autoesporte, on November

9, 2009, in So Paulo. Member of the Companys Board of Directors

and one of the pioneers of the Brazilian automobile industry, he was

responsible for presenting the Romi-Isetta, the first car manufactured

in Brazil, to Mr. Emlio, convincing him that Romi would be ready to

start the manufacture of the vehicle.

PARTNERSHIP WITH EESC-USP

On October 30, 2009, Romi announced the partnership with the

So Carlos Engineering School (EESC-USP) to develop a project for

integration of teachers and students of Production Engineering

post-graduate, masters degree and doctors degree courses, from the

University, and the teams of Romis Product Engineering Departments.

The purpose of the integration is to develop several studies with

the Romi D 800 High Performance Vertical Machining Center, which

produces 3D parts for multiple applications, from production and mold

and die machining to other specific applications


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SUSTAINABILITY INDICATORS

FINANCIAL STATEMENTS

The Companys Sustainability Indicators were produced based

on GRI (Global Reporting Initiative) guidelines, level B, and are

attached to this report.

The Companys Financial Statements for the year ended December

31, 2009 in accordance with IFRS (International Financial Reporting

Standard) are attached to this report.


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You will know some of the most important

moments in the history of Romi.

The commitment to permanently invest

in research and development has lead the

company to bring to the market an updated

product and service portfolio along almost

80 years.

This has led Romi to become the largest

manufacturer of machine tools and plastic

processing machines Brazil and to reach

an important position in the production of

castings, which are supplied to the market

rough or machined.

ROMI. INNOVATION AND

PIONEERING SINCE 1930

TIMELINE


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38

1940

The Romi embryo, the GarageSanta Brbara was founded

on June 29

1930

Initiation of fabrication

of 22 models ofagricultural equipment

Inauguration ofthe first foundry

Presses,hammers, and

drills constructedfor own use

Pioneering spirit inthe use of electric

welding to manufactureagricultural equipment

New corporatename: MquinasAgrcolas Romi Ltda.

Romi builds a planer tomanufacture lathe bars

First Romi ImorModel TP-5 lathemanufactured

The Imor brandbegins to be usedon the machines

Three hundred TP-5s

Thousandth TP-5lathe produced

The first Imorlathe is exported

to Argentina

Sixty machine toolswere purchasedin an auction inthe United States,which were moreproductive andprecise, for thenew lathe models

1934

1935 1938

1941

1942

1943

19471944

1946

Launching of the NTPNand NTCN Imor lathe

models, many of whichstill operate today

Move to new facilities, at the currentAv. Prola Byington, 56 address, with

eight 12,000 m3 pavilions

RCN model launched, first Imorlathe with a Norton transmission

1,700 lathes of variousmodels produced

EIGHT DECADES OF INNOVATION AND PIONEERING SPIRIT


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Fabrication of theToro, first Braziliandesigned tractor

A further 50 machinetools bought inEngland, makingit possible to makemore precise lathes

Accumulated productionof 8,200 machines to date,

including 1,320 exported units

Launching of the Imorlathe model MIN,

of unheard of quality

Launching of the Imor

lathe model MVN, witha new productivitystandard, many

examples of which arestill in use today

Launching of theRomi-Isetta, thefirst Brazilian car

The couple, Amrico Emlio and Olmpia,

create the Fundao Romi to fomenthealth, education, and leisure

The Romi-Isetta assembly lineis established to produce 1,200

units/year

From November14 to 19, Romi

participated in the1st Mechanical Fair,

at Ibirapuera

First Imor TP-100heavy lathe delivered

Total accumulatedproduction of 22,000

machines to date,including 1,380exported units

1959

1957

19561951

195319491948

Evolution of the name

1930Garage Santa Brbara

1938Mquinas Agrcolas Romi Ltda.

1954

Mquinas Agrcolas Romi S. A.1962

Indstrias Romi S. A.

1962

New corporate name:Indstrias Romi SA

Manufactureof the Polimacrevolver lathe atthe old plant inSanto Andr (SP)

19611950 1960


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40

Romis new SoPaulo headquartersinaugurated at RuaCoriolano, 710

Indstrias Romido Nordeste SA

inauguratedin Recife

First 32 kb computerinstalled at Romi, theonly one in the region

Launching of the firstImor model U-30

universal milling machine

As of 1969,the Imor brand is

gradually substitutedby the Romi brand

Total accumulatedproduction of 41

thousand machines todate, including

5 thousandexported units

Launching of the first extraheavy UT-48 lathe, with an

electronic copying systemfor cylinder lamination

Launching of the HBXmodel Romi lathe, the

only one with continuousspeed variation

Confirming its pioneeringspirit, Romi delivers

lathe CN modelDCE-480, first in Brazill

Launching of the S Piloteand Transpilote lathes,first Brazilian typically copiersl

With the delivery of the firstRomi Reed model 300 TD

850 plastic injection moldingmachine, Romi enters the

plastics era

Launching of thenew logo, with theslogan The companythat already livestomorrow

The UT-50 first extra heavylathe is exported to the USA,

for cylinder lamination up to80 metric tons

Quality castings guarantee machinery durability,and the new foundry is inaugurated, the UF-10

Launching of the newRomi model ECN-40 lathe

Inauguration of the Plant Unit 11,to manufacture heavy and extraheavy machines

Launching of the

new line of Romi20/30/40 universallathes, styled by

Italian designerRodolfo Bonetto

Inauguration of the PlantUnit 15, to increase Romiplastic injection moldingmachie production

Total accumulated productionof 92 thousand machines

to date, including 14thousand exported units

Golden Jubilee 50years of struggleand development

Launching of the RomiCNC Galaxy PPL lathe

Romi becomesan open capitallimited liability

corporation, withstock negotiatedon the So PauloStock Exchange

1967

1968

1969

19661970

1972

1973 1974

1976

1978 19791980


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Initiation of fabricationof the CNC Mach for theCentur, ECN 40, Galaxylathes, and other models

Delivery of the Romi CNCCentur 20/30/40 lathe,sales success with morethan 4 thousand sold

In order toovercome the lack

of area techniciansin Brazil, the

Technical Institutefor Industrial

Electronics buildingwas inaugurated atthe Fundao Romi

Delivery of the firstRomi plastic injectionmolding machine using

CNC technology

Inauguration of the PlantUnit 14, to manufacture

CNC Mach electro-electronic panels

Commemoration of thefabrication of the 100,000thmachine an I-30 lathe,delivered to Liceu de Artese Ofcios de So Paulo

Launching of the CNCRomi Interact 4 milling

machine, pioneer in Brazil

Launching of theCosmos 10/20/30

turning centers

Inauguration of the totally climate-controlled Plant Unit 16,to manufacture turning and machining centers

Delivery of thethousandth CNC machine

Total accumulatedproduction of 121thousand machinesto date, including20 thousandexported units

Launching of the

Polaris machiningcenters

Launching of the Primax line ofplastic injection molding machines,

with a new productivity standard

Launching of the Discovery lineof vertical machining centers

Launching

and deliveryof the first

Romicron ,which currently

has dozens ofpatents

Launching of the Galaxy10/20/30/50 line

of turning centers

The Plant Unit10 achieved

ISO 9002certification

1981

1982

1984

1986

1987

19881990

1992

1993

1994

Delivery of the first Romi TGRline plastic injection moldingmachine, using Braziliantechnology


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42

ISO 9001certificate unifiedfor all Romi units

Launching ofthe Romi-Emag

VSC verticalpick-up

multitasktype lathes

Romi MachineTools, Ltd.activities

initiated inErlanger,

Kentucky, toprovide total

support forNorth American

dealers

Inauguration of the RomiTechnology Center for Tooling

Machines (CT-MF)

Total accumulated productionof 138 thousand machines

to date, including 25 thousandexported units

Romi 70 years, increasinglydeveloping cutting-edgetechnology

Romi Europe is inauguratedin Germany, to provide total

support for Europeanand Asian dealers

Launching of the Velox high-speedplastic injection molding machine series

Romis visual signature isrestyled to its current format

Launching of the Romi VTC 30 rapidand precise vertical threading center

Launching of the Eletramaxelectric plastic injection

molding machine, pioneer in Brazil,with lower power consumption

Launching of the Primax DPTwo Platen line of plastic

injection molding machines

Inauguration of the PlasticInjection Molding Machine

Technology Center (CT-IP)

Launching ofthe lathingcenter forthe Romi Eline, newproductivityparameter

Launching of the DiscoveryM&M line, for molds and dies

Creation of the PlantUnit 5, to produce the

Romicron high-precisionboring system

Inauguration of the CentroSenai-Fundao Romi

Formao de Formadores

1995

1997

1998 2001

2002

2003

20042000


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Launching of thePractical series

Launching of theRomi PH 400, version 2.0

Launching of the UT-2000ultra heavy CNC lathe

End of the expansion of the

Plant 16, totaling 24,100square meters

Fundao Romis

50th anniversary

Launching of the RomiPH 630 horizontalmachining center

Purchase of CNCService Ltda.,

a company specializedin the manufacture,

sales, and retrofittingof heavy CNC machines

The foundrys manualmolding line is expanded

Launching of the Primax1300 and Primax 1500heavy-duty plastic injectionmolding machines

Beginning of the EstaoCultural activities, aFundao Romi project

Indstrias Romi SA is listedin the ndice de Aes com

Governana CorporativaDiferenciada (IGV) Bovespa

portfolio [DifferentiatedCorporate Governancestock-rating portfolio]

Launching of the CNCCentur and UT line of

heavy and extra heavy lathes

Fifty-year anniversaryof the launching of theRomi-Isetta, firstautomobile producedin Brazil

At the 2006 InternationalAuto Show in So Paulo,

the Romi-Isetta marks itspresence at the FundaoRomi booth

Launching of theCentur 30D, version 3.0

2006

2007

The E 220 turningcenter is launchedat the Feimafe,with two headersand two towers

Launchingof the SW

Power Packand EZ Flex

Totalaccumulatedproduction of146 thousandmachines to

date, including27 thousand

exported units

ISO 14001, version2004 certification,for all of the SantaBrbara dOestecompanys activities

Romi celebrates its75 years with the

slogan A traditionof innovation

2005


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44

2009

Initiation of the expansionof machine tools and

plastics machinerymanufacture units in

Santa Brbara and theconstruction of a new

foundry and machining unitConstruction of new foundryand machinning units,in Santa Brbara dOeste

Total accumulated production

of 147 thousand machines todate, including 27,400 unitsexported

Purchase of SandrettoIndustrie srl equity, anItalian plastics blowermanufacturer

Announcement of investmentto expand the industrial

plants and increase

machinery production

Romi presented 13 newmachine models in the 2008

Mechanical Fair

Launching of the CNCCentur 35D lathe

Launching of the Romi VTCvertical threading centers

Launching of the PrimaxH plastic injection moldingmachine series

Launching of theRomi GL turning centers

Launching of the Romi Dvertical machining centers

Purchase of JAC IndstriaMetalrgica Ltda.,

manufacturer of plastic blowmolding machines

Creation of Romi Italia srl

2008

New UF 82 foundryoperations start-up,with yearly capacity

of 10.000 metric tons

Technology acquisition tomanufacture PET plastic blow

molding machines, expanding Romisplastic machinery portfolio

Beginning of activitiesof New heavy machine toolsplant UF-19, focused on largevertical and horizontal lathes

Romi Joins the select groupof companies with a highcommitment degree to sustainabilitypractices and corporate governance,comprising the portfolio of ISECorporate Sustainability Indexof the BM & FBovespa

License agreementwith Italian

company Lazzatito manufacture

the high capacityLazzati HBM 130Tmilling machines

in Brazil


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SUSTAINABILITY INDICATORS

Our Sustainability indicators were produced

based on GRI (Globall Reporting Initiative)

Level B guidelines.


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46

INDICATOR APPENDIX PERFORMANCE AREAS ASPECTS

EC1 Appendix 1 Economic (Economic Performance Indicators) Economic Performance

EC3 Economic Performance

EC5 Appendix 2 Market Presence



EN3 Environmental (Environmental Performance Indicators) Energy

EN8 Water

EN22 Emissions, Effluents, and Waste

LA1 Appendix 5 Social (Performance Indicators Related to Labor Practices & Decent Work) Employment

LA2 Appendix 6 Employment

LA4 Labor / Management Relations

LA6 Occupational Health and Safety

LA7

LA9 Appendix 7

LA10 Appendix 8 Training and Education

LA11 Appendix 9

LA12

LA13 Appendix 10 Diversity and Equal Opportunity

HR5 Human Rights (Performance Indicators Related to Human Rights) Freedom of Association and Collective Bargaining

SO1 Appendix 11 Society (Performance Indicators Related to Society) Community

SO3 Corruption

SO7 Anti-Competitive Behavior

SO8 Compliance

PR5 Practices related to customer satisfaction, including results of customer satisfaction surveys Product and service labeling

PR6 Product Responsibility (Performance Indicators Related to Product Responsibility) Marketing Communications

INDSTRIAS ROMI S.A.

2009 SUSTAINABILITY INDICATORS, BASED ON GRI (GLOBAL REPORTING INITIATIVE) GUIDELINES


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INDSTRIAS ROMI S.A.


INDICATOR ASPECTS INDICATOR DESCRIPTION PERFORMANCE

EC1EconomicPerformance

Direct economic value generated and distributed, including revenues,operating costs, employee compensation, donations and other communityinvestments, retained earnings, and payments to capital providers andgovernments.

This corporate performance represents the economic valuegenerated by the Company and its related allocations anddistributions (employees, shareholders and others), as well as theaccumulation of value in the reported period or year. (Appendix 1)

EC3EconomicPerformance

Coverage of the organizations defined benefit pension plan obligations

Romiprev (Supplementary Pension Plan)

The amount spent on Supplementary Pension Plan by the Companyin 2009 was R$ 3,339,005.63 (company portion).

The percentage of employees participating in the pension plan,totally or partially funded by the Company, was 98.99%.

EC5 Market AspectRange of ratios of standard entry level wage compared to local minimumwage at significant locations of operation.

Allow readers to be informed of the Companys concern about theattractiveness and competitiveness of salaries offered, as well asthe contribution to the economic well-being of employees throughsalaries above the legal minimum wage. (Appendix 2)

EC6 Market AspectPolicy, practices, and proportion of spending on locally-based suppliersat significant locations of operation.

Allow readers to be informed of the Companys concern about theeconomic strengthening of companies from the region where thecompany is established. (Appendix 3)

EC7 Market AspectProcedures for local hiring and proportion of senior management hiredfrom the local community at significant locations of operation.

In 2009, of Romis total senior management positions, 84% werehired from the local community (Appendix 4).


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48


EN3 EnergyDirect energy consumption byprimary energy source

119.612,24 GJ (gigajoule)Energy consumption considered was only electric energy consumption since it is the most representative one.In 2009, we had a considerable reduction in view of the low production.

EN8 WaterTotal water withdrawalby source

Well 104.044 m3

Public Water Network - 541 m3

Public water network is used only at the Head Office, for human consumption in drinking fountains. In 2009,

we had a considerable reduction in view of the low production and decrease of workforce.

EN22Emissions,Effluents,and Waste

Total weight of waster by typeand disposal method.

By Type

Non-Hazardous Waste 14,123.28 tons

Hazardous Waste 360.38 tons

Hazardous waste - Material contaminated with oil, chemical product, solvents, ink sludge, grinder sludge, quench salt,soluble oil and fluorescent lamps. Non-Hazardous Waste Foundry Sand, Common Trash, Biological Mud, Physical-Chemical Mud, Paper, Plastic, Metal, Glass, Slag, Refractory Items. Note: Civil construction material and tree andgrass pruning are not included.

Disposal Method

Landfill - 5,770.46 tons

External recycling 5,666.84 tons

Internal recycling - 3,807.44 tons

Other - 147.41 tons

Landfill - material sent to sanitary landfill or industrial landfill.

Foundry Sand, Common Trash and Asbestos Roofing Tile. 98% of the materials sent to landfill are foundry sand.

External recycling basically the material that has commercial value, which is sold by Romi. Plastic, Paper, CorrugatedPaper, Ferrous Scrap, Non-Ferrous Scrap, Powder Ink, Lubricating Oil.

Internal recycling - material used at the Foundry. Ferrous Scrap.

Other waste sent for co-processing, incineration, treatment, virtually the hazardous waste.

In 2009, we had a considerable reduction in view of the low production.

INDSTRIAS ROMI S.A.



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LA1 EmploymentTotal workforce by employment type,employment contract, and region

Total 2.296

The divisions of workforce by employment type, employment contract, and region are found in spreadsheetLA1. (Appendix 5

LA2 EmploymentTotal number and rate of employeeturnover by age group, gender, andregion.

The employee dismissal policy establishes that leaders should try to reverse low performance cases,dismissing only when there is no other possibility.

In 2009, there was an atypical change in the economic scenario, which demanded certain adjustments bythe company, including in its workforce. Additionally, there was the dismantling of a unit (UF-05 Romicron),which was sold to another company. Romi conditioned the transaction to job maintenancefor all the 62 employees. (Appendix 6)

LA4Labor /ManagementRelations

Percentage of employees covered bycollective bargaining agreements.

100%

All employees are covered by collective bargaining agreements.

LA6Healthand Safety

Percentage of total workforcerepresented in formal joint management-worker health and safety committees thathelp monitor and advise on occupational

health and safety programs.

Over 75%

Employees are represented in Internal Accident Prevention Committees (Cipas), maintained in each plant(Head Office, District and Foundry).

These committees are composed of employees from several hierarchical levels, appointed by the company

and elected by the workforce of each plant, under legislation, and have the mission of working actively inimproving the health and safety conditions in the work environment.

LA7Healthand Safety

Rates of injury, occupational diseases,lost days, and absenteeism, and totalnumber of work-related fatalitiesby region.

Health and Safety is one of the pillars of our integrated management policy, where Romi is committedto several aspects related to this topic.

INDSTRIAS ROMI S.A.


Continues


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INDSTRIAS ROMI S.A.



HR5

Freedom ofAssociation

and CollectiveBargaining

Operations identified in whichthe right to exercise freedomof association or collective

bargaining may be atsignificant risk, and actionstaken to support these rights.

All employees have the right to free association to trade unions, including with an agreement that allows thededuction of union dues from payroll.

We have various internal employee committees, for example CIPA (Internal Accident Prevention Committee),Employees committee for discussing and approving profit sharing, Committee of Jequitibanos (employees

working at the company for more than 30 years), among others.

The Trade Union, for example, can deliver gifts to its affiliates in the companys facilities.

We have Company employees holding managing positions in the Trade Union.


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52


SO1 Community

Nature, scope, and effectiveness of any programsand practices that assess and manage the impactsof operations on communities, including entering,operating, and exiting.

Report (Appendix 11)

SO3 CorruptionPercentage of employees trained in organizationsanti-corruption policies and procedures.

All employees were trained when the standard was issued, and hired employeesare trained during the Integration.

SO7Anti-CompetitiveBehavior

Total number of legal actions for anti-competitivebehavior, anti-trust, and monopoly practices andtheir outcomes.

The Company is not aware of the existence of any legal action or administrativeproceeding regarding this or of the imposition of significant fines.

SO8 ComplianceMonetary value of significant fines and total numberof non-monetary sanctions for non-compliance withlaws and regulations.

The Company is not aware of the existence of any legal action or administrativeproceeding regarding this or of the imposition of significant fines.

INDSTRIAS ROMI S.A.



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INDSTRIAS ROMI S.A.



PR5Productand ServiceLabeling

Practices related to customersatisfaction, includingresults of surveys measuringcustomer satisfaction.

2.1 Practices in place related to customer satisfaction evaluation:

In the organizations corporate process related to products Machine Tools and Plastic Processing Machines,the Company established the customer satisfaction evaluation in two moments of the product life cycle:

Satisfaction Survey 1 (PS1): an evaluation is requested 30 days after the customer receives the acquired product. Thisevaluation PS1 has the purpose of evaluating the processes: pre-sale, sale and technical delivery service. This surveyis made by the serial number of the product sold, that is, if the customer purchased three products, three evaluation

requests will be sent. This is necessary because each purchase may have a specific process, and the products may be ofdifferent models.

Satisfaction Survey 2 (PS2): an evaluation is requested from the customer 30 days before the expiration of the productwarranty period. This evaluation PS2 has the purpose of evaluating: the product (functionality, technology, resources,maintainability, among other attributes), post-sale processes (training, technical assistance, technical support andreplacement parts) and product institutional image. Like in the PS1, this survey is also performed by the serial numberof the product sold.

In both surveys, customers are requested to provide comments and suggestions. Such information is analyzed quarterly,translated into performance indicators, and later communicated within the organization. Both suggestions and thecomplaints detected in the surveys are submitted, for individual analysis by the involved areas. The suggestions may be,case by case, used in changes or improvements and the complaints are duly handled through a corporate processfor addressing customer complaints.

2.2 Results and conclusions:

In 2009, we closed the annual customer satisfaction survey period with the following results:

PS1: 1,058 customer satisfaction evaluation questionnaires were sent. There was a response rate of 43%, where thefinal result was 93% of satisfied customers. In this survey, the processes that had the lowest satisfaction rate were those

related to technical delivery and training.PS2: 1,867 customer satisfaction evaluation questionnaires were sent. There was a response rate of 38%, where thefinal result was 92% of satisfied customers. In this survey, the processes that had the lowest satisfaction rate were thoserelated to replacement parts and technical assistance.

PR6MarketingCommunications

In our advertisements, website, leaflets and catalogues, the Company adopts an informative posture, and not a convincingposture as with consumer goods, that is, it seeks to expose in a transparent manner who we are, our activities andthe technical qualities of our products and services. The customer makes the buying decision after comparisons andconclusions. We do not publish advertisements with emotional appeal or other appeals that could involve ethical issues.We adopt as guideline the Brazilian Advertising Auto-Regulation Code, which governs the ethical standards to befollowed by Advertisers and Advertising Agencies in the preparation of their advertisements.


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54

INDSTRIAS ROMI S.A.


APPENDIX 1 (INDICATOR EC1)

DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED, INCLUDING REVENUES, OPERATING COSTS, EMPLOYEE COMPENSATION, DONATIONSAND OTHER COMMUNITY INVESTMENTS, RETAINED EARNINGS, AND PAYMENTS TO CAPITAL PROVIDERS AND GOVERNMENTS.

ECONOMIC VALUE GENERATED AND DISTRIBUTED (Amounts expressed in thousands of reais - R$)

2008Ajusted

2009

Direct economic value generated 734,115 499,807a) Revenues 734,115 499,807

Economic value distributed 675,376 468,170

b) Operating costs 372,559 258,484

c) Employee wages and benefits 219,523 191,235

d) Payments to providers of capital 45,397 11,459

e) Payments to government (1) 36,237 6,491

f) Community investments (2) 1,660 501

Economic value retained (economic value generated less economic value distributed) 58,739 31,637

Accounting standard used: IFRS

(1) Brazil 35,818 6,313

Uruguay 5 5

Italy 414 199

Spain - 38Germany - (64)

(1) Only income tax, does not include indirect taxes (ICMS, PIS-COFINS, IPI)(2) Includes in 2008 R$


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INDSTRIAS ROMI S.A.


The Companys activities are composed of three business units:

Machine Tools (machines and equipment to work metal by metal cutting), specifically

CNC Lathes, Engine Lathes and Machining Centers;;

Plastic Processing Machines (machines and equipment for plastic injection and blow molding);

Gray, nodular and vermicular cast iron parts, supplied rough or machined.

The Company adopts the same compensation policy for all business units, based on technicalcriteria widely used by the market. In order that the compensation may be attractive andcompetitive, the Company performs periodically comparative surveys between the compensationit offers and the market compensation, covering all regions where it operates.

Romi floor exceeds the National MW* by 90,11%

Romi floor exceeds the State MW* by 66,79%

The compensation offered is compatible with the position complexity and individual performance.In addition to wage and other benefits offered, employees receive a variable compensation basedon the Companys productivity and profitability goals and individual performance. Basedon historical data from the last years, the amount paid as variable compensation has been higherthan the one paid by other companies in the industry.

The lowest wage offered by the Company was at least approximately 67% higher than the legalminimum wage paid in each location, in the period covered in this report, as shown below.

2008 2009

* Minimum Wage


RANGE OF RATIOS OF STANDARD ENTRY LEVEL WAGE COMPARED TO LOCAL MINIMUM WAGE AT SIGNIFICANT LOCATIONS OF OPERATION.

National MW* State SM* Romi floor


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INDSTRIAS ROMI S.A.



POLICIES, PRACTICES, AND PROPORTION OF SPENDING ON LOCALLY-BASED SUPPLIERS AT SIGNIFICANT LOCATIONS OF OPERATION.

The Company, located in Santa Brbara dOeste, State of So Paulo, is located in Campinas Microregion together with themunicipalities: Americana, Campinas, Cosmpolis, Elias Fausto, Holambra, Hortolndia, Indaiatuba, Jaguarina, Monte Mor,Nova Odessa, Paulnia, Pedreira, Sumar, Valinhos and Vinhedo.

The Campinas Microregion, located in the interior of the State of So Paulo, has a total area of 3,082,952 km2, with a populationof 2,530,029 inhabitants (2006), Gross Domestic Product of R$ 67,590,000 thousand (IBGE 2007), high average HDI (human

development index) 0.832 (PNUD/2000).The Company adopts a policy for purchase of goods from companies located in this microregion, it currently has 469 companiesproviding items and/or services from this microregion.

Romis relationship with suppliers is strategic, seeking to develop the businesses of these suppliers, making them competitive,and to create close bonds for continuous improvement and long-lasting relationship.

The quality of the products developed by the Company also depends on the quality of the products of our suppliers and, therefore,we are in constant contact so that we can seek a continuous development that may result in the delivery of high quality productsto our customers.

The Company classifies its suppliers by the application of items / services acquired and segments where they operate:

Suppliers of items / services applied to products: Manufacturers of Mechanical, Electrical, Hydraulic and Pneumatic Items,Providers of Machining, Deburring, Painting, Superficial Treatment, Calibration and External Transportation Services, amongothers.

Suppliers of items / services not applied to products: Suppliers of Office Materials, Auxiliary Materials, Civil ConstructionMaterials, EPIs (personal protective equipment), Direct Debts, among others

Suppliers of items / services applied to automotive products: Suppliers of items / services designed for items sold to theautomotive industry.

In 1997, the Company developed a program named PDF Supplier Development Program, which had as main purposes:Productivity increase; Cost and expense reduction; Possibility of higher investments in strategic areas; Management more focusedon core activities. Under this program, companies were developed, mainly in the city of Santa Brbara dOeste, to supply Machinedand Cast Iron Parts, Sheet Metal Parts and Packaging. This program was extended along the years to other cities of theCampinas Microregion and is still in place.

Currently, the policy for assessing new suppliers, items and/or services applied to products gives privileges to companies that havethe ISO 9001:2008 Certification or that are in process of implementation. These companies must also be regularized with the Stateenvironmental agency. Our assessment goes beyond financial and legal analyses, taking into consideration aspects such as: suppliertransparency/image and respect to environment, for example.


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POLICIES, PRACTICES, AND PROPORTION OF SPENDING ON LOCALLY-BASED SUPPLIERS AT SIGNIFICANT LOCATIONS OF OPERATION.

2008

% of purchase expenditures in Brazil (*) = 74.4%

% of purchase expenditures in Campinas Microregion (**) = 20.0%

% of purchase expenditures in Campinas Microregion vs. Brazil (***) = 26.9%

2009

% of purchase expenditures in Brazil (*) = 71.5%

% of purchase expenditures in Campinas Microregion (**) = 23.0%

% of purchase expenditures in Campinas Microregion vs. Brazil (***) = 32.2%

Calculation formula

(*) Total purchase expenditures in Brazil divided by total purchase expenditures multiplied by 100

(**) Total purchase expenditures in Campinas Microregion divided by total purchase expenditures multiplied by 100

(***) Total purchase expenditures in Campinas Microregion divided by total purchase expenditures in Brazil multiplied by100


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58

INDSTRIAS ROMI S.A.



Procedures for local hiring and proportion of senior management members hired from the local community at significant locations of operation.

In 2009, of Romis total senior management positions, 84% (*) were hired from the local community, since the skills required for management positions are more specific.

We used as senior management positions the positions of managers and directors, who have under their responsibility Manufacturing Units, Service Units or Departments.

(*) The indicator calculation was considered local, the Campinas Metropolitan region, where Romi is established.


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APPENDIX 5 (INDICATOR LA1)

TOTAL WORKFORCE BY EMPLOYMENT TYPE, EMPLOYMENT CONTRACT, AND REGION

GRI INDICATOR LA1 2008 2009

NUMBER OFEMPLOYEES

%NUMBER OFEMPLOYEES

%

LA1 Employment (monthly working hours) Full-Time 2,888 99.72 2,291 99.78

Part-Time 8 0.28 5 0.22

TOTAL 2,896 100 2,296 100

LA1 Employment (employment contract) CLT (LABOR CODE) UNDEFINED TERM 2,874 99.24 2,274 99.04

CLT (LABOR CODE) DEFINED TERM 0 0 2 0.09

EXECUTIVE OFFICERS / BOARD OF DIRECTORS 22 0.76 20 0.87

TOTAL 2,896 100 2,296 100

LA1 Employment (region) Outside Santa Brbara dOeste-SP, Brazil 181 6.25 154 6.70

In Santa Brbara dOeste-SP, Brazil 2,715 93.75 2,142 93.30

TOTAL 2,896 100.00 2,296 100

INDSTRIAS ROMI S.A.



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TOTAL NUMBER AND RATE OF EMPLOYEE TURNOVER BY AGE GROUP, GENDER, AND REGION.


TermGend/

Total TermTotal

GenderTerm. Gend /Total Gend

TermGend/

Total TermTotal

GenderTerm. Gend /Total Gend

LA2 Turnover (gender) Female 75 11.40% 347 21.61% 102 12.86% 282 36.17%

Male 583 88.60% 2,549 22.87% 691 87.14% 2,014 34.31%

TOTAL 658 100% 2,896 22.72% 793 100% 2,296 34.54%

Term Group/Total TermTotal

GroupTerm. Group/Total Group Term

Group/Total Term

TotalGroup

Term. Group/Total Group

LA2 Turnover (age group) below 30 years 286 43.47% 1,115 25.65% 308 38.84% 836 36.84%

over 50 years 98 14.89% 373 26.27% 81 10.21% 359 22.56%

between 30 and 50 years 274 41.64% 1,408 19.46% 404 50.95% 1,101 36.69%

TOTAL 658 100% 2,896 22.72% 793 100% 2,296 34.54%

TermRegion/

Total TermTotal

RegionTerm. Region/Total Region

TermRegion/

Total TermTotal

RegionTerm.Region/Total Region

LA2 Turnover (region)Outside Santa BrbaradOeste-SP, Brazil

32 4.86% 181 17.68% 26 3.28% 154 16.88%

In Santa BrbaradOeste-SP, Brazil

626 95.14% 2,715 23.06% 767 96.72% 2,142 35.81%

TOTAL 658 100% 2,896 22.72% 793 100% 2,296 34.54%

INDSTRIAS ROMI S.A.



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APPENDIX 7 (INDICATOR LA9)HEALTH AND SAFETY TOPICS COVERED IN FORMAL AGREEMENTS WITH TRADE UNIONS.

GRI Indicator LA9

Collective Labor Convention Clauses

2008

CLAUSE DESCRIPTION

28 Potable water

49 Brest feeding52 Accredited network medical services

25 Medical and dental certificates

11 Nursery allowance

59 Funeral allowance

27 CIPA (Internal Work Prevention Committee)

51 Pension plan allowance supplementation

62 Work-related accident communication

61 Medical plans

29 Supplementary medical examinations35 Provision of working uniforms and clothes

57 Guarantee to employee on leave of absence for illness44 Employment guarantee to employee victim of work-related

accident46 Temporary employment guarantee to employee with professional

or occupational disease

56 Indemnity for death or disability24 Protect ion measures

36 Hygienic needs

43 On-site medical clinics

31Prevention of accidents with mechanical pressesand metalworking machines

30 Occupational safety and medicine professionals

32 Transportation and meal

INDSTRIAS ROMI S.A.


GRI Indicator LA9

Collective Labor Convention Clauses2009

CLAUSE DESCRIPTION28 Potable water

49 Brest feeding

52 Accredited network medical services25 Medical and dental certificates

11 Nursery allowance

59 Funeral allowance

27 CIPA (Internal Work Prevention Committee)

51 Pension plan allowance supplementation

62 Work-related accident communication

61 Medical plans

29 Supplementary medical examinations

35 Provision of working uniforms and clothes

57 Guarantee to employee on leave of absence for illness

44 Employment guarantee to employee victim of work-relatedaccident

46 Temporary employment guarantee to employee with professionalor occupational disease

56 Indemnity for death or disability24 Protection measures

36 Hygienic needs

43 On-site medical clinics31 Prevention of accidents with mechanical presses

and metalworking machines30 Occupational safety and medicine professionals

32 Transportation and meal


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APPENDIX 8 (INDICATOR LA10)AVERAGE HOURS OF TRAINING PER YEAR PER EMPLOYEE BY EMPLOYEE CATEGORY


EMPLOYEE CATEGORY HOURS OFTRAINING 2008 NUMBER OFEMPLOYEES HOURS OF TRAINING/YEAR / EMPLOYEE HOURS OFTRAINING 2009 NUMBER OFEMPLOYEES HOURS OF TRAINING/YEAR / EMPLOYEE

Administrative Areas 11,970.83 272 44.01 4,478.53 202 22.17

Sales Areas 16.600,54 295 56.27 8,386.94 275 30.50

Production Areas 81,557.11 2,117 38.52 30,515.49 1,513 20.17

Technology Areas 11,809.62 212 55.71 8,917.26 306 29.14

Total 121,938.10 2,896 42.11 52,298.22 2,296 22.78

INDSTRIAS ROMI S.A.



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PROGRAMS FOR SKILLS MANAGEMENT AND LIFELONG LEARNING THAT SUPPORT THE CONTINUED EMPLOYABILITY OF EMPLOYEESAND ASSIST THEM IN MANAGING CAREER ENDINGS

LA11 PROGRESS OPPORTUNITY PROGRAM (POP)

All job vacancies are disclosed internally, before being disclosed externally to the public, and selection is made among employees and interns that voluntarily apply for the vacancies.

TRAINING AND DEVELOPMENT POLICY

The Training and Development Policy is based on professional education and development principles that generate results for the business. Annually the training needsof all employees are identified, and they attend training as required.

Total hours of Training (2008): 121,938 hours (42h / employee / year)

Total hours of Training (2009): 52,298 hours (23h / employee / year)

Total invested in Training (2008): R$ 2,722,000.00

Total invested in Training (2009): R$ 1,137,000.00

INTERNEE PROGRAM

In this program semi-trained professionals are developed, providing employee hiring alternatives and contributing to the professional education of high school and college students.They receive specific training in their operating areas as required. In addition to education supplementation, the company offers benefits such as On-Site Medical Services, Country Club,Transportation, Meal and Personal Accident Life Insurance.

Number of interns on 12/31/2008: 31Number of interns on 12/31/2009: 3

Continues

INDSTRIAS ROMI S.A.



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TRAINEE PROGRAM

Aimed at the professional education of talent young in the last year of Mechanical, Production, Metallurgical, Materials, and Electric and Electronic Engineering courses, from the bestcolleges of the State of So Paulo, to reinforce even further the Product Engineering, Methods and Processes, Quality Assurance, Sales Engineering, Technical Assistance and Productionareas of all Manufacturing Units. Hired as employees, they undergo intensive three-year training. In the first stage of the program, still in the last graduation year, Trainees know allManufacturing Units, having a complete view of the process. As from the second year of the program, they are assigned for the preparation of specific projects in their operating areas.

Number of Trainees on 12/31/2008: 17

Number of Trainees on 12/31/2009: 23

OPERATIONAL PROFESSIONAL EDUCATION PROGRAM (WAS NOT INCLUDED) According to page 67 of the prior report

Aims to identify candidates for professional operating training, with theoretical and practical training in order to use them in future production opportunities.

It is held in partnership with SENAI Santa Barbara dOeste, and has lectured at SENAI and the Company

Number of people trained by the program (2009): There were no people trained

Amount invested in the Professional Training Program Operational (2009): There was no investment in the program

Continuation

INDSTRIAS ROMI S.A.



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COMPOSITION OF GOVERNANCE BODIES AND BREAKDOWN OF EMPLOYEES PER CATEGORY ACCORDING TO GENDER, AGE GROUP,MINORITY GROUP MEMBERSHIP, AND OTHER INDICATORS OF DIVERSITY

2008 2009

GENDER QT % QT %

LA13 Diversity and equal opportunity-Gender Administrative areas F 97 35.66 60 29,70

Administrative areas M 175 64.34 142 70,30Total 272 100.00 202 100,00

Sales areas F 44 14.92 39 14,18

Sales areas M 251 85.08 236 85,82

Total 295 100.00 275 100,00

Production areas F 177 8.36 152 10,05

Production areas M 1.940 91.64 1.361 89,95

Total 2.117 100.00 1.513 100,00

Technology areas F 29 13.68 31 10,13

Technology areas M 183 86.32 275 89,87

Total 212 100.00 306 100,00

Total F 347 11.98 282 12,28

M 2.549 88.02 2.014 87,72

2.896 100.00 2.296 100,00

Continues

INDSTRIAS ROMI S.A.



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2008 2009QT % QT %

LA13 Diversity and equal opportunity-Ethnic Group * Administrative areas YELLOW 1 0.37 1 0.50Administrative areas WHITE 252 92.65 184 91.09Administrative areas DARK 15 5.51 13 6.43Administrative areas BLACK 4 1.47 4 1.98

Total 272 100.00 202 100.00

Sales areas YELLOW 4 1.36 3 1.09Sales areas WHITE 271 91.86 253 92.00Sales areas BLACK 20 6.78 19 6.91Total 295 100.00 275 100.00

Production areas YELLOW 5 0.24 5 0.33Production areas WHITE 1,714 80.96 1,269 83.87Production areas DARK 291 13.75 174 11.50Production areas BLACK 107 5.05 65 4.30Total 2,117 100.00 1,513 100.00

Technology areas YELLOW 2 0.94 2 0.65Technology areas WHITE 198 93.40 279 91.18Technology areas DARK 8 3.77 19 6.21Technology areas BLACK 4 1.89 6 1.96Total 212 100.00 306 100.00

Total WHITE 2,435 84.08 1,985 86.46YELLOW 12 0.41 11 0.48

DARK 334 11.53 225 9.80BLACK 115 3.97 75 3.27

2,896 100.00 2,296 100.00

Continuation

Continues

INDSTRIAS ROMI S.A.


* Definition given by Administr ative Rule 1740, of October

26, 1999, from the Labor Ministry, for informative data on

race and color of employees, and for the classification used

by the Brazilian Institute of Geography and Statistics (IBGE).


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2008 2009

QT % QT %

LA13 Diversity and equal opportunity-PhysicallyDisabled Persons (PDP) Administrative areas Not PDP 233 85.66 193 94.77

Administrative areas PDP 39 14.34 9 5.23

Total 272 100.00 202 100.00

Sales areas Not PDP 287 97.29 269 97.82

Sales areas PDP 8 2.71 6 2.18

Total 295 100.00 275 100.00

Production areas Not PDP 2,053 96.98 1,445 95.51

Production areas PDP 64 3.02 68 4.49

Total 2,117 100.00 1,513 100.00

Technology areas Not PDP 200 94.34 290 94.77

Technology areas PDP 12 5.66 16 5.23

Total 212 100.00 306 100.00

Total Not PDP 2,773 95.75 2,197 95.69

PDP 123 4.25 99 4.31

2,896 100.00 2,296 100.00

Continuation

Continues

INDSTRIAS ROMI S.A.



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2008 2009

QT % QT %

LA13 Diversity and equal opportunity Age GroupAdministrative areas

below30 years

88 32.35 53 26.24

Administrative areasover

50 years 53 19.49 50 24.75

Administrative areasbetween 30

and 50 years131 48.16 99 49.01

Total 272 100.00 202 100.00

Sales areasbelow

30 years87 29.49 79 28.73

Sales areasover

50 years32 10.85 40 14.55

Sales areasbetween 30

and 50 years176 59.66 156 56.73

Total 295 100.00 275 100.00

Production areas below30 years 843 39.82 584 38.60

Production areasover

50 years262 12.38 220 14.54

Production areasbetween 30

and 50 years1,012 47.80 709 46.86

Total 2,117 100.00 1,513 100.00

Continuation

INDSTRIAS ROMI S.A.


Continues


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Continuation

INDSTRIAS ROMI S.A.


2008 2009

QT % QT %

Technology areas

below

30 years 97 45.75 120 39.22

Technology areasover

50 years26 12.26 49 16.01

Technology areasbetween 30

and 50 years89 41.98 137 44.77

Total 212 100.00 306 100.00

Totalbelow

30 years1,115 38.50 836 36.41

over50 years

373 12.88 359 15.64

between 30

and 50 years 1,408 48.62 1,101 47.95

2,896 100.00 2,296 100.00


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Romi Foundation

The operations in the communities are carried out through Romi Foundation and has as priority

focus the community of Santa Brbara dOeste, State of So Paulo, Brazil, municipality where thecompany is established.

Romi Foundation, a philanthropic social assistance institution recognized by the CNAS (NationalCouncil of Social Assistance) and declared of state and federal public utility, was founded in1957 by married couple Amrico and Olmpia Romi and has been supported by the Companysince 1969. Currently, the institution has revenues other than from the supporter. In 2009, thecompanys contribution totaled R$ 454,061.00, accounting for 15.25% of Romi Foundationsoperating expenses, of R$ 2,978,176.00 in the same year.

Annually Romi Foundation presents an action plan for the following year and a report on theactivities developed in the reference year. The information is the same as the one contained inthe accountability to the Public Prosecutor of Foundations, Federal Revenue, Ministry of Justice,CNAS (National Council of Social Assistance), INSS (National Institute of Social Security), andMunicipal Council of Social Assistance. It is also included in the balance sheets audited byindependent auditors.

In the action plan, the institution describes the bases on which its projects were devised, itsobjectives and the strategies adopted. The purpose is to reduce social vulnerability and risksto which the population is exposed, starting from the understanding that social vulnerability

derives from various phenomena, with distinct causes and effects, among them schooling,and particularly in Brazil today, the quality of education and cultural education. Its educationalprojects are intended to allow the access of students from the municipality of Santa BarbaradOeste with such vulnerability to a quality education that stimulates them to a higher schoolinglevel and, consequently, to a greater insertion in the labor market and social mobility.

Studies, references and indicators from the Government itself, as well data from the internationalknowledge evaluation proofs point to a poor pu

Documents

RSE - Reporte de Sustentabilidad de Indústrias Romi Brasil 2009