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Directors Report of Elecon Engineering Company Ltd.

Mar 31, 2017

Dear Members,

The Directors have pleasure in presenting this 57th Annual Report together with the Audited Financial Statements for the year ended on March 31, 2017.

You being our valued partners in the Company, we share our vision of growth with you. Our guiding principles are a blend of realism and optimism which has been and will be the guiding force of all our future endeavors.

Performance of the Company

Pursuant to the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards ("IndAS”) notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2016. Financial statements for the year ended and as at March 31, 2016 have been restated to conform to IndAS Note 43 to the standalone & consolidated financial statement provides further explanation on the transition to Ind AS.

Standalone Financial Performance

For the year ended on March 31, 2017, the Company has achieved a Turnover of Rs.99,648.05 Lakhs as against Rs.106,473.41 Lakhs in the previous year.

For the year ended on March 31, 2017, the Company has achieved Earnings Before Interest (Finance Cost), Depreciation & Amortization and Tax (EBIDTA) of Rs.15,579.96 Lakhs as against the EBIDTA of Rs.14,236.49 Lakhs during the previous year, representing a marginal increase in EBIDTA by 9.43%.

The Net Profit of the Company for the year 2016-17 was Rs.2,106.22 Lakhs compared to Rs.3,651.10 Lakhs during the previous year.

The Company holds total unexecuted orders about Rs.115,780 Lakhs (Rs. 67,959 Lakhs for Gear Division and Rs.47,821 Lakhs of MHE Division) as on March 31, 2017. This will help us to continue to have sustainable growth in coming years.

The financial performance of the Company in the fiscal remained soft as it witnessed challenges on multiple counts. At the macro level, the economic activity in the country remained low and it resulted in the slow pick up of orders and poor execution of the operation at the client level. The Company''s customers also got affected by Demonetization, event which led to some disruption of activity. At the micro level, the integration process of merger of Elecon EPC Projects Limited, which is a significant step forward for the Company''s growth, also added momentary interruption to the normalcy. With the major events already executed, the Company now aims to consolidate its business and expand its operations on the core strengths. It expects the activity at the macro level to smoothen soon and thus anticipates a strong recovery in its business in the near term future.

Consolidated Operations

The Audited Consolidated Financial Statements of your Company as on March 31, 2017, which forms part of the Annual Report, have been prepared pursuant to the provisions of SEBI (LODR) Regulations, 2015 and also as per the applicable Indian Accounting Standard (IndAS) on Consolidated Financial Statements (IndAS-110) as notified by the Ministry of Corporate Affairs.

Particulars

Standalone

Consolidated

31/03/17

31/03/16

31/03/17

31/03/16

Turnover

99648.05

106473.41

127465.54

136554.80

Profit Before Tax, Finance cost, Depreciation & Amortization and Adjustment for previous year (EBIDTA)

15579.96

14236.49

16402.42

16380.24

Add: Other Income

785.34

3125.10

856.26

2967.50

EBIDTA (Including other income)

16365.30

17361.59

17258.68

19347.73

Less : Finance Cost

6304.87

6243.73

7957.32

7471.96

Depreciation & Amortization

4813.76

5567.22

5323.82

6212.26

Profit Before Tax

5246.67

5550.64

3977.54

5663.52

Less: Provision for Tax

2079.08

1419.53

2246.03

1663.35

Deferred Tax

1026.81

489.62

1030.32

570.19

Short/(Excess) Prov. of earlier years

34.56

(9.61)

34.56

(9.61)

Profit After Tax

2106.22

3651.10

666.63

3439.59

Add:

Others Comprehensive Income

(75.04)

(29.02)

923.84

157.04

Share of Profit of Associates

--

--

408.39

297.33

Previous Year Balance Brought Forward

18827.02

18153.99

16476.71

15531.81

PROFIT AVAILABLE FOR APPROPRIATION

20858.20

21776.07

18475.57

19425.76

APPROPRIATIONS:

Dividend paid

1198.29

1198.29

1198.29

1198.29

Income Tax on Dividend paid

243.94

250.76

243.94

250.76

Transfer to General Reserve

--

1500.00

--

1500.00

Balance Carried Forward

19415.97

18827.02

17033.34

16476.71

Your Company''s total consolidated turnover for the year ended on March 31, 2017 was Rs.127,465.54 Lakhs as against Rs.136,554.80 Lakhs for previous year.

For the year ended on March 31, 2017, the Company has achieved Earnings Before Interest (Finance Cost), Depreciation & Amortization and Tax (EBIDTA) of Rs.16,402.42 Lakhs as against the EBIDTA of Rs.16,380.24 Lakhs during the previous year.

The Consolidated Net Profit of the Company for the year 2016-17 after minority interest and share of profit/loss of associates was ''1,998.86 Lakhs compared to Rs.3,893.96 Lakhs during the previous year.

During the year under review, your Company''s consolidated net worth is Rs.70,984.97 Lakhs as against Rs.70,428.35 Lakhs for previous year.

Dividend

Your Directors have recommended dividend of 25% i.e Rs.0.50/- per share on 11,21,99,965 equity shares of Rs.2/-each for the year ended on March 31, 2017 (previous year Rs.1.10/- per share on 10,89,35,843 equity shares of Rs.2/-each).

The said dividend, if approved by the shareholders, would involve a cash outflow of Rs. 675.21 Lakhs, including dividend distribution tax of Rs.114.21 Lakhs against Rs.1,442.23 Lakhs including dividend distribution tax of Rs.243.94 Lakhs in the previous year.

During the year, the unclaimed dividend pertaining to the financial year 2008-09 has been transferred to the Investor Education & Protection Fund.

Transfer to Reserves

The Company proposes to retain the entire amount of Rs.19,415.97 Lakhs in the profit and loss account.

Amalgamation of Elecon EPC Projects Limited with Elecon Engineering Company Limited

During the year under review, the Hon''ble High Court of Gujarat, vide its Orders dated October 7, 2016 approved the Scheme of Arrangement of Elecon EPC Projects Limited (Transferor Company) with the Company and their respective Shareholders and Creditors. The appointed date of the Scheme was March 30, 2015. The Scheme became effective upon filing of the certified copy of order with Registrar of Companies, Gujarat on October 24, 2016.

The Scheme of Amalgamation inter alia, envisages following benefits:

i. Enable Company to use the resources of Transferor Company and generate significant synergy in operations;

ii. The consolidated entity would be able to utilize its full potential and leverage on the combined financial strength as well as optimize the use of resources for the purpose of future growth;

iii. Reduction of overheads and other expenses, facilitate administrative convenience and ensure optimum utilization of available services and resources.

Share Capital

The paid up Equity Share Capital as on March 31, 2017 was Rs.2,244.00 Lakhs. Pursuant to the Scheme of Amalgamation duly approved by the Hon''ble High Court of Gujarat vide its order dated October 7, 2016, the Company has issued 32,64,122 Equity Shares to the shareholders of Elecon EPC Projects Limited (Transferor Company) on November 10, 2016.

During the year under review, the Company has not issued any shares with differential voting rights nor granted stock options nor sweat equity.

Directors'' shareholding in the Company, as on March 31, 2017, is given in extract of Annual Return.

Finance

Cash and cash equivalent as at March 31, 2017 was Rs.470.84 Lakhs. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

Fixed Deposits

The Company has not accepted any fixed deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014. There are no unpaid/unclaimed deposits as on March 31, 2017.

Particulars of Loans, Guarantees or Investments

The details of Loans given, Guarantees and Securities provided and Investments made by the Company in compliance with the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Directors

Director Retire by rotation

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Shri Pradip M. Patel, Director retires by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offers himself for re-appointment.

The Board recommends his appointment for your approval.

Your Directors expressed their profound grief on the sad demise of Shri Hasmukhlal S. Parikh, an Independent Director of the Company on May 8, 2016. The Board expressed its heartfelt condolence to his family members to bear the irreparable loss. The Board paid glowing tribute to him and put on record highest appreciation of his association with the Company as a highly respected Director.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of SEBI (LODR) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Meetings

During the year four Board Meetings, four Audit Committee Meetings, one Corporate Social Responsibility Committee Meeting, three Nomination and Remuneration Committee Meetings, three Stakeholders Relationship Committee Meeting and one Separate Meeting of Independent Directors were held. The details of which are given in the Corporate Governance Report. The intervening gaps between the Board meetings were within the period prescribed under the Companies Act, 2013.

Composition of Various Committees

Details of various committees constituted by the Board as per the provisions of Companies Act, 2013 and SEBI (LODR) Regulations, 2015 and their meetings are given in the Corporate Governance Report which forms part of this report.

Independent Directors

The Independent Directors met on April 27, 2016 without the attendance of Non-Independent Directors and members of the management. The Independent Directors reviewed the performance of Non-Independent Directors and Board as a whole and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

The Company has received necessary declarations from each Independent Director under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (LODR) Regulations, 2015.

Familiarization Programme for Independent Directors

The Company has conducted the familiarization programme for Independent Directors of the Company, details for the same have been disclosed on the Company''s website https://www.elecon.com/investors/corporate-information.

Remuneration Policy

The policy for remuneration of Directors, Key Managerial Personnel and Senior Management Personnel is set out in "Annexure A" which forms part of the Board Report.

Disclosures by Directors

None of the Directors of your Company is disqualified as per provisions of Section 164(2) of the Companies Act, 2013. Your Directors have made necessary disclosures to this effect as required under Companies Act, 2013.

Directors'' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, with respect to the Directors'' Responsibility

Statement, the Board of Directors, hereby confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the period;

(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors have prepared the annual accounts on a going concern basis; and

(e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Related Party Transactions

All contracts or arrangements with related parties, entered during the financial year were at arm''s length basis and in the ordinary course of the Company''s business. All such contracts or arrangements were entered into only with prior approval of Audit Committee. No material contract or arrangements with related parties were entered into during the year under review. Therefore, there is no requirement to report any transaction in Form No. AOC-2 in terms of Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website at https:// www.elecon.com/views/templates/admin-uploads/Inves-tors/Policies/Elecon-Related-Party-Transactions-Policy.pdf.

None of the Directors or any Key Managerial Personnel has any pecuniary relationships or transactions vis-a-vis the Company.

Auditors

Statutory Auditors

M/s. Thacker Butala Desai, Chartered Accountants, Statutory Auditor of the Company had been appointed as Statutory Auditors for two (2) years at the 55th Annual General Meeting of the Company. Their tenure will expire at the ensuing 57th Annual General Meeting of the Company for the financial year 2016-17.

The Board places on record the highest sense of appreciation for the valuable services rendered by them as Auditors of the Company during their long association with the Company.

M/s. B S R & Co. LLP, Chartered Accountants appointed as a Joint Statutory Auditors of the Company for a period of 5 (five) years i.e. from the conclusion of 56th Annual General Meeting for the financial year 2015-16 until the conclusion of Annual General Meeting for the financial year 2020-21. As per the provisions of Section 139 of the Companies Act, 2013 the Company has placed the matter relating to ratification of their appointment by members at the Annual General Meeting. Consequent upon the expiry of term of M/s. Thacker Butala Desai, M/s. B S R & Co. LLP shall be the Statutory Auditors of the Company.

M/s. B S R & Co. LLP, Chartered Accountants have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for appointment as Statutory Auditors of the Company. As required under SEBI (LODR) Regulations, 2015, the Auditor have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Rules, 2014, the Cost Audit records maintained by the Company in respect of its manufacturing activity are required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s. Y.S. Thakar & Co., Cost Auditors to audit the cost accounts of the Company for the year ended on March 31, 2018 on a remuneration of ''75,000/- p.a. As required under the Companies Act, 2013, the remuneration payable to the cost auditors is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a Resolution seeking Member''s ratification for the remuneration payable to M/s. Y.S. Thakar & Co., Cost Auditors is included in the notice convening the 57th Annual General Meeting. The Cost Audit Report for the year 2015-16 was filed with the Ministry of Corporate Affairs before the due date of filing.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed CS Ashwin Shah, a Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Report on the Secretarial Audit carried out by him during the year 2016-17 is annexed herewith as "Annexure B".

Internal Auditors

Pursuant to the provisions of Section 138 of the Companies Act, 2013, the Company has appointed M/s. K. C. Mehta & Co., Chartered Accountants (Firm Reg. No. 106237W), as Internal Auditors of the Company to carry out the Internal Audit as per the scope of work approved by the Board.

Subsidiary, Joint Venture & Associate Companies

As on March 31, 2017, the Company has 14 Direct & Indirect Subsidiary Companies.

During the year under review, no new Company has been incorporated / acquired as Subsidiary, Joint Ventures or Associate Companies. Pursuant to the Scheme of Amalgamation as approved by the Hon''ble High Court of Gujarat vide its Order dated October 7, 2016 Elecon EPC Projects Limited ceased to be a Subsidiary Company of the Company.

Pursuant to the provisions of Sections 129,134 and 136 of the Companies Act, 2013 read with rules framed there under and SEBI (LODR) Regulations, 2015, your Company had prepared Consolidated Financial Statements of the Company and its Subsidiaries and a separate statement containing salient features of financial statement of Subsidiaries/Associates forms part of the Annual Report.

The Annual Financial Statements and related information of the Subsidiary Companies shall be made available for inspection by the shareholders of the Holding and Subsidiary Companies on all working days during business hours for a period of 21 days before the date of the Annual General Meeting and the same will also be placed on the website of your Company. Any member who is interested in obtaining the Audited Financial Statements of the Subsidiary Companies may obtain the same by writing to the Company Secretary of the Company.

Financial Performance - Subsidiary Companies

Elecon Transmission International Limited (Mauritius -consolidation)

During the financial year under review, turnover of Benzlers Radicon Group has increased by 3.22 % from GBP 30.6 million FY 2015-16 to 31.6 million FY 2016-17. However there is a drop in EBITDA from 7.20% FY 2015-16 to 2.98 % FY 2016-17. Finance Cost and SG&A Cost has increased by 45.53 % and 15.34% respectively which resulted in loss of GBP 1.53 million FY 2016-17 from Profit Before Tax of GBP 0.11 million FY 2015-16.

Benzlers group (Nordic and Europe)

Benzlers Group had a good year in terms of sales. All entities in both Nordic and European countries increased their sales compared to previous year. The sales increased by 18% with highest sales growth coming from Nordic customers.

EBITDA grew from GBP 0.89 million ( 6.9%) to GBP 1.08 million ( 7.1%) due to better sales and efficient cost control processes put in place during FY 2015-16. This together with the increased sales has given the group a PAT of GBP 0.45 million almost double than previous year of GBP 0.24 million.

Benzler Groups sales performance in the FY 2016-17 -despite very strong competition - is in line with business strategy of changing from a product oriented company to a sales and service company. We are expanding our service and repair business in the Nordic countries during FY 2017-18. We are in the process of placing more marketing activities and digital communications in the market which will give us positive result in coming year.

The marketing of Elecon products into the European Union is continuously being well received and the sales of these products are increasing yearly.

Radicon Transmission UK Ltd.

The UK domestic market continues to be subdued, due to Brexit. This is affecting capital investment decisions within a lot of industries. This has affected number of larger project based orders available in the market.

Distribution and the replacement market have stayed consistent but with the lack of larger investment projects, this has increased competition to substitute for the lack of the investment/project orders. We still believe that Radicon is well placed to service this market. As we have the advanced manufacturing capabilities of Elecon Engineering Company Limited along with local facilities to provide not only sales, but also engineering and technical support direct to our customers. This enables Radicon to provide customized service levels to high volume distributors and manufacturers, wanting standard products to more bespoke customers, requiring higher technical support and assistance. We believe it is this attention to customer service level that will distinguish Radicon in a competitive market. And we continue to focus on providing outstanding customer support and service.

We also have an established and experienced service and repair division which has seen some challenges in the steel industry during the past year. However, we have managed to secure some important contracts with key new customers and we are looking for growth in our service and repair division in the coming year.

Growth potential outside of Radicon''s domestic and traditional markets continues to be explored. Orders within the African region increased by 10% on prior year and are expected to continue to grow with increased local representation. Elecon''s enhanced product ranges, are also giving Radicon''s customer''s greater choice and options, whilst increasing capabilities, with engineering support.

We are also looking for further opportunities in the export markets, which may be strengthened more with competitive pricing resulting from GBP currency depreciation. However the currency depreciation during the past financial year has impacted on Radicon UK''s profit, as GBP lost ground on all major currencies after the EU referendum.

Sales revenue dropped 20.7% to GBP 11.1 million in FY 2017, from GBP 14.0 million in FY 2016. However, due to cost control initiatives and adaptability, EBITDA was maintained at GBP 1 million compared with GBP 1.3million in FY 2016. And would have been similar to prior year, if not for foreign currency fluctuations.

Despite challenging European markets, starting the year with an established sales team, along with Elecon''s product ranges, development of new sectors, industries, and territories Radicon UK are forecasting growth in FY 2018.

Radicon Drive Systems, Inc, (Radicon USA)

(Formerly known as Elecon USA Transmission Ltd.) - a Radicon UK subsidiary

During the last financial year Radicon Drive Systems has continued with the expansion of its sales and marketing team, and an increased representation geographically. This has been backed by an extensive marketing campaign to communicate the Radicon brand, and also publicize the additional Elecon product ranges and capabilities which can now be offered. Growth of national distribution partners is also continuing, to also increase national market penetration.

Radicon Drive Systems also expanded their facilities and moved to new larger premises during the year. Coupled with further capital investment, to make sure that the company has the capabilities to give the expanded customer base, the great Radicon service levels.

Subsequently Radicon Drive Systems is now quoting a larger and more geographically diverse customer base. However converting all of these into sales revenue, is now expected to be mainly realised in the forthcoming financial year.

As such the sales revenue for the past year increased by 1% from USD 9.5million to USD 9.6 million.

EBITDA reduced from USD 0.3 million to a loss of USD 1.3 million as a consequence of the increase in selling and expansion costs. The management believes that this investment will help grow sales and profitability in the new financial year and beyond.

Elecon Singapore Pte. Ltd.

Elecon Singapore Pte. Ltd., Singapore is a Wholly-Owned Subsidiary of the Company. It is a marketing arm of your Company and engages in the business of selling and supply of your Company''s products in Singapore, Indonesia, Malaysia, Laos, Vietnam, Philippines, Taiwan, South Korea, North Korea, Cambodia, Russia, China, Japan, Myanmar, Thailand, Mongolia and other Far East countries.

Elecon Singapore Pte. Ltd., has achieved a total revenue growth of 32.77 %, from USD 1.56 million FY 2015-16 to USD 2.08 million FY 2016-17. However, EBITDA has decreased by 62.76% from USD 0.072 million FY 2015-16 to USD 0.027 million FY 2016-17.

Elecon Middle East FZE, Dubai

Elecon Middle East FZE, Dubai is a Wholly-Owned Subsidiary of the Company. It is a marketing arm of your Company and engages in the business of selling and supply of your Company''s products in U.A.E. (Abu Dhabi, Dubai, Sharjah, Ajman, Umma Al Quwain, Ras Al Khaimah), Saudi Arabia, Oman, Yemen, Jordan, Kuwait, Iran, Iraq, Syria, Turkey, Bahrin, Qatar, Afghanistan, Palestine, Algeria, Comoros, Djibouti, Lebanon and other Middle East Countries.

During the year, total revenue of Elecon Middle East FZE has dropped by 36.18 %, from AED 13.33 million FY 2015-16 to AED 8.51 million FY 2016-17 and an EBITDA has dropped by 75.40% from AED 2.21 million FY 2015-16 to AED 0.54 million FY 2016-17.

Financial Performance - Associate

Eimco Elecon (India) Limited (EEIL)

Eimco Elecon (India) Ltd. (EEIL), a listed Company, was promoted by Elecon Engineering Company Ltd. and Envirotech Corporation, USA in 1974. In 1989, Tamrock OY, a Finnish Corporate Giant acquired stake held by Envirotech Corporation, USA in EEIL. In 1997, Sandvik AB, a Swedish company, has acquired major shares of Tamrock OY, thereby taken its controlling interest. At present, Sandvik Group holds 25.10% shares in EEIL.

EEIL is engaged in the business of manufacturing of a wide range of underground mining machinery viz. Air Powered Rocker Shovels, Electro Hydraulic Side Dump Loaders and Electro-hydraulic and Air powered Load Haul Dumpers used as loading machines in both the underground Coal mines and Metalliferous mines. EEIL is the market leader in the underground mining machinery business.

During the year, EEIL has achieved a Turnover of Rs.18,540.52 Lakhs as against Rs.14,953.26 Lakhs in the previous year, representing an increase of 24 %.

For the year ended on March 31, 2017, EEIL has achieved Earnings Before Interest (Finance Cost), Depreciation & Amortization and Tax (EBIDTA) including other income of Rs.3,535.15 Lakhs as against the EBIDTA of Rs.3,022.19 Lakhs during the previous year, representing an increase of 16.97 %.

Vigil Mechanism / Whistle Blower Policy

The Company has in place a Vigil Mechanism/Whistle Blower Policy for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct. The Mechanism provides for adequate safeguards against victimization of Director(s) and Employee(s) who avail the mechanism.

The Vigil Mechanism/Whistle Blower Policy is available on Company''s website at https://www.elecon.com/views/ templates/admin-uploads/Investors/whistle-blower-policy/Elecon-Whistle-Blower-Policy.pdf.

Report on Management Discussion & Analysis and Corporate Governance

As per Chapter IV of SEBI (LODR) Regulations, 2015, separate reports on Management Discussion & Analysis, Corporate Governance and a certificate from the Company''s Auditors form part of this Report.

Your Company is committed to maintain the highest standards of Corporate Governance, reinforcing the valuable relationship between the Company and its Stakeholders.

Corporate Social Responsibility (CSR) Initiatives

In accordance with the provisions of Section 135 of the panies Act, 2013 and Rules framed there under your Company has adopted a policy for CSR and the Board has constituted a Committee for implementing the CSR activities. Composition of the Committee and other details are provided in Corporate Governance Report.

The Company has implemented various CSR projects directly and / or through implementing agency and the projects undertaken by the Company are in accordance with Schedule VII of the Companies Act, 2013. The report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014, is given in "Annexure C", forming part of this report.

Significant and Material Orders passed by the Regulators or Courts

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

Material Changes and Commitments

There have been no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year and the date of this report.

Reporting of Frauds

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee, Board and/or Central Government under Section 143(12) of the Companies Act, 2013 and Rules framed there under.

Risk Management

Although it is not mandatory for the Company, the Board of the Company has constituted a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Board at its meeting held on July 26, 2016 & November 10, 2016 reconstituted Risk Management Committee, particulars of which are mentioned in the Corporate Governance Report. The said committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the areas of financial risks and controls.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

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

Particulars of Employees

The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is annexed to this Report as "Annexure E", forming part of this Report.

Prevention of Sexual Harassment at Workplace

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. As required under law, an Internal Complaints Committee (ICC) has been constituted for reporting and conducting inquiry into the complaints made by the victim on the harassment at the work place. During the year under review, there were no complaints pertaining to sexual harassment.

The policy on Sexual Harassment at Workplace is placed on the Company''s website.

Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as "Annexure F".

Insurance

The Company takes a very pragmatic approach towards insurance. Adequate cover has been taken for all movable and immovable assets for various types of risks.

Industrial Relations/Personnel

Your Company is committed to upholding its excellent reputation in the field of Industrial relations. Through continuous efforts, the Company invests and improvises development programmes for its employees.

Acknowledgement

Your Directors are highly grateful for the unstinted guidance, support and assistance received from the Government, Financial Institutions and Banks. Your Directors are thankful to all valuable Stakeholders of the Company viz. shareholders, customers, dealers, vendors, suppliers and business associates for their faith, trust and confidence reposed in the Company.

Your Directors wish to place on record their sincere appreciation for the dedicated efforts and consistent contribution made by the employees at all levels, to ensure that the Company continues to grow and excel.

For and on behalf of Board of Directors

Prayasvin B. Patel

Chairman & Managing Director

DIN: 00037394

Place: Vallabh Vidyanagar

Date: May 19, 2017


Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting this 54th Annual Report together with the Audited Statements of Accounts for the year ended on March 31, 2014.

In the environment of global slowdown, your Directors strive hard to retain/restate the confidence of various stakeholders including the shareholders. We have continued with our custom of providing high quality content and services. The custom in no way hinders our capacity for innovations.

As you are our valued partner in the Company, we share our vision of growth with you. Our guiding principles are a blend of realism and optimism which has been and will be the guiding force of all our future endeavours.

The summary of operating results for the year and appropriation of divisible profits is given below:

Review of Operations

Standalone financial performance

For the year ended on 31st March, 2014, the Company has achieved a Turnover of Rs. 50,123.19 Lacs as against Rs.59,520.70 Lacs in the previous year, representing decrease in Turnover by 15.79%. The decline in turnover is because of slow down in Indian economy.

For the year ended on 31st March, 2014, the Company has achieved Earnings Before Interest (Finance Cost), Depreciation & Amortization and Tax (EBIDTA) of Rs.11,762.34 Lacs as against the EBIDTA of Rs.11,381.85 Lacs during the previous year, representing increase in EBIDTA by 3.34%.

The Company holds total unexecuted orders worth Rs. 266.49 Crs. as on March 31, 2014. This will help us to continue to have sustainable growth in coming years.

( Rs. in Lacs)

Year Ended March 31, Standalone Consolidated 2013-14 2012 -13 2013-14 2012-13

Profit Before Tax, Finance cost, 11,762.34 11,381.85 16,504.25 21,560.59

Depreciation & Amortization and

Adjustment for previous year

Less : Finance Cost 3,324.78 3,008.16 7,403.70 8,168.32

Depreciation & Amortization 4,542.22 4,198.88 6,162.36 5,708.99

Profit Before Tax 3,895.34 4,174.81 2,938.19 7,683.28

Less/(Add) : Exceptional Items - 2,668.29 - 2,668.29

Less: Provision for Tax 1,402.67 1,044.37 1,667.80 2,268.90

Deferred Tax (250.31) (306.49) (84.21) (111.58)

Mat Credit Entitlement - - (73.35) -

Short/(Excess) Prov. of earlier years - (83.86) 1.22 (81.82)

Profit After Tax 2,742.98 852.50 1,426.73 2,939.49 Add:

Minority Interest - - (68.87) (1,150.99)

Profit on disposal of Interest in Associate - - 15.42 4.72

Previous Year Balance Brought Forward 1,924.09 2,446.09 1,259.25 1,241.98

PROFIT AVAILABLE FOR APPROPRIATION

APPROPRIATIONS: 4,667.07 3,298.59 2,632.53 3,035.20

Proposed Dividend 1,089.36 1,089.36 1,121.33 1,089.36

Income Tax on Dividend 97.91 185.14 104.41 278.90

Transfer to General Reserve 500.00 100.00 799.07 407.69

Balance Carried Forward 2,979.80 1,924.09 607.72 1,259.25

Consolidated operations

In compliance with the applicable Clauses of the Listing Agreements with the Stock Exchanges, the Company has prepared Consolidated Financial Statements as per the Accounting Standard on Consolidated Financial Statements (AS 21, AS 23 & AS 27) issued by the Institute of Chartered Accountants of India. The Audited Consolidated Financial Statements along with the Auditors'' Report have been annexed to this Annual Report.

Your Company''s total consolidated turnover for the year 2013-14 was Rs.1,29,291.79 Lacs as against Rs.1,52,684.66 Lacs for previous year, representing an decrease of 15.32 %.

For the year ended on 31st March, 2014, the Company has achieved Earnings Before Interest (Finance Cost), Depreciation & Amortization and Tax (EBIDTA) of Rs.16,504.25 Lacs as against the EBIDTA of Rs.21,560.59 Lacs during the previous year, representing decrease in EBIDTA by 23.45%. During the year under review, your Company''s consolidated net worth is Rs.53,209.37 Lacs as against Rs.53,779.16 Lacs for previous year.

Dividend

Your Directors are pleased to recommend dividend of Rs.1/- per share (previous year^1 per share on 10,89,35,843 equity shares of Rs. 2/- each) on 10,89,35,843 equity shares of Rs. 2/- each for the year ended on 31st March, 2014.

Directors'' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, with respect to the Directors'' Responsibility Statement, it is hereby confirmed that:

-in the preparation of the annual accounts of the Company for the year ended on March 31, 2014, the applicable accounting standards have been followed;

-the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year ended on that date;

-the Directors have taken proper and sufficient care 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; and the accounts have been prepared on a "going concern" basis.

Directors

Retire by rotation

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Shri Pradip M. Patel, Director retires by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offers himself for re-appointment.

Appointment Under Section 149 of the Companies Act, 2013

In our Company, all Independent Directors were appointed as directors liable to retire by rotation as per Section 256 of the Companies Act, 1956.

In terms of Section 149 and any other applicable provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, an Independent Director appointed by the Company and holding office as an Independent Director as on the date of commencement of the Companies Act, 2013 i.e. 01.04.2014 shall hold office for a term of five consecutive years and not be liable to retire by rotation.

Accordingly, all Independent Directors of the Company i.e. Shri H.S. Parikh, Shri Chirayu Amin, Shri Jal R. Patel and Shri Jai S. Diwanji shall be appointed as Independent Directors to hold office for a term of five consecutive years from 01.04.2014 upto 31.03.2019 and shall not liable to retire by rotation.

All our Independent Directors fulfil the conditions specified in the Companies Act, 2013 and rules made there under for their appointment as Independent Directors of the Company and are independent of the management.

Members'' approval for their appointment as Independent Directors has been sought in the Notice convening the Annual General Meeting of the Company.

Auditors

Section 139 read with Rules the Companies (Audit and Auditors) Rules, 2014, an Audit firm can be appointed as Statutory Auditors of the Company for maximum two terms of five consecutive years. If the Audit firm has already been appointed as Statutory Auditors of the Company for more than 10 years as on the date of the commencement of the Act, i.e. 01.04.2014, such Audit firm can be appointed as Statutory Auditors for maximum period of 3 years from the date of commencement of the Act, 2013 and their appointment shall be ratified at each Annual General Meeting till the completion of the term.

Since, the Company''s Auditors M/s. Thacker Butala Desai, Chartered Accountants, Navsari has been appointed as Statutory Auditors of the Company for more than 10 years, they can be appointed as Statutory Auditors of the Company to hold the office for maximum period of 3 years from the ensuing Annual General Meeting of the Company. However, your Directors have decided to appoint them on annual basis and they will hold office for one year from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting after the commencement of the Act i.e. 01.04.2014.

Subsidiary Companies

Elecon EPC Projects Limited. (EPL)

Financial Performance: During the year under review, turnover of EPL was Rs. 50,203.45 Lacs against Rs. 66,442.23 Lacs during previous year.

( Rs. In Lacs)

PARTICULARS 31.03.2014 31.03.2013

Profit before Depreciation, Interest & 4,409.51 8,830.02 provision for Taxation

Less: Finance Cost 3,125.13 3,780.57

Depreciation & Amortisation 934.42 850.68

Profit Before Tax 349.96 4,198.77

Add/Less: Provision for Taxation 73.35 1,061.29

Deferred Tax 180.42 223.45

MAT Credit entitlement (73.35) -

Profit After Tax 169.54 2,914.03

APPROPRIATION :

Transfer to General Reserve 150 300.00

Proposed Dividend - Equity Shares - 848.56

Tax on distributed dividend - 144.21

Balance brought forward to balance sheet ,621.18 (0.08)

Balance carried forward to balance sheet 1,640.72 1,621.18

Foreign Subsidiaries

Benzlers-Radicon Group

The Benzlers Radicon group saw tremendous amount of activity by way of site shifting in Benzlers and record order booking growth in Radicon UK (24%) and Radicon USA (18%)

Benzlers shifted its focus from being a manufacturer to that of being a Sales and Engineering focused company. A major portion of manufacturing has been shifted to Elecon in India. The movement saw a great amount of hard work and teamwork by the employees which culminated into an Open day event and inauguration of the facility by our Group Chairman. Along with the open day event, Benzlers also celebrated its 70th anniversary which covered meetings with our key customers and distributors. The new mantra for the B-R group is growth through volumes.

Radicon UK booked 2 prestigious orders from Glaxo Smith Kline (value GBP 1 million) and MVB ( Value GBP 1.2 million), this is the highest single value order in history of Radicon. The current year will see an expansion of sales network having our own sales personnel in France; Africa; Poland; Spain & Portugal. Along with the geographic expansion we will also expand the product portfolio and introduce the EOS series and planetary series in UK/Europe.

Radicon USA on the strength of its distribution business and geographic expansion grew the order booking by 18%. In the current year there will be aggressive expansion of geographic reach, product portfolio and manpower to reach a target of USD 20million.

Financial Performance

Against a challenging global economic environment, Benzlers Radicon group managed to grow sales by 9% from Rs.294 Crores (GBP 34.25 mn.) to Rs.320Crores (GBP 33.29 mn.). Benzlers group had a negative growth of 17%. The budget for 2014-15 for the group has been set at GBP 49 million targeting a growth of 48%. The major growth is forecasted in Radicon USA (125%), Radicon UK (28%) and Benzlers Group (30%)

Radicon Transmission UK Ltd.

The sale at Radicon Transmission UK Ltd. is Rs.132 Cr. (GBP 13.70 Mn.) in FY 13-14 compared to Rs.112 Cr. (GBP 13.06 Mn.) in FY 12-13 resulting into growth of 17% in FY 13- 14.

Elecon USA Transmission Ltd., (Radicon USA) – a Radicon UK subsidiary

The sale at Radicon Transmission USA Ltd. is Rs.62 Cr. (USD 10.23 Mn.) in FY 13-14 compared to Rs. 47 Cr. (USD 8.59 Mn.) in FY 12-13 resulting into growth of 32% in FY 13-14.

AB Benzlers, Sweden

The sales at AB Benzlers, Sweden is Rs.117 Cr. (SEK 126.55 Mn.) in FY 13-14 compared to Rs.137 Cr. (SEK 168.77 Mn.) in FY 12-13 resulting into negative growth of (14%) in FY 13-14.

Operations: (Opening new assembly centers across the world)

We have opened our assembly center in UAE and we now have our own sales personnel in Spain & Portugal. The target is to have our own local entity with stocks and assembly center once the sales cross GBP 1.5 million in that territory.

In 2013-14 we also appointed new distributors in South Africa; Spain, Poland, Germany and Finland who carry our stocks in kit form and locally assemble.

The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2/2011 dated 8th February, 2011, exempt Companies from attaching to its Balance Sheet, the individual Annual Reports of its Subsidiary Companies. As per the Circular, the Consolidated Financial Statements of the Company and all its Subsidiaries duly audited by its statutory auditors are included in the Annual Report.

Shareholders interested in obtaining the statement of Company''s interest in the Subsidiaries or Standalone Financial Statements of the Subsidiary Companies may obtain the same by writing to the Company Secretary of the Company.

The annual accounts of Subsidiary Companies are available for inspection by any investor at the registered office of the Company.

Corporate Governance

As per Clause 49 of the Listing Agreement, a report on Corporate Governance, together with Management Discussion and Analysis and a certificate from the Company''s Auditors form part of this Report.

Your Company, acknowledging its corporate responsibility, has obtained a "Secretarial Compliance Report" from Mr. Ashwin Shah, Company Secretary in practice, which is annexed to this Report.

Your Company is committed to maintain the highest standards of Corporate Governance, reinforcing the valuable relationship between the Company and its Stakeholders.

Fixed Deposits

During the year under review, your Company has not accepted any fixed deposits under the provisions of Section 58A of the Companies Act, 1956 read with Companies (Acceptance of Public Deposits) Rules, 1975. There are no unclaimed deposits as on 31st March, 2014.

Particulars of Employees

Statement as per Section 217(2A) of the Companies Act, 1956 read with the Companies (particulars of employees) Rules, 1975 as amended is annexed to this Report as Annexure A, forming part of this Report.

Foreign Exchange Earnings and Outgo

The particulars required to be furnished under Section 217(1)(e) read with the Companies (Disclosures of particulars in the report of Board of Directors) Rules, 1988 are given in Annexure B, forming part of this Report.

Statutory Disclosures

None of the Directors of your Company is disqualified as per provisions of Section 274(1)(g) of the Companies Act, 1956. Your Directors have made necessary disclosures, as required under various provisions of the Act and Clause 49 of the Listing Agreement.

Insurance

The Company takes a very pragmatic approach towards insurance. Adequate cover has been taken for all movable and immovable assets for various types of risks.

Industrial Relations/Personnel

Your Company is committed to upholding its excellent reputation in the field of Industrial relations. Through continuous efforts, the Company invests and improvises development programmes for its employees.

Acknowledgement

As trustees of the Company, the Directors acknowledge the unstinted support received from Vendors, Traders, Customers, Banks, Financial Institutions, Shareholders and the Society at large.

The Directors also acknowledge the support of the Auditors, Bankers, State and Central Governments'' Officials, Business Partners, Solicitors, Advisors and Employees. The growth of the Company would not have been possible without their unfailing support.

Your Directors look forward to having a long and fruitful relationship with all of them.

For and on behalf of Board of Directors

Prayasvin B. Patel

Chairman & Managing Director

Place: Vallabh Vidyanagar

Date : May 23, 2014


Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting this 53rd Annual Report together with the Audited Statements of Accounts for the year ended on March 31, 2013.

In the environment of global slowdown, your Directors strive hard to retain/restate the confidence of various stakeholders including the shareholde'' We have continued with our custom of providing high quality content and services. The custom in no way hinders our capacity for innovations.

As you are our valued partner in the Company, we share our vision of growth with you. Our guiding principles are a blend of realism and optimism which has been and will be the guiding force of all our future endeavo''

The summary of operating results for the year and appropriation of divisible profits is given below:

Review of Operations

Standalone financial performance

For the year ended on 31st March, 2013, the Company has achieved a Turnover of Rs. 60,631.53 Lacs as against Rs. 1,33,909.98 Lacs in the previous year. The decline in turnover is only because of slump sale of MHE Business of the Company, which was used to contribute more than 50% of total turnover. Therefore, the F.Y. 2012-13 financial figures are not comparable with previous year''s figures.

For the year ended on 31st March, 2013, the Company has achieved Earnings Before Interest (Finance Cost), Depreciation & Amortization and Tax (EBIDTA) of Rs. 10,271.02 Lacs (excluding exceptional item of Rs. 2,668.29 Lacs pertains to loss on sale of MHE undertaking pursuant to the Scheme of Arrangement).

(Rs.in Lacs)

Year Ended March 31, Standalone Consolidated

2012-13 2011 -12 2012-13 2011-12

Proft Before Tax, Finance cost, 11381.85 21017.41 21560.59 21667.28

Depreciation & Amortization and Adjustment for previous year

Less : Finance Cost 3008.16 5795.81 8168.32 6634.71

Depreciation & Amortization 4198.88 4238.08 5708.97 4864.71

Proft Before Tax 174.81 10983.52 7683.30 10167.86

Less/(Add) : Exceptional Items 2668.29 2668.29 (149.34)

Less: Provision for Tax 1044.37 3495.08 2268.90 3746.11

Deferred Tax (306.49) 360.82 (111.58) 350.68

Short/(Excess) Prov. of earlier years (83.86) 167.70 (81.82) 166.87

Proft After Tax 852.50 6959.92 2939.99 6053.54

Add: Adjustment of P. Y. / Share of Proft (1150.99)

of Associate 4.72 30.87

Proft on disposal of Interest in Associate 25.61

Previous Year Balance Brought Forward 2446.09 2428.84 1241.98 2409.95

PROFIT AVAILABLE FOR APPROPRIATION 3298.59 9388.76 3035.20 8519.97 APPROPRIATIONS:

Proposed Dividend 1089.36 1671.51 1089.36 1709.84

Income Tax on Dividend 185.14 271.16 278.90 277.38

Transfer to General Reserve 100.00 5000.00 407.69 5290.77

Balance Carried Forward 1924.09 2446.09 1259.25 1241.98

The Company holds total unexecuted orders worth Rs. 20,612.00 Lacs as on March 31, 2013. This will help us to continue to have sustainable growth in coming yea''

Consolidated operations

In compliance with the applicable Clauses of the Listing Agreements with the Stock Exchanges, the Company has prepared Consolidated Financial Statements as per the Accounting Standard on Consolidated Financial Statements (AS 21, AS 23 & AS 27) issued by the Institute of Chartered Accountants of India. The Audited Consolidated Financial Statements along with the Auditors'' Report have been annexed to this Annual Report.

Your Company''s total consolidated revenue for the year 2012-13 was Rs. 1,53,422.83 Lacs as against Rs. 1,62,119.77 Lacs for previous year, representing an decrease of 5.36%.

During the year, EBIDTA was Rs. 20,822.42 Lacs (excluding exceptional item of Rs. 2,668.29 Lacs pertains to loss on sale of MHE undertaking

pursuant to the Scheme of Arrangement) as against Rs. 21,018.54 Lacs for the previous year, representing a decrease of 0.94%. During the year under review, your Company''s consolidated net worth is Rs. 53,779.16 Lacs as against Rs. 45,869.29 Lacs for previous year.

Dividend

Your Directors are pleased to recommend dividend of Rs. 1/- per share (previous year Rs. 1.80 per share on 9,28,61,510 equity shares of Rs. 2/- each) on 10,89,35,843 equity shares of Rs. 2/- each for the year ended on 31st March, 2013.

Directors'' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, with respect to the Directors'' Responsibility Statement, it is hereby confirmed that:

- in the preparation of the annual accounts of the Company for the year ended on March 31, 2013, the applicable accounting standards have been followed;

- the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year ended on that date;

- the Directors have taken proper and sufficient care 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; and

- the accounts have been prepared on a "going concern" basis.

Directors

Retire by rotation

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Shri Pradip M. Patel and Shri Chirayu Amin, Directors retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer themselves for reappointment.

New Appointment

Shri Jai S. Diwanji, was appointed as an Additional Director of the Company from the 1st day of November 2012. His experience in the field of domestic and international laws, drafting of various documents will provide essential guidance for the Company in today''s legal complexities. He holds office upto the date of the ensuing Annual General Meeting of the Company.

The Board welcomes Shri Jai S. Diwanji and considers it an advantage to the Company to avail the expertise of the new board member. Members'' approval for his appointment as a Director has been sought in the Notice convening the Annual General Meeting of the Company.

Auditors

The Company''s Auditors M/s. Thacker Butala Desai, Chartered Accountants, Navsari retire as Statutory Auditors at the ensuing Annual General Meeting of the Company and being eligible offer themselves for reappointment.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR 2012-13:

Acquisition of Shares of Elecon EPC Projects Ltd.

During the year under review, the Company has invested in shareholding of Elecon EPC Projects

Ltd. (formerly known as Aakaaish Projects Ltd.), a closely held unlisted Group Company by purchasing its entire capital. By virtue of the acquisition of shares, the Elecon EPC Projects Ltd. has become a Wholly-Owned Subsidiary of the Company. As this Subsidiary is material non listed Indian subsidiary Company, as per Clause 49 (III) of the Listing Agreement, one of the Independent Directors of the Company has been appointed on the Board of the Subsidiary.

Formation of a new Subsidiary Company

During the year, the Company has formed a private Company namely; Excel EPC Projects Pvt. Ltd. on 30.05.2012 as its Wholly-Owned Subsidiary Company. Later during the year, the Company has sold its entire shareholding in Excel EPC Projects Pvt. Ltd. to two of the promoters of the Company.

Scheme of Arrangement

During the year under review, the Hon''ble High Court of Gujarat, vide its orders dated December 21, 2012 has sanctioned the Scheme of Arrangement between Prayas Engineering Limited (''First Demerged Company'' or ''PEL'') and EMTICI Engineering Limited (''Second Demerged Company'' or ''EMTICI'') and Elecon Engineering Company Limited (''First Resulting Company'' or ''EECL'') and Elecon EPC Projects Limited (''Second Resulting Company or ''EPL'') and their respective Shareholders and Credito'' The appointed date of the Scheme is April 1, 2012. The Company has received certified copies of the orders dated 19th March, 2013. The Scheme has become effective on filing of certified copy of order with Registrar of Companies, Gujarat on 1st April, 2013.

The Scheme of Arrangement inter alia, envisages:

- Transfer of MHE Undertaking of Elecon Engineering Company Limited to Elecon EPC Projects Limited, a Subsidiary Company of the Company by way of slump sale.

- Transfer of GEAR business of Prayas Engineering Limited and EMTICI Engineering Limited to Elecon Engineering Company Limited by way of demerger.

Slump Sale of MHE Business

By virtue of the Scheme of Arrangement, the Company has transferred its MHE Div. by way of slump sale to its Subsidiary Company for a total cash consideration of Rs.127.32 C''

By virtue of the aforesaid High Court order, all assets, liabilities, facilities, workforce, contracts, rights, obligations, qualifications, etc. (except land and buildings) of MHE business of Elecon Engineering Company Limited stands transferred to Elecon EPC Projects Limited.

Merger of GEAR Business of two Group Companies into the Company

By virtue of the Scheme of Arrangement, GEAR businesses of two Group Companies i.e. Prayas Engineering Ltd. and Emtici Engineering Ltd., have been merged into the Company. Against the payment of the consideration for the merger, the Company has allotted new equity shares to the Shareholders of these two Group Companies.

By virtue of the aforesaid High Court order, all assets, liabilities, facilities, workforce, contracts, rights, obligations, qualifications, etc. (except land and buildings) of GEAR business of Prayas Engineering Ltd. and Emtici Engineering Ltd. stands transferred to Elecon Engineering Company Limited.

Share Capital

Pursuant to the Scheme of Arrangement and for the consideration of merger of GEAR businesses of two Group Companies i.e. Prayas Engineering Ltd. and Emtici Engineering Ltd., the Company, on 12th April, 2013, has allotted 1,60,74,333 equity shares to the Shareholders of these two Group Companies thereby increasing its Paid Up Share Capital to 10,89,35,843 equity shares of Rs. 2 each.

Subsidiary Companies

Elecon EPC Projects Limited. (EPL) Financial Performance :

During the year under review, turnover of EPL was Rs. 66,813.80 Lacs against Rs. 3.80 Lacs during previous year.

(Rs. In Lacs)

PARTICULARS 31.03.2013 31.03.2012

Proft before Depreciation & provision for Taxation 5049.45 3.73

Less: Depreciation & Amortisation 850.68

Proft Before Tax 4198.77 3.73

Add/Less: Provision for Taxation 1061.29 1.20

Deferred Tax 223.45

Excess/Short Provision for tax of earlier year 0.77

Proft After Tax 2914.03 1.76

APPROPRIATION :

Transfer to General Reserve 100.00

Proposed Dividend - Equity Shares 848.56

Tax on distributed dividend 144.21

Balance Carried forward to balance sheet 1821.18

Foreign Subsidiaries

Year 2012-13 was year of change in Benzlers- Radicon group. Change not only in terms of leadership but also in terms of operating structure.

Capitalizing on the superior manufacturing setup of Elecon group, Benzlers-Radicon group will evolve into a highly customer centric, sales-marketing and assembly- service oriented organization. BR group has been constantly working towards streamlining of focus towards the sales and marketing aspects of the business across the BR group and we believe that this exclusive concentration will enable us to get an edge over our competitors in the international markets, while reducing our overall costs.

Benzlers is on the verge of successfully implementing its restructuring strategy, Project Viking. Through the Project Viking, Benzlers looks forward to harnessing the world class infrastructure of Elecon and become a completely lean organization. With the implementation of Project Viking we will succeed in rationalizing our supply chain, bring down our costs and effectively compete in the European market.

As a step towards becoming one of the biggest power transmission players in the world, we are looking forward to implementing our sales expansion strategy called the Swift Sixteen project. We are planning to establish Swift Centers in sixteen different locations across the globe, where the geared motors of the BR group would be assembled and distributed to the market. Our high quality, distributor friendly, modular products enable us to successfully setup, operate and expand our reach in different geographies. In the past one year, we have already setup a master swift center at Chicago, USA and we are continuously working towards expanding our distributor network in the North American market. Similarly, we have also entered into the growing Russian market, by starting a Swift Center in collaboration with a strong local entity. We are also establishing a footprint in the MENA (Middle East and North Africa) region through our own master swift location in the UAE. We are expecting similar establishments in countries like South Africa and Australia very soon. We are also expanding our operations in Europe through setting up new sales offices and deputing new Key Account Managers at different strategic locations which would help us increase our marketing network. Through these activities, we are consistently expanding our reach and growing aggressively across the world. We are becoming a truly global group with operations in every continent.

Financial Performance

Against a challenging global economic environment, Benzlers Radicon group managed to grow sales by 15% from Rs. 255 Crores (GBP 33.46 mn.) to Rs. 294 Crores (GBP 34.25 mn.). Benzlers group had a negative growth of 6%. The budget for 2013-14 for the group has been set at GBP 40 million targeting a growth of 17%. Apart from the competition from the well-established global players one of the biggest challenges facing the group in exchange risk. For the year end 2012-13, the group has had to provide for GBP 674,000 as loss on exchange rate movement.

Operations: (Opening new assembly centers across the world)

Elecon group has initiated process to start assembly and sales offices in various largest and fastest growing economies of the world. The group plans to open similar locations in South Africa, Brazil, Ukraine/Russia (CIS) and UAE in the next 2 year This helps the group to drive sales in new markets.

The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2/2011 dated 8th February, 2011, exempt Companies from attaching to its Balance Sheet, the individual Annual Reports of its Subsidiary Companies. As per the Circular, the Consolidated Financial Statements of the Company and all its subsidiaries duly audited by its statutory auditors are included in the Annual Report.

Shareholders interested in obtaining the statement of Company''s interest in the subsidiaries or stand- alone financial statements of the subsidiary Companies may obtain the same by writing to the Company Secretary of the Company.

The annual accounts of subsidiary Companies are available for inspection by any investor at the registered office of the Company.

Corporate Governance

As per Clause 49 of the Listing Agreement, a report on Corporate Governance, together with Management Discussion and Analysis and a certificate from the Company''s Auditors form part of this report.

Your Company, acknowledging its corporate responsibility, has voluntarily obtained a "Secretarial Compliance Report" from Mr. Ashwin Shah, Company Secretary in whole-time practice, which is annexed to this Report.

Your Company is committed to maintain the highest standards of Corporate Governance, reinforcing the valuable relationship between the Company and its Stakeholde''

Fixed Deposits

During the year under review, your Company has not accepted any fixed deposits under the provisions of Section 58A of the Companies Act, 1956 read with Companies (Acceptance of Public Deposits) Rules, 1975. There are no unclaimed deposits as on 31st March, 2013.

Particulars of Employees

Statement as per Section 217(2A) of the Companies Act, 1956 read with the Companies (particulars of employees) Rules, 1975 as amended is annexed to this Report as Annexure A, forming part of this Report.

Foreign Exchange Earnings and Outgo

The particulars required to be furnished under Section 217(1)(e) read with the Companies (Disclosures of particulars in the report of Board of Directors) Rules, 1988 are given in Annexure B, forming part of this report.

Statutory Disclosures

None of the Directors of your Company is disqualified as per provisions of Section 274(1)(g) of the Companies Act, 1956. Your Directors have made necessary disclosures, as required under various provisions of the Act and Clause 49 of the Listing Agreement.

Insurance

The Company takes a very pragmatic approach towards insurance. Adequate cover has been taken for all movable and immovable assets for various types of risks.

Industrial Relations/Personnel

Your Company is committed to upholding its excellent reputation in the field of Industrial relations. Through continuous efforts the Company invests and improvises development programmes for its employees.

Acknowledgement

As trustees of the Company, the Directors acknowledge the unstinted support received from Vendors, Traders, Customers, Banks, Financial Institutions, Shareholders and the Society at large.

The Directors also acknowledge the support of the Auditors, Bankers, State and Central Governments'' Officials, Business Partners, Solicitors, Advisors and Employees. The growth of the Company would not have been possible without their unfailing support.

Your Directors look forward to having a long and fruitful relationship with all of them.

For and on behalf of Board of Directors

Prayasvin B. Patel

Chairman & Managing Director

Vallabh Vidyanagar,

May 23, 2013


Mar 31, 2012

The Directors have pleasure in presenting this 52nd Annual Report together with the Audited Statements of Accounts for the year ended on March 31, 2012.

Your Directors believe in enhancement of wealth of the shareholders. We have continued with our custom of providing high quality content and services. The custom in no way hinders our capacity for innovations.

As you are our valued partner in the Company, we share our vision of growth with you. Our guiding principles are a blend of realism and optimism which has been and will be the guiding force of all our future endeavors.

The summary of operating results for the year and appropriation of divisible profits is given below:

Review of Operations

Standalone financial performance For the year ended on 31st March, 2012, the Company has achieved Turnover of Rs 13,316.72 Mn. as against the Turnover of Rs 11,739.43 Mn. during the previous year, representing increase in Turnover of 13.44%

For the year ended on 31st March, 2012, the Company has achieved Earnings Before Interest, Depreciation & Amortization and Tax (EBIDTA) of Rs 2,003.90 Mn. as against the EBIDTA of Rs 1,771.40 Mn. during the previous year, representing increase in EBIDTA by 13.13%.

The Company holds total unexecuted orders worth Rs 1 2,1 20.90 Mn. Out of which Rs 9,130.07 Mn. is for the MHE division and Rs 2,9908.30 Mn. is for the Gear Division as on March 31, 2012. This will help us to continue to have sustainable growth in coming years.

(Rs.in Mn)

Year Ended March 31, Standalone Consolidated

2011-12 2010 -11 2011-12 2010-11

Profit Before Tax, Finance cost,

Depreciation & Amortization and 210l.74 2098.39 2166.73 2171.41 Adjustment for previous year

Less : Finance Cost 579.58 500.94 663.47 527.87

Depreciation & Amortization 423.81 393.53 486.47 416.50

Profit Before Tax 1098.35 1203.92 1016.79 1227.04

Add : Exceptional Items -- -- 14.93 --

Less: Provision for Tax 402.36 324.71 426.37 340.35

Deferred Tax -- -- -- -- Short/(Excess) Prov. of earlier years -- -- -- --

Profit After Tax 695.99 879.21 605.35 886.69

Add: Adjustment of P. Y. / Share of Profit --- -- 5.65 12.89 of Associate

Previous Year Balance Brought Forward 242.88 207.94 241.00 203.75

PROFIT AVAILABLE FOR APPROPRIATION 938.87 1087.15 852.00 1103.33 APPROPRIATIONS:

Proposed Dividend 167.15 167.15 170.98 167.15

Income Tax on Dividend 27.12 27.12 27.74 27.74

Transfer to General Reserve 500.00 650.00 529.08 667.45

Balance Carried Forward 244.60 242.88 124.20 240.99

Consolidated operations

In compliance with the applicable Clauses of the Listing Agreements with the Stock Exchanges, the Company has prepared Consolidated Financial Statements as per the Accounting Standard on Consolidated Financial Statements (AS 21, AS 23 & AS 27) issued by the Institute of Chartered Accountants of India. The Audited Consolidated Financial Statements along with the Auditors Report have been annexed to this Annual Report.

Your Company's total consolidated revenue for the year 2011-12 was Rs 16,132.17 Mn. as against Rs12,843.48 Mn. for previous year, representing an increase of 25.61%.

During the year, EBIDTA was Rs 1998.94 Mn. as against Rs 1,843.02 Mn. for the previous year, representing an increase of 8.46%. During the year under review, your Company's consolidated net worth is Rs 4,586.93 Mn. as against Rs 4,183.91 Mn. for previous year.

Dividend

Your Directors are pleased to recommend dividend of Rs 1.80 per share (previous year Rs 1.80 per share on 9,28,61,510 equity shares of Rs 2/- each) on 9,28,61,510 equity shares of Rs 2/- each for the year ended on 31st March, 2012.

Directors' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, with respect to the Directors' Responsibility Statement, it is hereby confirmed that:

- in the preparation of the annual accounts of the Company for the year ended on March 31, 2012, the applicable accounting standards have been followed;

- the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year ended on that date;

- the Directors have taken proper and sufficient care 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; and

- the accounts have been prepared on a "going concern" basis.

Directors

Retire by rotation

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Shri Hasmukhlal Parikh, Director retires by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offers himself for reappointment.

Your Directors express their profound grief on the sad demise of Dr. A.C. Shah, an Independent Director of the Company on 16th January, 2012. The Board expresses its heartfelt condolence to his family members to bear the irreparable loss. The Board pays glowing tribute to him and puts on record highest appreciation of his association with the Company as a highly respected Director.

New Appointment

Shri Jal Patel, was appointed as an Independent Director of the Company w.e.f. 12th of May 2012 to fill the casual vacancy caused due to sad demise of Dr. A.C. Shah. His experience in the field of financial management, accounting, planning and business development will be an asset to the Company. He holds the office upto the date of the ensuing Annual General Meeting of the Company.

The Board welcomes Shri Jal Patel and expects to avail his expertise in varied areas. Members approval for his appointment as an Independent Director has been sought in the Notice convening the Annual General Meeting of the Company.

Auditors

The Company's Auditors M/s. Thacker Butala Desai, Chartered Accountants, Navsari retire as Statutory Auditors at the ensuing Annual General Meeting of the Company and being eligible offer themselves for reappointment.

Subsidiary Companies

During the year under review, the Company has been continuously investing in the B-R group to enhance the group's profitability as well as to expand its reach with new offices. Elecon has established UK as the headquarters for the B-R group with a mandate to drive global expansion. Elecon has invested in moving to a new manufacturing area and offices in the UK, while a subsidiary of the UK in USA has started sales in 2011. There are plans to create more entities to expand the reach of the B-R group into newer markets.

Some of the initiatives to expand the B-R operations are:

- Expanding the product portfolio of B-R group to include a range of Special Worm Gear Boxes, Couplings; Planetary Gear Boxes and Vertical Mill Drives

- Shifting the function of procurement, assembly and testing of G series gear boxes from Sweden and UK

- Driving the expansion of operations in South Africa; Russia and South America from UK

A few of these efforts have been given in detail in the following section:

Benzlers Overview for 2011-12

- Despite the tough economic climate in Europe, a steady top-line growth has been maintained

- Focus on expanding the Service Business:

A new Service Center has been started at Orebro (North Sweden) with a special emphasis on the Mining and Paper industries

- Geographic Expansion:

-The Company has entered into the Italian market through its new subsidiary - Benzlers Italia srl, established at Milan

-The Company has also expanded its presence in Germany with the addition of a new sales Key Account Manager

- New Products:

-Benzlers has now started focused selling of Elecon Worm units.

-Other Elecon products are being introduced in a planned manner.

Radicon Transmission UK Ltd.

Radicon UK has shifted old offices in Huddersfield, to a new independent facility for manufacturing; service and sales offices at Elland (West Yorkshire). The total cost of this initiative was about GBP 750,000 and helped established a modern facility measuring about 30,000 sq. ft. facility to enable focused growth in the UK market.

Elecon USA Transmission Ltd.- a Radicon UK subsidiary

Elecon USA has obtained assumed name of Radicon USA Transmission in Michigan. Sales in the US market were done through Cone Drive (in Traverse City, Michigan) on a commission basis in the pre-acquisition and post- acquisition period. However, as Cone Drive had similar products, there was lack of focus on pushing Radicon USA sales leading to a stagnation of growth in the US market. To enable growth from a strong central entity, efforts were initiated to create an independent facility for Radicon USA which would enable it to sell to the US customers directly while also operating from a central location like Chicago. These efforts have already started to bear fruits as Radicon USA is currently on track to cross 10 million USD of sales compared to 8 million USD on average during the Cone Drive era.

Operations:

(Opening new assembly centers across the world)

Elecon group has initiated process to start assembly and sales offices in various largest and fastest growing economies of the world. The group plans to open similar locations in South Africa, Brazil, Ukraine/Russia (CIS) and UAE in the next 2 years. This helps the group to drive sales in new markets.

The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2/2011 dated 8th February, 2011, exempt Companies from attaching to its Balance Sheet, the individual Annual Reports of its subsidiary companies. As per the Circular, the consolidated financial statements of the Company and all its subsidiaries duly audited by its statutory auditors are included in the Annual Report.

Shareholders interested in obtaining the statement of Company's interest in the subsidiaries or stand-alone financial statements of the subsidiary Companies may obtain the same by writing to the Company Secretary of the Company.

The annual accounts of subsidiary Companies are available for inspection by any investor at the registered office of the Company.

Corporate Governance

As per Clause 49 of the Listing Agreement, a report on Corporate Governance, together with Management Discussion and Analysis and a certificate from the Company's Auditors form part of this report.

Your Company, acknowledging its corporate responsibility, has voluntarily obtained a "Secretarial Compliance Report" from Mr. Ashwin Shah, Company Secretary in whole-time practice, which is annexed to this Report.

Your Company is committed to maintain the highest standards of Corporate Governance, reinforcing the valuable relationship between the Company and its Stakeholders.

Fixed Deposits

During the year under review, your Company has not accepted any fixed deposits under the provisions of Section 58A of the Companies Act, 1956 read with Companies (Acceptance of Public Deposits) Rules, 1975. There are no unclaimed deposits as on 31st March, 2012.

Particulars of Employees

Statement as per Section 217(2A) of the Companies Act, 1956 read with the Companies (particulars of employees) Rules, 1975 as amended is annexed to this Report as Annexure A, forming part of this Report.

Foreign Exchange Earnings and Outgo

The particulars required to be furnished under Section 217(1)(e) read with the Companies (Disclosures of particulars in the report of Board of Directors) Rules, 1988 are given in Annexure B, forming part of this report.

Statutory Disclosures

None of the Directors of your Company is disqualified as per provisions of Section 274(1)(g) of the Companies Act, 1956. Your Directors have made necessary disclosures, as required under various provisions of the Act and Clause 49 of the Listing Agreement.

Insurance

The Company takes a very pragmatic approach towards insurance. Adequate cover has been taken for all movable and immovable assets for various types of risks.

Industrial Relations/Personnel

Your Company is committed to upholding its excellent reputation in the field of Industrial relations. Through continuous efforts the Company invests and improvises development programmes for its employees.

Acknowledgement

As trustees of the Company, the Directors acknowledge the unstinted support received from Vendors, Traders, Customers, Banks, Financial Institutions, Shareholders and the Society at large.

The Directors also acknowledges the support of the Auditors, Bankers, State and Central Government Officials, Business Partners, Solicitors, Advisors and Employees of Elecon. The growth of the Company would not have been possible without their unfailing support.

Your Directors look forward to having a long and fruitful relationship with all of them.

For and on behalf of Board of Directors

Prayasvin B. Patel

Chairman & Managing Director

Vallabh Vidyanagar, May 12, 2012


Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting this 51st Annual Report together with the Audited Statements of Accounts for the year ended on March 31, 2011.

Your Directors always try to maximize the value to the share holders. We have maintained our tradition of coming forth with high quality content and services. Our tradition in no way inhibits our capacity for innovations.

As trustees of the Company, we share our vision of growth with you. Our guiding principles are a blend of realism and optimism which has been and will be the guiding force of all our future endeavours.

The summary of operating results for the year and appropriation of divisible profits is given below:

Standalone financial performance

For the year ended on 31st March, 2011, the

Company has achieved Turnover ofRs. 11,772.09 Mn. and Net Profit ofRs. 879.21 Mn. as against the Turnover of Rs. 10,463.70 Mn. and Net Profit of Rs. 661.75 Mn. respectively during the previous year, representing increase in Turnover of 12.50% and increase in Net Profit by 32.86%.

The Company holds total unexecuted orders worthRs. 13,840 Mn. Out of whichRs. 10,590 Mn. is for the MHE division and Rs. 3,250 Mn. is for the Gear Division as of March 31, 2011. This will help us to continue to have sustainable growth in coming years. Your Company has ability to attend substantial live enquiries with excellence.

Consolidated operations

In compliance with the applicable Clauses of the Listing Agreements with the Stock Exchanges, the Company has prepared Consolidated Financial Statements as per the Accounting Standard on Consolidated Financial Statements (AS 21, AS 23 & AS 27) issued by the Institute of Chartered Accountants of India. The Audited Consolidated Financial Statements along with the Auditors' Report have been annexed to

(Rs. in Mn)

Year Ended March 31, Standalone Consolidated

2010-11 2009-10 2010-11

Profit Before Tax, Interest, Depreciation & 2049.42 1743.26 2121.86 Adjustments for previous year

Less: Interest 458.26 508.89 485.46

Depreciation 384.26 331.20 406.38

Profit Before Tax 1206.90 903.17 1230.02

Less: Provision for Tax 319.63 166.64 337.02

Deferred Tax 8.06 74.78 6.31

FBT -

Profit After Tax 879.21 661.75 886.69

Add:

Share of Profits of Associates - - 12.89

Adjustment of Previous Years 7.74 -

Previous Year Balance Brought Forward 207.94 200.87 203.75

PROFIT AVAILABLE FOR APPROPRIATION 1087.15 870.36 1103.33 APPROPRIATIONS:

Proposed Dividend 167.15 139.29 167.15

Income Tax on Dividend 27.12 23.13 27.74

Transfer to General Reserve 650.00 500.00 667.45

Balance Carried Forward 242.88 207.94 240.99

this Annual Report.

This is the first year of consolidation. Your Company's total consolidated revenue for the year 2010- 11 was t 12,876.14 Mn. The Net Profit after provision for taxation for the year ended 31st March, 2011 was Rs. 899.58 Mn. The basic earnings per share for the year was Rs. 9.69. Your Company's consolidated net worth is Rs. 4,147.58 Mn. as on 31 March, 2011.

Your Directors are pleased to recommend dividend ofRs. 1.80 per share (previous year Rs. 1.50 per share on 9,28,61,510 equity shares ofRs. 2/- each) on 9,28,61,510 equity shares of Rs. 21- each for the year ended on 31st March, 2011.

Directors' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, with respect to the Directors' Responsibility Statement, it is hereby confirmed that:

- in the preparation of the annual accounts of the Company for the year ended on March 31, 2011, the applicable accounting standards have been followed;

- the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year ended on that date;

- the Directors have taken proper and sufficient care 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; and

- the accounts have been prepared on a "going concern" basis.

Retire by rotation

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Shri Pradip M. Patel and Shri Chirayu Amin, Directors retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer themselves for reappointment.

Re-appointment of Shri Prayasvin B. Patel as Chairman and Managing Director

The tenure of Shri Prayasvin B. Patel, Chairman & Managing Director of the Company will expire on 30th June, 2011. The Remuneration Committee and the Board of Directors at their respective meetings held on 24th May, 2011 recommended and approved the re- appointment of and payment of remuneration to Shri Prayasvin B. Patel as Chairman & Managing Director of the Company for a further period of three years w.e.f. 1st July, 2011, subject to the approval of Shareholders. Terms and conditions for his re-appointment are contained in the Explanatory Statement forming part of the notice of the ensuing Annual General Meeting.

Appointment of Shri Prashant C. Amin as an Executive Director

Shri Prashant C. Amin has been appointed as Director liable to retire by rotation w.e.f. 29th July, 2008. The Remuneration Committee and the

Board of Directors at their respective meetings held on 24th May, 2011 recommended and approved the appointment of and payment of remuneration to Shri Prashant C. Amin as Executive Director of the Company for a period of three years w.e.f. 1st June, 2011, subject to the approval of Shareholders. Terms and conditions for his re-appointment are contained in the Explanatory Statement forming part of the notice of the ensuing Annual General Meeting.

The Company's Auditors M/s. Thacker Butala Desai, Chartered Accountants, Navsari retire as Statutory Auditors at the ensuing Annual General Meeting of the Company and being eligible offer themselves for reappointment.

Subsidiary Companies

During the year under review, the Company has incorporated a Wholly Owned Subsidiary, (WOS) in Mauritius, namely, Elecon Transmission International Ltd. to acquire the business of Benzlers-Radicon Group, a Sub-Group of David Brown Gear Systems Group, UK. the said WOS has executed Sale and Purchase Agreement (SPA) to acquire 100% stake in the business of 1) David Brown Systems Sweden AB (Sweden), 2) Applied

Transmission Products Division of David Brown Geared Systems Limited (U.K) and 3) Geared Motor Division of Cone Drive Operations Inc. (U.S) (the "Business") of the David Brown Gear Systems Group. The WOS has also paid the acquisition consideration to the Seller on 26.11.2010.

The following eleven subsidiaries were set up / acquired during the year:

1. Elecon Transmission International Ltd., Mauritius.

2. Radicon Transmission UK Ltd.

3. Elecon USA Transmission Ltd.

4. David Brown Systems Sweden AB

5. AB Benzlers, Sweden

6. Benzler Technisch Buro Aandrijftechniek B.V. (The Netherlands)

7. Benzler Transmission A.S. (Denmark)

8. Benzler Andtriebstech nik GmbH (Germany)

9. Oy Benzler AB (Finland)

10. Benzlers Antriebstechnik Gesmbh, Austria

11. Benzlers Malaysia, Malaysia

Radicon Transmission UK Ltd.

Warehouse and offices currently located at DB site, Huddersfield, UK Warehousing, service, assembly, sales office Engineering: design and applications There are total 58 Employees at present Relocation to

alternative premises in November 2011

Elecon USA Transmission Ltd

Site located in Traverse City, Michigan Warehousing, Assembly, Testing Growth opportunities through regional focus, product expansion, sales team focus

AB Benzlers, Sweden

Plant located in Helsingborg, Sweden Property owned by AB Benzlers Manufacturing , Assembly, Testing, Warehousing ; Engineering: Design and Applications ; At present, there are total 99 Employees Satellite service centre in Orebro (central Sweden) opens April 2011

Benzler Technisch Buro Aandrijftechniek B.V. (The Netherlands)

- Site located in Venlo, Netherlands Warehousing, service, assembly, sales office Well positioned to serve Centra! Europe

Benzlers-Radicon Intellectual Property acquired: Brands :

Products & Range Designs

Series G Industrial Reducer Series H Industrial Reducer Series BD Screw Jacks Series BS Worm Drive Series BTM Shaft Mount Reducer Series A Mid Worm Drive Series J Shaft Mount Reducer Series X Couplings Roloid Gear Pump Kibo Taper Release System

By virtue of this acquisition, your Company can expand its operations in various Countries across the globe either directly or through its Subsidiary Companies.

The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2/2011 dated 8th February, 2011, exempt Companies from attaching to its Balance Sheet,

the individual Annual Reports of its subsidiary companies. As per the Circular, the consolidated financial statements of the Company and all its subsidiaries duly audited by its statutory auditors are included in the Annual Report.

Shareholders interested in obtaining the statement of Company's interest in the subsidiaries or stand-alone financial statements of the subsidiary Companies may obtain the same by writing to the Company Secretary of the Company.

The annual accounts of subsidiary Companies are available for inspection by any investor at the registered office of the Company.

Ringspann GmbH, Germany, a joint venture partner in Ringspann Elecon (India) Ltd., a Joint Venture Company ("JVC") has made divestment of their entire shareholding by selling their stake to Elecon Group of Companies. In view of the said divestment, the said JVC has applied for the change of name. The JVC will continue to use the technology of the outgoing German partner for its captive consumption.

As per Clause 49 of the Listing Agreement, a report on Corporate Governance, together with Management Discussion and Analysis and a certificate from the Company's Auditors form part of this report.

Your Company, acknowledging its corporate responsibility, has voluntarily obtained a "Secretarial Compliance Report" from Mr. Ashwin Shah, Company Secretary in whole-time practice, which is annexed to this Report.

Your Company is committed to maintain the highest standards of Corporate Governance, reinforcing the valuable relationship between the Company and its Stakeholders.

During the year under review, your Company has not accepted any fixed deposits under the provisions of Section 58A of the Companies Act, 1956 read with Companies (Acceptance of Public Deposits) Rules, 1975. There are no unclaimed deposits as on 31st March, 2011.

Statement as per Section 217(2A) of the Companies Act, 1956 read with the Companies (particulars of employees) Rules, 1975 as amended is annexed to this Report as Annexure A, forming part of this Report.

The particulars required to be furnished under Section 217(l)(e) read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are given in Annexure B, forming part of this report.

None of the Directors of your Company is disqualified as per provisions of Section 274(1 )(g) of the Companies Act, 1956. Your Directors have made necessary disclosures, as required under various provisions of the Act and Clause 49 of the Listing Agreement.

The Company takes a very pragmatic approach towards insurance. Adequate cover has been taken for all movable and immovable assets for various types of risks.

Your Company is committed to upholding its excellent reputation in the field of Industrial relations. Through continuous efforts the Company invests and improvises development programmes for its employees.

As trustees of the Company, the Directors acknowledge the unstinted support received from Vendors, Traders, Customers, Banks, Financial Institutions, Shareholders and the society at large.

The Directors also acknowledges the support of the Bankers, Auditors, Central and State Government Officials, Solicitors, Advisors, Business Partners and Members of Elecon family. The growth of the Company would not have been possible without their unfailing support.

Your Directors look forward to having a long and fruitful relationship with all of them.

For and on behalf of Board of Directors



Prayasvin B. Patel

Chairman & Managing Director Vallabh Vidyanagar, May 24, 2011


Mar 31, 2010

The Directors have pleasure in presenting this 50th Annual Report together with the Audited Statements of Accounts for the year ended on March 31, 2010.

Your Directors always try to give the maximum possible value to the share holders. We have maintained our tradition of coming forth with high quality content and services. Our tradition in no way inhibits our capacity for innovations.

As stewards of the Company, we share our vision of growth with you. Our guiding principles are a blend of realism and optimism which has been and will be the guiding force of all our future endeavours.

For the first time, your Company has crossed a Milestone of Rs. 1000 Crores Turnover.

The summary of operating results for the year and appropriation of divisible profits is given below:

(Rs. in Lacs) Year Ended March 31, 2009-2010 2008-2009 Profit Before Tax, Interest, Depreciation & 17432.63 15861.55 Adjustments for previous year Less: Interest 5088.89 4836.80 Depreciation 3312.03 2214.72 Profit Before Tax 9031.70 8810.03 Less: Provision for Tax 1666.35 1812.43 Deferred Tax 747.83 1197.48 FBT - 55.00 Profit After Tax 6617.53 5745.12 Add: Adjustment of Previous Years 77.38 (248.09) Previous Year Balance Brought Forward 2008.75 5641.37 PROFIT AVAILABLE FOR APPROPRIATION 8703.66 11138.40 APPROPRIATIONS: Proposed Dividend 1392.92 1392.92 Income Tax on Dividend 231.35 236.73 Transfer to General Reserve 5000.00 7500.00 Balance Carried Forward 2079.39 2008.75

Review of Operations

For the year ended on 31st March, 2010, the Company has achieved Turnover of Rs. 104637.05 Lacs and Net Profit of Rs. 6617.53 lacs as against the Turnover of Rs. 95506.48 Lacs and Net Profit of Rs. 5745.12 Lacs respectively during the previous year, representing increase in Turnover of 9.56% and increase in Net Profit by 15.19%.

The Company holds unexecuted orders worth Rs. 124301.25 Lacs. Rs. 99653.25 Lacs is for the MHE division and Rs. 24648 Lacs is for the Gear Division as of March 31, 2010. This will help us to steer the Company in the profitable direction. Your Company has ability to attend substantial live enquiries with excellence. During the current financial year, the Company has begged orders worth Rs. 32614.31 Lacs.

Dividend

Your Directors are pleased to recommend dividend of Rs. 1.50/- per share (Previous Year Rs. 1.50/- per share on 9,28,61,510 equity shares of Rs. 21- each) on 9,28,61,510 equity shares of Rs. 21- each for the year ended on 31 st March, 2010.

Directors Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, with respect to the Directors Responsibility Statement, it is hereby confirmed that:

in the preparation of the annual accounts of the Company for the year ended on March 31, 2010, the applicable accounting standards have been followed;

the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year ended on that date;

the Directors have taken proper and sufficient care 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; and

the accounts have been prepared on a "going concern" basis.

Corporate Governance

As per Clause 49 of the Listing Agreement, a report on Corporate Governance, together with Management Discussion and Analysis and a certificate from the Companys Auditors form part of this report.

Your Company, acknowledging its corporate responsibility, has voluntarily obtained a "Secretarial Compliance Report" from Mr. Ashwin Shah, Company Secretary in whole-time practice, which is annexed to this Report.

Your Company is committed to maintain the highest standards of Corporate Governance, reinforcing the valuable relationship between the Company and its Stakeholders.

Fixed Deposits

During the year under review, your Company has not accepted any fixed deposits under the provisions of Section 58A of the Companies Act, 1956 read with Companies (Acceptance of Public Deposits) Rules, 1975. There are no unclaimed deposits as on 31st March, 2010.

Particulars of Employees

Statement as per Section 217(2A) of the Companies Act, 1956 read with the Companies (particulars of employees) Rules, 1975 as amended is annexed to this Report as Annexure A, forming part of this Report.

Conservation Of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars required to be furnished under Section 217(1) (e) read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are given in Annexure 8, forming part of this report.

Directors

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, ShriHasmukhlal S. Parikh and Dr. A.C. Shah, Directors retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer themselves for reappointment.

Auditors

The Companys Auditors M/s. Thacker Butala Desai, Chartered Accountants, Navsari retire as Statutory Auditors at the ensuing Annual General Meeting of the Company and being eligible offer themselves for reappointment.

The observations of the Auditors are self-explanatory.

Statutory Disclosures

None of the Directors of your Company is disqualified as per provisions of Section 274(1 )(g) of the Companies Act, 1956. Your Directors have made necessary disclosures, as required under various provisions of the Act and Clause 49 of the Listing Agreement.

Insurance

The Company takes a very pragmatic approach towards insurance. Adequate cover has been taken for all movable and immovable assets for various types of risks.

industrial Relations/Personnel

Your Company is committed to upholding its excellent reputation in the field of Industrial relations. Through continuous efforts the Company invests and improvises development programmes for its employees.

Acknowledgement

As stewards of the Company, the Directors acknowledge the unstinted support received from Vendors, Traders, Customers, Banks, Financial Institutions, Shareholders and the society at large.

The Directors also acknowledges the support of the Bankers, Auditors, Central and State Government Officials, Solicitors, Advisors, Business Partners and Members of Elecon family. The growth of the Company would not have been possible without their unfailing support.

Your Directors look forward to having a long and fruitful relationship with all of them.

For and on behalf of Board of Directors Prayasvin B. Patel Chairman & Managing Director Vallabh Vidyanagar, May 10, 2010

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