Home  »  Company  »  Kinetic Engg.  »  Quotes  »  Directors Report
Enter the first few characters of Company and click 'Go'

Directors Report of Kinetic Engineering Ltd.

Mar 31, 2016

(Including Management Discussion & Analysis)

Dear Members,

The Directors present the 45th Annual Report on the business and operations of Kinetic Engineering Limited and the Audited Financial Accounts for the financial year ended 31st March, 2016.

Business Overview

I believe that the year 2015 - 2016 is a historic year for your Company. During this year, your Company, which forayed into auto components a few years ago, has implemented major strategic initiatives to ensure a healthy and bright future in the chosen field. Due to these initiatives, which are explained below, your Company now lies at the path of growth, and profitability in the coming future. These initiatives include:

Initiatives taken towards business growth

In the year 2015 - 2016, your Company has obtained and developed major business from international customers. It has utilized its available technical expertise to ensure a successful implementation of these high volume prestigious programmes. The following is the status:

1) Development of components for Renault - Nissan: Your company has successfully developed sleeves and dog teeth components for global major Renault Nissan. These components are supplied to the new platform of gearboxes developed by RNTBC and is used in the widely successful Renault Kwid and the Nissan Redi -Go. Our customer has seen a major success in both these models, due to its features, styling and value proposition, and Your Company is proud to be a part of a high growing programme. Currently the production for this continues to grow at 20% month on month; and is expected to further double by the end of the year 2016 - 2017 as per the volume projections given to us. Furthermore, Your company shall export the same components for RNTBC''s worldwide usage of the gearbox which is also expected to comment shortly. Overall hence, this business shall become a major part of the Company''s growth in the coming years

2) Development of High Value Component for American Axle: Your company has successfully completed the development and validation requirement of a single component that shall be exported (deemed) to the American Major, American Axle. The production and supply of this component has begun and is in high ramp upstage.

The Above 2 business alone are expected to ramp up to an annual revenue of 55 - 60 crores, which is equal to yourcompany''s current revenues!

In addition to the above, your company has also commenced mass production to Magna Powertrain in Muncie, USA. Your Company has also received the order for the development and production for a 380 NM gearbox to be supplied toAshok Leyland for one of their important vehicles. This gearbox has been designed under Your Company''s technical agreement with Magna Styer India and shall be supplied as a fully assembled gearbox, strengthening your Company''s image as the country''s fastest growing commercial vehicle gearbox manufacturer. Your Company also believes that successful implementation of the above initiatives shall result in larger business opportunities from these very premium customers.

The Leyland

Your Company continues to make products for Indian CEMs including TATA, Mahindra, Carraro India and exporting to BRP (USA), Tomos (Slovenia) which have been the customers who have supported Your Company since the beginning of its foray into auto components.

Initiatives taken towards reduction of costs:

Debt and interest burden reduction

Your Company has settled and paid the entire FCCB due as well as the loan from Reliance Capital Ltd, amounting to a debt reduction of Rs. 77.50 crores. Currently hence the liabilities of the company have come substantially down and your company is now left with working capital limits and ICDs from promoters, freeing itself from external long term debt. This way, the company can now focus on implementing a robust business model on the strength of its infrastructure and technical knowledge. This has also reduced the interest burden for the company by Rs. 1.49 Crores, enabling it to use its cash flow usage towards business and required capex.

Material Cost reduction

Your Company has successfully completed its entire backward integration into forgings. An initiative started

2 years ago, today your Company makes more than 95% of its requirement of forgings in house, compared to previous years where this was a bought out commodity. The Company now runs 2 hammer forgings and 1 x 1300 ton press forgings which it purchased during this year. Currently the company has reached a forging production of about 300 tons per month and plans to increase the same along with the business growth. Due to this major initiative, Your company continues to reduce its material cost which has now come down to 51%.

The Company has also benefitted from the reducing fuel prices as the above forgings and heat treatment shops run primarily on crude oil products.

The Company continues to explore avenues of further reduction of costs by exploring options to reduce the fixed overheads including electricity, manpower, fuels, packaging and freight.

KEL has commenced mass production for Renault’s highly successful model KWID and Nissan Redi -

GO. KEL is further developing components for the AMT & 100 NM versions along with commencing its exports.

With a quality system set up in tune with the requirements of ISO 9001, and with ISO/TS 16949:2002 certification, the Company plans to leverage its skills in domestic as well as international market, by further striving for total customer satisfaction through relationship building and providing superior products and technological solutions to its customers. The Company has further strengthened its quality systems by an internal quality assessment system called as "KQAA" (Kinetic Quality Assessment and Awards") which reviews and rewards exceptional practices in Quality at each cell. Various efforts and initiatives have been taken to have a larger focus on Kaizens, Pokayoke, Quality Analysis methodology, APQP documentation and other systems that will ensure a sustainable effort for the business.

The company has launched “KEDS”; a training center called as “Knowledge Enhancement & Development of Skills Center” for its employees in its Ahmednagar facility which focuses on motivational and training of its staff and workers at regular intervals.

Overview of Settlement with FCCB holders and Reliance:

Company had a FCCB Liability of about Rs. 142 Crores. Company had settled the same and was awaiting the approval of RBI.

During the year Company received approval of RBI for the settlement reached with FCCB holders and settlement of the liability was completed as under:

1. Rs. 70 Crores Cash Payment; and

2. By way of issuing 23,40,499 shares of the Company at a price of Rs. 156 per share.

During the year Company also completed the settlement of dues of Rs. 7.25 Crores with M/s. Micro Age Instruments Private Limited, a promoter group Company at Rs. 3.50 Crores by issuing 2,24,359 shares of the Company at a price of Rs. 156 per share.

Similarly, during the year Company also settled the liability of Reliance Capital Limited and Pay one Enterprises Pvt. Ltd. of Rs. 33.10 Crores.

Accordingly, the Loan and Preference Shares liability will be settled asunder:

1. Rs. 14.15 Crores Cash Payment; and

2. By way of issuing 6,00,000 shares of the Company at a price of Rs. 156 per share.

The said issue of 6,00,000 shares was pending shareholders approval as on 31.03.2016.

The above referred negotiations and settlements helped the Company to further improve its net worth and reduction of its liabilities.

Management Discussion &Analysis

While the global recovery was still slow and witnessing divergent trends, Indian Economy grew at 7.8% in the Financial Year 2015-16, against 7.3% in 2014-15 (Source: Indian Statistical Office (CSO) of India data). The major contributor was the manufacturing sector which registered 7.1%growth for the year.

The Government has initiated a slew of steps to take the economy forward.

INDUSTRY OVERVIEW

Industry structure

The automotive industry is an engine of growth for the Indian economy. The auto component industry contributes 25.6% to the manufacturing GDP and 2.2% to National GDP, providing direct employment to 1.5 million people. To help the auto component industry, the government has announced a slew a reforms in the Budget 2015 and the Foreign Trade Policy 2015. Forward looking policy measures such as announcement of introduction of GST, consolidation of various exports schemes, simplification of procedures to help integrate India into the global value chain, improving ease of doing business index through online and e-governance interventions and reducing the transaction costs augur well for the industry. The major business of your Company comes from exports. Company also benefitted from the strengthening of the rupee. All these factors have helped the Company immensely.

Outlook, Opportunities and Threat

The Indian auto industry (the industry) is one of the largest and one of the most competitive in the world. The industry is expected to perform better in the financial year 2016-17 in view of the improving macros - the Seventh Central Pay Commission bounty, softening interest rates, lower fuel cost and inflation.

The Indian Commercial Vehicle Industry is witnessing sizeable investments by Original Equipment Manufacturers (OEMs) towards upgrading their product portfolio, introducing new models and expanding manufacturing capacities.

Government of India aims to make automobile manufacturing the main driver of ‘Make in India'' initiative and has set up a separate independent Department for Transport, comprising of experts from the automobile sector. Investments in road projects is expected to grow at a healthy pace during the next five years, led by the government''s focus on the sector.

Deposits

During the year under review, your Company did not accept any deposits within the meaning of provisions of Chapter V - Acceptance of Deposits by Companies of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

Share Capital

The paid up equity share capital as on 31st March 2016 was Rs. 16.13 cr.

During the year, Company issued 23,40,499 Shares to FCCB holders and 2,24,359 Shares to Promoters on account of Settlement reached and full and final Settlement of their dues.

Research & Development

Research and development is viewed as crucial for development of the Company. These activities add in expanding and upgrading the product portfolio and improving the offerings to the customers.

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

The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure I and is attached to this Report.

Auditors

The auditors M/s P. G. Bhagwat, Chartered Accountants, hold office until the ensuing Annual General Meeting, and have furnished a certificate in terms of Sec. 224(1) of the Companies Act, 2013, about their eligibility.

Secretarial Auditor

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 Mr. Devendra V. Deshpande, Practicing Company Secretary (Certificate of Practice Number: 6099) to undertake the Secretarial Audit of the Company.

In terms of provisions of sub-section 1 of section 204 of the Companies Act, 2013, the Company has annexed to this Board Report as Annexure II, a Secretarial Audit Report given by the Secretarial Auditor.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Employees

Key Managerial Personnel (KMP)

The following have been designated as the Key Managerial Personnel of the Company pursuant to sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

a) Ms. Sulajja Firodia Motwani - Vice Chairperson

b) Mr.AjinkyaA. Firodia-Managing Director & CFO

c) Mr. Rohit Purandare - Company Secretary (CS)

Mr. Mukund Tasgaonkar, CFO of the Company resigned during the year. In his place Mr. Ajinkya A. Firodia, Managing Director of the Company was designated as Chief Financial Officer (CFO).

Particulars of Employees and related disclosures:

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annexure forming part of the Annual Report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Corporate Governance Report which is attached as Annexure III forming part of the Annual Report.

Having regard to the provisions of Section 136(1) read with its relevant provision of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost.

Board Meetings and Annual General Meeting

During the year, 5 meetings of the Board of Directors were held. The details of the meetings are furnished in the Corporate Governance Report which is attached as Annexure-III to this Report.

A calendar of Meetings is prepared and circulated in advance to the Directors'' During the year 1st April, 2015 to 31st March, 2016, 5 Board Meetings were held on 22nd July, 2015, 13th August, 2015, 9th November, 2015, 31st December, 2015, 12th February, 2016. The 44thAnnual General Meeting (AGM) of the Company was held on 30thSeptember, 2015.

Meetings of Independent Directors

The Independent Directors of the Company meet before the Board Meetings without the presence of the Chairman & Managing Director or Executive Director or other Non-Independent Directors or Chief Financial Officer or any other Management Personnel.

These Meetings are conducted in an informal and flexible manner to enable the Independent Directors to discuss matters pertaining to, inter alia, review of performance of Non-Independent Directors and the Board as a whole, review the performance of the Chairman of the Company (taking into account the views of the Executive and Non-Executive Directors), assess 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.

Audit Committee

This Committee comprises of the following Directors viz. Mr. Shirish R. Kotecha (Chairman of the Committee), Mr. Jinendra H. Munot, Mr. Ramesh J. Kabra and Mr. K. H. Sancheti. All the Members are Independent Directors. All the Members of the Committee possess strong accounting and financial management knowledge. The Company Secretary of the Company is the Secretary of the Committee.

All the recommendations of the Audit Committee were accepted by the Board.

Directors and Key Managerial Personnel

During the year under review, there was no change in the composition in the Board of Directors of the Company.

Ms. Sulajja Firodia Motwani, Vice Chairperson of the Company, retires by rotation at the forthcoming Annual General Meeting, and being eligible offers herself for reappointment.

The Independent Directors of the Company have declared that they meet the criteria of Independence in terms of Section 149(6) of the Companies Act, 2013 and that there is no change in their status of Independence.

Mr. Mukund Tasgaonkar, Chief Financial Officer of the Company resigned from the post w.e.f. 30th June, 2015. In his place Mr.AjinkyaA. Firodia, Managing Director of the Company was designated as Chief Financial Officer at the Board Meeting held on 31st December, 2015.

Extract of Annual Return

Pursuant to sub-section 3(a) of section 134 and subsection (3) of section 92 of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return as on 31st March, 2016 in Form No. MGT 9 is attached herewith as Annexure IV and forms part of this Report.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, Independent Directors at their meeting without the participation of the Non-independent Directors and Management, considered/evaluated the Boards'' performance, Performance of the Chairman and other No independent Directors.

The Board have undergone a formal review which comprised Board effectiveness survey, 360 degree and review of materials. This was delivered by an external specialist and resulted in a full Board effectiveness report and Directors'' feedback. This is further supported by the Chairman''s Annual Director Performance Review.

The Board subsequently evaluated its own performance, the working of its Committees (Audit, Nomination and Remuneration and Stakeholders Relationship Committee) and Independent Directors (without participation of the relevant Director).

The criteria for performance evaluation have been detailed in the Corporate Governance Report which is attached as Annexure-III to this Report.

Material changes and commitments affecting the financial position of the Company which have occurred between March 31, 2016 and August 9, 2016 (date of the Report)

There were no material changes and commitments affecting the financial position of the Company between the end of financial year (March 31, 2016) and the date of the Report (August 09,2016).

GOVERNANCE

Corporate Governance

Your Company has a rich legacy of ethical governance practices many of which were implemented by the Company, even before they were mandated by law. Your Company is committed to transparency in all its dealings and places high emphasis on business ethics. A Report on Corporate Governance along with a Certificate from the Statutory Auditors of the Company regarding compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 before which is attached as Annexure III to this Annual Report.

Vigil Mechanism

The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules prescribed there under and the Listing Agreement is implemented through the Company''s Whistle Blower Policy to enable the Directors and employees of the Company to report genuine concerns, to provide for adequate safeguards against victimization of persons who use such mechanism and make provision for direct access to the Chairman of the Audit Committee.

Whistle Blower Policy of the Company is available on the Company''s website at the web-link:

www.kineticindia.com/investors

Further details are available in the Report on Corporate Governance that forms part of this Annual Report.

Contracts or Arrangements with Related Parties

All Related Party Transactions entered into during the year were in the Ordinary Course of Business and on Arm''s Length basis. No Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual financial turnover as per last audited financial statements, were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions to be provided under section 134(3)(h) of the Companies Act, 2013, in Form AOC-2 is not applicable.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website and can be accessed at web link:

www.kineticindia.com/investors

Internal Control System

The company has adequate internal control system commensurate with its size and nature of business for ensuring efficiency of operations, adherence to management policies and protection of company''s assets. The company''s Audit Committee periodically reviews the internal control systems and compliance with Company''s policies, procedures and laws.

Cautionary Statement

The report contains estimates and expectations, which could be ''forward looking''. Actual results, however, might differ from estimates and expectations expressed or implied in this report, as the same are affected by many other uncertainties, including raw material availability & prices, changes in Government regulations, tax regimes, economic developments and other incidental factors.

Directors responsibility statement

Pursuant to section 134(5) of the Companies Act, 2013, your Directors, based on the representations received from the Operating Management, and after due enquiry, confirm that:

(a) in the preparation of the annual accounts for the Financial Year ended 31st March, 2016, the applicable accounting standards have been followed;

(b) the Directors had in consultation with Statutory Auditors, selected 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 as at 31st March, 2016 and of the profit of the Company for the year ended on that date;

(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and irregularities;

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

(e) the Directors have laid down adequate Internal Financial Controls to be followed by the Company and such Internal Financial Controls were operating effectively during the Financial Year ended 31st March, 2016;

(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively throughout the Financial Year ended 31st March, 2016.

Remuneration Policy of the Company

The Remuneration policy of the Company comprising the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company including criteria for determining qualifications, positive attributes, independence of a Director and other related matters has been provided in the Corporate Governance Report which is attached as Annexure-III to this Report.

Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in Note A-11 of the Notes to the financial statements.

Significant and Material Orders Passed by the Regulators or Courts or Tribunals impacting the Going Concern status of the Company

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

Acknowledgement

The directors express their sincere thanks to Central & State Governments, Financial Institutions, banks who have extended their support in form of Credit Facilities, suppliers and stakeholders for the support extended to the Company and also wish to place on record their appreciation of the dedicated services rendered by the employees of the Company.

For and on behalf of the Board of Directors

A. H. Firodia

Chairman

Pune, August 9, 2016

Regd. Off. : D1 Block, PlotNo.18/2, MIDC, Chinchwad, Pune-411019.


Mar 31, 2015

Dear Members,

The Directors present the 44th Annual Report on the business and operations of Kinetic Engineering Limited and the Audited Financial Accounts for the financial year ended 31 st March, 2015.

Financial Highlights

During the financial year 2014-15, the company has made remarkable progress in building the financial strength of the company. Efforts taken for debt reduction and costs rationalization have yielded into strengthening of key financial ratios for the company ensuring a strong success for the business in the long term. As a result, the financial highlights are as follows:

2014 (in Cr) 2013 (in Cr)

Revenues 61.16 61.00

EBITDA 23.98 (78.21)

Profit 10.22 (59.00)

Debt 278.60 192.44

Key Take Aways include:

* Decrease in material costs: from 60.82% to 58.40%.

* Profit for the company of Rs. 10.22 Cr during the year as against a loss of Rs. 59.00 Cr in the previous year.

* Decrease in total debt of the company by Rs.86.16 Cr.

Major factors contributing to net profit were as under: -

A. Backward integration into forgings and turning to become a 100% vertically integrated facility for transmission assemblies manufacturing

B. Rationalisation of businesses to focus on profitable verticals

C. Reduction in overheads through re-layout of plant facilities

D. Negotiation and arriving at a settlement of FCCB bonds worth $ USD 23 MN

E. Settlement of Promoter ICDs worth Rs. 7.25 Crores.

Resulting in a net gain to Rs. 26.75 Crores; and resulting in a net profit for the company of Rs. 10.22.

BUSINESS OVERVIEW

The Company has undertaken the strategic decision to transform its traditional 2 wheeler business to auto-components in the year 2009 in order to tap its immense technical expertise and infrastructure available to become a unique and credible supplier of auto parts & systems, focused on transmission assemblies. Over the period, since the inception, the company has achieved a strong strategic direction to explore the immense potential of this business and has been taking constructive steps to build a robust business ahead. These include:

* A Larger Focus on International Customers and make in India initiative

* Technology partnerships to add to the company's competitiveness and product portfolio

* Focus on transmission assemblies as core business area

* Control on costs through backward integration

* Upgradation of Facilities and Equipments

* Upgradation of Quality systems

* Make in India:

In line with the Honorable Prime Ministers Mantra for "Make in India", your company has been the winner of the prestigious EEPC's award for export excellance consecutively for the last 5 years. Taking forward this strength, the company has won various prestigious, high volume business from international customers such as:

American Axle, A US Company with sales worth $2.93 billion for a major order worth Rs. 30 cr annually

Aixam, France, part of the $5 BN US Polaris industry, for the supply of complete transmission assembly for their quadricycle for Rs. 12 cr annually

Renault Nissan, for the supply of transmission parts for their upcoming small car KWID and various other global platforms worth Rs. 20 cr annually, marking your company's entry into the passenger car segment of a global OEM

Magna Powertrain, for the supply of broached transmission components in the US worth Rs. 5 crore annually

These businesses are under various stages of development, and are expected to commence in 2014 - 2015 and ramp up in the coming years to the desired volumes. As you can see, your company has been successful in bagging business across the globe amongst diverse market segments and is well poised to grow its business substantially. In addition the company continues to maintain its relationship with existing customers including Mahindra Group, TATA motors, Carraro India and various others. The company has also proudly developed various parts for India's favorite small car Nano's new versions which have recently hit the market.

Technology:

Your company continues to partner with technology suppliers to build horizontal and vertical capabilities and offer to customers end to end solutions as noted below:

- The Company is a proud partner with Magna Styer, India as a partner under its existing "technical alliance agreement", whereby MSIA complements KEL's manufacturing capabilities in terms of design, testing and validation of transmission assemblies for its customers. Magna Styer India is a subsidiary of Magna Styer GMBH, Austria, one of the world's largest design xxx

- The Company also has a technical agreement with CTI (Chief Transmissions Limited, formerly Taiwan Golden Bee), a Taiwanese company focusing on making CVT's from 50 cc to 1000 cc. The company hopes to expand its CVT business in the growing scooter market in India together with this alliance.

- The Company also has developed its strength in forgings through backward integration. The company has recently added 1 hammer and 1 press of 1300 tons and has over 95% of its forgings done in house.

These technological partners give the Company a unique position in the market to offer its customer products of international standards at reasonable costs Upgradation of facilitiles and Quality Systems:

In line with the customer profile, the company has taken various initiatives to upgrade its facilities to international standards. These include:

- Set up of a modern & automatic assembly line

- Creation of a conveyorised single piece flow line for high volume customer

- Addition of in-house press forge shop

- Addition of new machines for various critical processes like induction hardening and rack rolling. These shops have been upgraded with a new 5 S initiative to maintain cleanliness and automisation required to deliver the precision quality demanded by the business.

With a quality system set up in tune with the requirements of ISO 9001, and with ISO/TS16949:2002 certification, the Company plans to leverage its skills in domestic as well as international market, by further striving for total customer satisfaction through relationship building and providing superior products and technological solutions to its customer The Company has further strengthened its quality systems by an internal quality assessment system called as "KQAA" (Kinetic Quality Assessment and Awards") which reviews and rewards exceptional practices in Quality at each cell.Various efforts and initiatives have been taken to have a larger focus on Kaizens, Pokayoke, Quality Analysis methodlogy, APQP documentation and other systems that will ensure a sustainable effort for the business.

The company has launched "KEDS"; a training center called as "Knowledge Enhancement & Development of Skills Center" for its employees in its Ahmednagar facility which focuses on motivational and training of its staff and workers at regular intervals.

Overview of Settlement with FCCB holders:

A. On 13 February 2008, the Company issued USD 18,000,000 (United States Dollars Eighteen Million) 2% Convertible Bonds due 2013 i.e. 180 (one hundred and eighty) bonds of face value USD 100,000 (United States Dollars One Hundred Thousand)each.

B. The Bonds were issued pursuant to the terms of the Offering Circular, the Subscription Agreement and the trust deed dated 13 February 2008 entered into between the Company and the Trustee as amended by a supplemental deed dated 15 February 2013 (each as may be amended and/ or restated from time to time, collectively, the "Trust Deed"). The Company had also entered into an Agency Agreement in relation to the appointment of the Principal Agent, the Registrar, the Conversion Agent and the Transfer Agent.

C. The Bonds are listed on the Singapore Exchange Securities Trading Limited, Singapore under ISIN Code: ISIN XS0345165020.

D. As per the terms of the Trust Deed, the Bonds were scheduled to be redeemed by the Company on 15 February 2014 (the "Maturity Date") but have not been redeemed, repurchased, cancelled or converted.

E. The Bondholders and the Company have discussed and negotiated in good faith, terms and conditions for a full and final settlement of the Bonds and have entered an Agreement to record their understanding.

F. Accordingly, the FCCB liability of about Rs. 142 Crores as on 31.03.2015 will be settled as under:

1. Rs. 70 Crores Cash Payment; and

2. By way of issuing 23,40,499 shares of the Company at a price of Rs. 156 per share.

The above settlement is subject to approval of RBI and Company will be making an application to RBI. Similarly, Micro Age Instruments Pvt. Ltd. a promoter group Company also agreed to a settlement whereby, its dues of Rs. 7.25 Crores will be settled at Rs. 3.50 Crores by way of issuing 2,24,359 shares of the Company at a price of Rs. 156 per share.

The above referred negotiations and settlements helped the Company to improve its Net Worth to Rs. 41.91 Crores as on 31.03.2015 and reduction of its liabilities by Rs. 149.25 Crores.

G. Company is also in discussion with Reliance Capital Limited for the settlement of liability.

The above referred negotiations will further help the Company to improve its Net Worth and make it a virtually debt free Company.

While the global recovery was still slow and witnessing divergent trends, Indian Economy grew at 7.3% in the Financial Year (FY) 2014-15, against 6.9% in 2013-14 (Source: Indian Statistical Office (CSO) of India data). The major contributor was the manufacturing sector which registered 7.1 % growth for the year.

The Government has initiated a slew of steps to take the economy forward.

INDUSTRY OVERVIEW

Industry structure

The Auto Component Industry in India has a strong positive multiplier effect as a key driver of economic growth. Indian auto components are exported to more than 160 countries and it is indeed very heartening that component exports have been growing at a CAGR of 29% over the past six years. The major business of your Company comes from exports. Company also benefited from the strengthening of the rupee. All these factors have helped the Company immensely.

Outlook, Opportunities and Threat Your company has successfully bagged business across the globe amongst diverse market segments and is well poised to grow its business substantially. Company also benefited from the strengthening of the rupee.

The Company has got orders however, the same are in development stage and the management is of the view that it is will take another 2 to 3 quarters to operationalise the orders.

Deposits

During the year under review, your Company did not accept any deposits within the meaning of provisions of Chapter V - Acceptance of Deposits by Companies of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

Share Capital

The paid up equity share capital as on 31 March 2015 was Rs. 13.57 cr.

There was no public issue, rights issue, bonus issue or preferential issue etc. during the year.

Research & Development

Research and development is viewed as crucial for development of the Company. These activities add in expanding and upgrading the product portfolio and improving the offerings to the customers.

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

The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure I and is attached to this Report.

Auditors

The auditors M/s P. G. Bhagwat, Chartered Accountants, hold office until the ensuing Annual General Meeting, and have furnished a certificate in terms of Sec. 224(1) of the Companies Act, 1956, about their eligibility.

Secretarial Auditor

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 Mr. Devendra V. Deshpande, Practicing Company Secretary (Certificate of Practice Number: 6099) to undertake the Secretarial Audit of the Company.

In terms of provisions of sub-section 1 of section 204 of the Companies Act, 2013, the Company has annexed to this Board Report as Annexure II, a Secretarial Audit Report given by the Secretarial Auditor.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Employees

Key Managerial Personnel (KMP)

The following have been designated as the Key Managerial Personnel of the Company pursuant to sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

a) Mr.Arun H. Firodia-Chairman

b) Ms. Sulajja Firodia Motwani-Vice Chairperson

c) Mr.Ajinkya A. Firodia-Managing Director

d) Mr. Mukund V. Tasgaonkar - Chief Financial Officer (CFO)

e) Mr. Rohit Purandare - Company Secretary(CS) Other than Mr. Pranvesh Tripathi, Company Secretary and Mr. Ravindra Yadav, Company Secretary, none of the KMP has resigned during the year under review.

Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annexure forming part of the Annual Report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Corporate Governance Report which is attached as Annexure III forming part of the Annual Report.

Having regard to the provisions of Section 136(1) read with its relevant provision of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost.

Board Meetings and Annual General Meeting During the year, 6 meetings of the Board of Directors were held. The details of the meetings are furnished in the Corporate Governance Report which is attached as Annexure-lll to this Report.

During the year 1st April, 2014 to 31st March, 2015, 6 Board Meetings were held on 22nd April, 2014,24th May, 2014, 28th June, 2014, 14th August, 2014, 13th November, 2014, and 12th February, 2015. The 43rd Annual General Meeting (AGM) of the Company was held on 29th September, 2014.

Meetings of Independent Directors

The Independent Directors of the Company meet before the Board Meetings without the presence of the Chairman & Managing Director or Executive Director or other Non-Independent Directors or Chief Financial Officer or any other Management Personnel.

These Meetings are conducted in an informal and flexible manner to enable the Independent Directors to discuss matters pertaining to, inter alia, review of performance of Non-Independent Directors and the Board as a whole, review the performance of the Chairman of the Company (taking into account the views of the Executive and Non-Executive Directors), assess 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.

Audit Committee

This Committee comprises of the following Directors viz. Mr. Shirish R. Kotecha (Chairman of the Committee), Mr. Jinendra H. Munot, Mr. Ramesh J. Kabra and Mr. K. H. Sancheti. All the Members are Independent Directors. All the Members of the Committee possess strong accounting and financial management knowledge.The Company Secretary of the Company is the Secretary of the Committee.

All the recommendations of the Audit Committee were accepted by the Board.

Directors and Key Managerial Personnel

During the year under review, Mr. Ashish Kumar Agarwal,Nominee Director stepped down from the Board. The Board wishes to place on record its deep sense of appreciation for the valuable contributions made by him the Board and the Company during his tenure as Director.

Mr. A. H. Firodia, Director, retires by rotation at the forthcoming Annual General Meeting, and being eligible offers himself for re-appointment.

The Independent Directors of the Company have declared that they meet the criteria of Independence in terms of Section 149(6) of the Companies Act, 2013 and that there is no change in their status of Independence. At the Board Meeting held on May 22, 2014, Mr. Ajinkya A. Firodia, was appointed as Managing Director of the Company for a tenure of 5 years, Mr. Mukund Tasgaonkar, was appointed as Chief Financial Officer w.e.f. 24th May, 2014 and Mr. Pranvesh Tripathi, resigned from the post of Company Secretary as on 24th May, 2014, thereafter Mr. Ravindra Yadav, was appointed as Company Secretary on 24th May, 2014. Mr. Ravindra Yadav resigned from the post of Company Secretary on 5th July, 2014. Mr. Rohit Purandare, was then appointed as Company Secretary on 1st Aug. 2014 and was designated as "Key Managerial Personnel" of the Company pursuant to Sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Extract of Annual Return

Pursuant to sub-section 3(a) of section 134 and sub-section (3) of section 92 of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return as on 31 st March, 2015 in Form No. MGT 9 is attached herewith as Annexure IV and forms part of this Report.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, Independent Directors at their meeting without the participation of the Non-independent Directors and Management, considered/evaluated the Boards' performance, Performance of the Chairman and other Non- independent Directors.

The Board have undergone a formal review which comprised Board effectiveness survey, 360 degree and review of materials. This was delivered by an external specialist and resulted in a full Board effectiveness report and Directors' feedback. This is further supported by the Chairman's Annual Director Performance Review.

The Board subsequently evaluated its own performance, the working of its Committees (Audit, Nomination and Remuneration and Stakeholders Relationship Committee) and Independent Directors (without participation of the relevant Director).

The criteria for performance evaluation have been detailed in the Corporate Governance Report which is attached as Annexure-lll to this Report.

Material changes and commitments affecting the financial position of the Company which have occurred between March 31, 2015 and May 12, 2015 (date of the Report)

There were no material changes and commitments affecting the financial position of the Company between the end of financial year (March 31,2015) and the date of the Report (August 13,2015).

GOVERNANCE

Corporate Governance

Your Company has a rich legacy of ethical governance practices many of which were implemented by the Company, even before they were mandated by law. Your Company is committed to transparency in all its dealings and places high emphasis on business ethics. A Report on Corporate Governance along with a Certificate from the Statutory Auditors of the Company regarding compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement which is attached as Annexure III to this Annual Report.

Vigil Mechanism

The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules prescribed thereunder and the Listing Agreement is implemented through the Company's Whistle Blower Policy to enable the Directors and employees of the Company to report genuine concerns, to provide for adequate safeguards against victimisation of persons who use such mechanism and make provision for direct access to the Chairman of the Audit Committee.

Whistle Blower Policy of the Company is available on the Company's website at the web-link: www. kineticindia.com/investors

Further details are available in the Report on Corporate Governance that forms part of this Annual Report. Contracts or Arrangements with Related Parties All Related Party Transactions entered into during the year were in the Ordinary Course of Business and on Arm's Length basis. No Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual financial turnover as per last audited financial statements, were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions to be provided under section 134(3)(h) of the Companies Act, 2013, in Form AOC-2 is not applicable.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website and can be accessed at web link: www.kineticindia.com/investors

Internal Control System

The company has adequate internal control system commensurate with its size and nature of business for ensuring efficiency of operations, adherence to management policies and protection of company's assets. The company's Audit Committee periodically reviews the internal control systems and compliance with Company's policies, procedures and laws.

Cautionary Statement

The report contains estimates and expectations, which could be 'forward looking'. Actual results, however, might differ from estimates and expectations expressed or implied in this report, as the same are affected by many other uncertainties, including raw material availability & prices, changes in Government regulations, tax regimes, economic developments and other incidental facto'

Directors responsibility statement

Pursuant to section 134(5) of the Companies Act, 2013, your Directors, based on the representations received from the Operating Management,and after due enquiry, confirm that:

(a) in the preparation of the annual accounts for the Financial Year ended 31st March, 2015, the applicable accounting standards have been followed;

(b) the Directors had in consultation with Statutory Auditors, selected 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 as at 31st March, 2015 and of the profit of the Company for the year ended on that date;

(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and irregularities;

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

(e) the Directors have laid down adequate Internal Financial Controls to be followed by the Company and such Internal Financial Controls were operating effectively during the Financial Year ended 31st March, 2015;

(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively throughout the Financial Year ended 31 st March, 2015.

Remuneration Policy of the Company

The Remuneration policy of the Company comprising the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company including criteria for determining qualifications, positive attributes, independence of a Director and other related matters has been provided in the Corporate Governance Report which is attached as Annexure-lll to this Report.

Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in Note A-11 of the Notes to the financial statements.

Significant and Material Orders Passed by the Regulators or Courts or Tribunals impacting the Going Concern status of the Company

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

Acknowledgement

The directors express their sincere thanks to Central & State Governments, Financial Institutions, banks who have extended their support in form of Credit Facilities, suppliers and stakeholders for the support extended to the Company and also wish to place on record their appreciation of the dedicated services rendered by the employees of the Company.



For and on behalf of the Board of Directors A.H. Firodia Chairman

Pune,August 13,2015 Regd. Off.: D1 Block, Plot No No.18/2, MIDC, Chinchwad, Pune-411019.


Mar 31, 2014

Dear Members,

The Directors present the 43rd Annual Report on the business and operations of Kinetic Engineering Limited and the Audited Financial Accounts for the financial year ended 31st March, 2014.

Financial Highlights

During the financial year 2013-14, the Total Revenue was Rs. 61 Crores as against Rs. 87 Crores in previous year. The revenue of the Company was lower due to prevailing recession in the Automobile Industry and reduction in demand from main customers of the Company Mahindra Two Wheelers Limited & Tata Motors Limited. The net loss during the year was Rs. 59 Crores.

Major factors contributing to net loss were as under: -

1. The operating net loss of the Company was Rs. 26.39 Crores.

2. In order to meet liabilities in the year 2013-14 the Company had to liquidate its non-core assets i.e. investment in equity shares of Mahindra Two Wheelers Limited at a loss of Rs. 24.77 Crores.

3. Due to adverse foreign currency movement the Company made provision of Rs. 3.90 Crores towards exchange fluctuation loss.

The financial performance of the Company was also affected by overall uncertain macro-economic environment and recessionary economy.

Business Overview

During the year, your Company has initiated three prestigious programmes;

1. Your Company has bagged an order from Aixam Polaris, a Company from France to manufacture complete Gear box for their Side-By-Side / ATV (All Terrain Vehicles) Vehicles which has a high volume business and is a leading market player.

2. Your Company also bagged an order from American Axle, to manufacture machine / part name ''Yoke'' for its units in Mexico and India. To complete this order, your Company has installed an in house forging press to expedite the manufacturing process and to reduce material cost.

3. Your Company also bagged an order to manufacture Oil Pumps parts from Advik, Chakan, Maharashtra.

4. Development of complete Gear box for Piaggio Vehicles Private Limited (PVPL) LCVs having 40 kilogram weight with the torque of 150 NM. This LCV is soon to be launched. With the launch of this LCV, PVPL is expected to perform very well in the market.

5. Your Company has also got an LOI for Tata Nano''s Automatic Manual Transmission (AMT), diesel and CNG version car.

6. To reduce material costs and better control of inventory schedules of customers, your Company has installed one ton hammer in forging shop, so as to become self reliant in forging supply and thereby managed to gain better control and reduction in costs of raw materials by at least 5% - 6%.

To summarise, the year under review has seen a good progress in the development of new programmes continued from last year and it gives confidence to your Directors that the Company would continue to see revenue increase from existing programmes, though this year the revenues did not show increase due to fluctuating market conditions for major product lines and overall depressed Automotive sector in India.

Many new programmes have been under development and testing during 2013-14 and they are now nearing completion. Being large and complex programmes, company expects them to start in the coming financial year and gain momentum within the first few quarters of the year, to be productionised during 2014-15, Further, the Company continues to add more parts from its existing customers including Mahindra and Mahindra, Carraro, Tata Motors as well as is exploring aggressively export business once the new programmes are in full production and based on projections given by our customers, company is confident of further increasing its revenues.

With a quality system set up in tune with the requirements of ISO 9001, and with ISO/TS 16949:2002 certification, the Company plans to leverage its skills in domestic as well as international market, by further striving for total customer satisfaction through relationship building and providing superior products and technological solutions to its customers. In the coming years, the Company will focus on strengthening its technological base and customer relationships to establish its position as a leading Power train components and assemblies specialist. Your Company would also like to adopt best manufacturing practices and has already started practising an internal Quality initiative called "KQAA" (Kinetic Quality Assessment and Awards") which reviews and rewards exceptional practices in Quality at each cell.

Industry Overview

Global Economic Slowdown affected growth of Indian Economy. Also due to Changing of economic and business conditions, evolving consumer preferences, rapid technological innovation and adoption and globalization are creating an increasingly competitive market environment that is driving corporations to transform the manner in which they operate.

The domestic market continued to be challenging for the automotive industry and for the year witnessed a distinct slowdown/negative growth. The demand was restrained by higher interest rates, inflation, fuel prices, volatile commodity market, industrial unrest and adverse forex fluctuations. Investor and business confidence was low throughout the year.

With the new Government at the center having clear majority, focusing on policy decisions, inflation control and commitment towards industrial and infrastructure development, customer sentiments are expected to improve in the country in medium to long term and stimulate the demand for the Auto industry.

In spite of some current concerns, the growth forecast for the Indian economy remains healthy. With the resulting increase in income levels and lifestyle aspirations, the potential size of the Indian passenger vehicle market in the next five years is likely to be as large as 4-5 million vehicles with a conservative growth rate of 10-12% per year. Similarly, the growth in agriculture and industrial production, the spread of organised retail and the growing prevalence of the hub- and-spoke model for transportation of goods will lead to a significant expansion of the overall market size. The expected introduction of more stringent norms related to overloading of goods vehicles and roadworthiness and vehicle age will also lead to considerable expansion in the market for CVs.

The Indian auto component industry is one of the country''s rising industries with tremendous growth prospects. From a low-key supplier providing components exclusively to the domestic market. The industry has emerged as one of the key auto components centres in Asia and is today seen as a significant player in the global automotive supply chain.

As per an Automotive Component Manufacturers Association of India (ACMA) report, the turnover of the auto component industry was measured about US$ 66 billion in FY 2015-16 with the likelihood to touch US$ 115 billion by FY 2020-21 depending on favorable conditions.

As evident from the above graphical chart, engine parts and transmission and steering parts have 50% of market presence in overall automotive products range in the automobile market. Your company''s main line of business is also in engine parts and transmission systems and there is huge potential for still growing its business and utilise untapped potential and thereby solicit big customers having sizable market presence in the two wheeler, three wheeler and four wheeler vehicles segments.

OPPORTUNITIES AND FUTURE OUTLOOK

We expect demand outlook to continue to remain weak in automobile sector, primarily due to uncertain macro economic environment. But the elections have delivered a clear mandate for decisive governance and development. 2014 - 15 could be a turnaround year for India, given the new energy and political will to drive economic reforms.

The new leadership has shown a resolve to implement progressive policies to bring the economy back on track. If this resolve translates into action, three developments could take place. Stalled projects could see quick execution. Better-directed subsidies could prune the fiscal deficit. Finally, strong leadership at the helm could make the administration more streamlined and responsive.

Hopefully, these steps will quicken the pace of capital formation and improve productivity. Continued reforms and a stable monetary policy would bolster the country''s macroeconomic fundamentals and deliver a powerful message of societal and economic dynamism to the world.

Your Company is focusing basically on following in the coming years:

(1) Technical alliances with the global leader like Magna Styr India Pvt. Ltd., to get access to new technologies like that of Automated Manual Transmissions (AMT), CVTs, ATs, Transfer Cases & complete solutions related to power train products. Through the Technical Agreement Company will not only strengthen it''s expertise, but add a horizontal benefit to its capabilities. The Company will also get access to various clients globally which shall open a door for numerous opportunities way ahead.

(2) To focus on high volume business with PVPL for gears and shafts and use Company''s infrastructure for PVPL''s three wheeler business.

(3) To focus on high volume business with Aixam Polaris for manufacturing complete Gear box for their Side-By-Side / ATV (All Terrain Vehicles) Vehicles.

(4) To focus on high volume business with American Axle for manufacturing machine / part name ''Yoke'' for its units in Mexico and India.

(5) To focus on high volume business with Advik, for manufacturing Oil Pumps parts.

Thus, the outlook of your Company is promising with continuous growth in terms of value and volume.

Internal Control System

The company has adequate internal control system commensurate with its size and nature of business for ensuring efficiency of operations, adherence to management policies and protection of company''s assets. The company''s Audit Committee periodically reviews the internal control systems and compliance with Company''s policies, procedures and laws.

Cautionary Statement

The report contains estimates and expectations, which could be''forward looking''. Actual results, however, might differ from estimates and expectations expressed or implied in this report, as the same are affected by many other uncertainties, including raw material availability & prices, changes in Government regulations, tax regimes, economic developments and other incidental factors.

Research & Development

Research and development is viewed as crucial for development of the Company. These activities add in expanding and upgrading the product portfolio and improving the offerings to the customers.

Conservation of energy

Some of the measures for conservation of energy undertaken during the period under review were:

1. Maintaining unit power factor throughout year saving Rs 28, 83,250/- as an Incentive in electricity bills.

2. Machine resifting as per layout to save transportation of jobs from one shop to another shop and better control on energy consumption.

3. In gear box testing all air leakage are arrested.

4. Energy efficient tube fitting installed in Hall no.8 & Heat Treatment shop. Instead of 250 watt mercury lamps results in 21600 units saving per year.

5. On shut down or paid holidays load is diverted on two transformers instead of five and remaining transformers shut off saving unwanted losses and power. In result 33000 units saving per year

6. In machine shop idle running of high consumption machines stopped by auto time introduction saving 20000 units per year.

7. Powder coating and Paint shop 72 watts, 6 no''s energy efficient tube fitting fitted instead of 250 watts mercury fitting in results 8640 units saving per year.

8. In Hall no. 10, 9, 9A, 8 Electronic control machine fitted MCB in incoming supply line. To cut off power of stabilizer & idle transformer, in result of saving 16540 unit per year.

9. For waste water treatment plant the 50 lacks liters of treated water is used for gardening.

10. Annual savings due to above steps in term of KWH. And Rs.

Annual unit saving 99,780 Units. Rs.7, 68,306/- Lacks, @ Rs.7.70/unit & P.F. Incentive Rs 28, 83,250/- Lacks. Total Rs.36, 51,556/-Saved.

The above measures have resulted in significant saving in energy cost.

Foreign exchange earnings and outgo

The information on foreign exchange earnings and outgo is contained in Point No. 10 & 11 in Notes to the Accounts. Directors responsibility statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

1. In preparation of the accounts for the period under review, the Company has followed the applicable accounting standards

2. Appropriate accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31st March, 2014 and of the loss of the company for the year ended on that date.

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities

4. The annual accounts for the period under review have been prepared on a''going concern'' basis

Corporate governance

Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, a report on Corporate Governance with certificate of the Auditors of your company on Compliance with the conditions of Corporate Governance is given as annexure to the Directors'' report.

Fixed deposits

During the period under review fixed deposits amounting to Rs.0.20 lac was transferred to Investor Education and Protection fund on 07.05.2014.

Compliance of provisions of SICA

As the net worth of the Company as at 31.03.2014 stands exceeded by its accumulated losses as on the same date, the Company has fallen within the ambit of Sick Industrial Companies (Special Provisions) Act, 1985 and accordingly the compliance as required under the provisions of Section 15(1) of the said Act has been made by the Company by filling a reference. The registration of the said reference is in process.

Directors

In accordance with the provisions of the Companies Act, 1956 as well as the Articles of Association of the Company, Ms. Sulajja Firodia Motwani director, retire at the ensuing Annual General Meeting, and is eligible for re-appointment. The information as required to be disclosed under clause 49 of the listing agreement in case of re-appointment of director is provided in the

Notice of the ensuing annual general meeting.

Mr. Harjit Singh Bhatia had resigned from the Board on 09th July, 2014. The Board expresses its sincere appreciation for the valuable services provided by him during his tenure as a Director.

During the year, the Board of Directors of the Company, at its meeting held on 22nd April, 2014 has, subject to the approval of members and Central Government, appointed Mr. Ajinkya A. Firodia as Managing Director, for a period of 5 (five) years from the expiry of his present term, at the remuneration recommended by the Nomination and Remuneration Committee of the Board and approved by the Board.

Pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Ramesh J. Kabra was appointed as an Additional Director Designated as an Independent Director w.e.f. 28th June, 2014 and he shall hold office up to the date of the ensuing Annual General Meeting. The Company has received requisite notice in writing from a member proposing Mr. Ramesh J. Kabra for appointment as an Independent Director.

Pursuant to section 149(4) of the Companies Act, 2013, every listed company is required to appoint at least one third of its directors as independent directors. The Board already has one half of its directors in the category of independent directors in terms of the provisions of clause 49 of the listing agreement. The Board therefore, in its meeting held on 14th August, 2014 appointed the following existing independent directors under clause 49, as ''independent directors'' pursuant to Companies Act, 2013, subject to approval of shareholders:

1. Mr. Jinendra H. Munot

2. Dr. K. H. Sancheti

3. Mr. Sudhir R. Sanghi

4. Mr. Shirish R. Kotecha

5. Mr. R. J. Kabra

As required under the said Act and the Rules made thereunder, the same is now put up for approval of members at the ensuing annual general meeting. Necessary details have been annexed to the Notice of the meeting in terms of section 102(1) of the Companies Act, 2013.

The independent directors have submitted the declaration of independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section(6). With the appointment of independent directors, the conditions specified in the Act and the Rules made thereunder as also under new clause 49 of the listing agreement stand complied.

Auditors

The auditors M/s P. G. Bhagwat, Chartered Accountants, hold office until the ensuing Annual General Meeting, and have furnished a certificate in terms of Sec. 224(1) of the Companies Act, 1956, about their eligibility.

In conformity with the directives of the Central Government, the Company has Re-appointed M/s. Dhananjay V. Joshi & Associates Cost Accountant, as the cost auditor under Section 233B of the Companies Act, 1956 to conduct the cost audit of Kinetic Engineering Limited for the year 2014-15.

Employees

Particulars of Employees as required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 form part of this report. However, as per the provisions of Section 219(1)(b)(IV) of the Companies Act, 1956, the report and the accounts are being sent to the shareholders of the company, excluding the statement of particulars of employees under Section 217(2A) of the Companies Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company at the Registered Office of the Company.

Acknowledgement

The directors express their sincere thanks to Financial Institutions, banks who have extended their support in form of Credit Facilities, suppliers and stakeholders for the support extended to the Company and also wish to place on record their appreciation of the dedicated services rendered by the employees of the Company.



For and on behalf of the Board of Directors

A. H. Firodia Chairman

Pune : August 14, 2014 Regd. Off. : D1Block, Plot No.18/2, MIDC, Chinchwad, Pune - 411019.


Mar 31, 2013

Dear Members,

The Directors present the 42nd Annual Report on the business and operations of Kinetic Engineering Limited and the Audited Financial Accounts for the financial year ended 31st March, 2013.

Financial Highlights

During Financial Year 2012-13, the total revenue was Rs. 101.80 crore, while the net loss after tax was Rs. 13.56 crore.

During Financial Year 2012-13, the materials cost increased from 64.68 % to 69.22 % over the last year.

In financial Year 2012-13 the company registered an EBITDA of Rs. 4.15 crore. The Company posted on operating cash loss Rs. 497 Lac as compared to an operating cash profit of Rs. 154 Lac in financial year 2011-12

During the Financial Year 2012-13 there was a marginal reduction of the revenue from operations - Rs. 80.21 crore in FY 2012-13 against Rs. 83.07 crore in FY 2011-12. This reduction has been due to a few temporary reasons - mainly due to the reduction in demand from Mahindra Two Wheelers Limited, as well as from the Tata Motors. The demand from both these customers is expected to normalise and increase in the coming months.

As you may be aware, your company entered the field of auto-components few years ago, after totally restructuring its operations from manufacture of two- wheelers to manufacture of various automotive components, and assemblies; and hence this marks a landmark in the company''s continued vision to become a substantially large player in the auto- component field.

Research & Development

Research and development is viewed as crucial for development of the Company. These activities add in expanding and upgrading the product portfolio and improving the offerings to the customers.

Conservation of energy

Some of the measures for conservation of energy undertaken during the period under review were:

I. Maintaining Unity power factor throughout the year saving Rs.4030338/- 2. Machine reshuffling as per lay out to save transportation of jobs from one shop to another shop and better control on energy consumption.

3. Arrested all air leakages in gear box testing.

4. Replaced all old Compressed air pipe wire braded with PU piping and fittings.

5. switching off three 1000 KVA transformers during shut down and paid holidays ultimately saving power and reducing losses.

6. Compressed air requirement continuously monitoring and operating the required capacity compressed, saving 3.6 Lacs units per year.

7. IIntroduced auto timer at machine shop which prevented idle running of high consumption machines saving 20000 units per year.

8. Introduce timer system for lighting and fans shut off during lunch period saving 30000 units per year.

9. Carried out leakage testing In LPG gas storage tanks. Also introduced the alarm for LPG leakage.

10. Utilized 4 lac liters'' of treated water for gardening from waste water treatment plant.

II. Rs. 20,000/- of oil is extracted from the waste water treatment plant.

12. All reservoir of air compressor is tested for air leakages and arrested the air leakages. Saving the most expensive compressor compressed air.

13. provided all trollys with trays to collect carryover oil with job.

14. Work in Progress for fixing trays to collect leakage oil and carryover oil for machines like hobbing and shaving The above measures have resulted in significant saving in energy cost.

Foreign exchange earnings and outgo

The information on foreign exchange earnings and outgo is contained in Point No. 12 & 13 in Notes to the Accounts.

Directors responsibility statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

1. In preparation of the accounts for the period under review, the Company has followed the applicable accounting standards.

2. Appropriate accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31st March, 2013 and of the loss of the company for the year ended on that date.

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

4. The annual accounts for the period under review have been prepared on a ''going concern'' basis.

Corporate governance

Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, a report on Corporate Governance with certificate of the Auditors of your company on Compliance with the conditions of Corporate Governance is given as annexure to the Directors'' report.

Fixed deposits

During the period under review fixed deposits amounting to Rs.0.55 lac were repaid on maturity. The balance as on 31.3.2013 standing in the fixed deposit account was Rs.0.20 lac.

Directors

In accordance with the provisions of the Companies Act, 1956 as well as the Articles of Association of the Company, Mr. S. R. Sanghi, Mr. Ashish Kumar Agarwal & Dr. K. H. Sancheti, directors, retire at the ensuing Annual General Meeting, and are eligible for re-appointment.

Mr. Santosh K. Senapati had resigned from the Board on 17th September, 2012. The Board expresses its sincere appreciation for the valuable services provided by him during his tenure as a Director.

Mr. Harjit Singh Bhatia was appointed as an Additional Director by the Board on 13th February, 2013 and holds office as such director until the ensuing Annual General Meeting. The Company has received a notice u/s 257 of the Companies Act, 1956, proposing the candidature of Mr. Harjit Singh Bhatia as a director of the Company.

None of the above mentioned directors are related to each other.

Auditors

The auditors M/s P. G. Bhagwat, Chartered Accountants, hold office until the ensuing Annual General Meeting, and have furnished a certificate in terms of Sec. 224(1) of the Companies Act, 1956, about their eligibility.

In conformity with the directives of the Central Government, the Company has Re-appointed M/s. Dhananjay V. Joshi & Associates Cost Accountant, as the cost auditor under Section 233B of the Companies Act, 1956 to conduct the cost audit of Kinetic Engineering Limited for the year 2013-14.

Employees

Particulars of Employees as required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 form part of this report. However, as per the provisions of Section 219(1)(b)(IV) of the Companies Act, 1956, the report and the accounts are being sent to the shareholders of the company, excluding the statement of particulars of employees under Section 217(2A) of the Companies Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company at the Registered Office of the Company.

Acknowledgement

The directors express their sincere thanks to Financial Institutions, banks who have extended their support in form of Credit Facilities, suppliers and stakeholders for the support extended to the Company and also wish to place on record their appreciation of the dedicated services rendered by the employees of the Company.

For and on behalf of the Board of Directors

A. H. Firodia

Chairman

Pune : 28th May, 2013

Regd. Off. :

D1Block, Plot No.18/2,

MIDC, Chinchwad, Pune - 411019.


Mar 31, 2012

Dear Members,

The Directors present the 41st Annual Report on the business and operations of Kinetic Engineering Limited and the Audited Financial Accounts for the financial year ended 31st March, 2012.

Financial Highlights

During Financial Year 2011-12, the total revenue was Rs. 101.93 crore, while the net loss after tax was Rs. 6.93 crore.

During Financial Year 2011-12, the materials cost reduced from 66.07 % to 64.68 % over the last year and the operating cash profit improved from (294) lac to 154 lac.

In financial Year 2011-12 the company also registered an EBITDA of Rs. 9.32 crore.

During the Financial Year 2011-12 there was a marginal reduction of the revenue from operations - Rs. 83.07 crore in FY 2011-12 against Rs. 90.93 crore in FY 2010-11. This reduction has been due to a few temporary reasons - mainly due to the reduction in demand from Mahindra Two Wheelers Limited, as well as from the Tata Motors. The demand from both these customers is expected to normalise and increase in the coming months.

As you may be aware, your company entered the field of auto-components few years ago, after totally restructuring its operations from manufacture of two- wheelers to manufacture of various automotive components, and assemblies; and hence this marks a landmark in the company's continued vision to become a substantially large player in the auto- component field.

Research & Development

Research and development is viewed as crucial for development of the Company. These activities add in expanding and upgrading the product portfolio and improving the offerings to the customers.

Conservation of energy

Some of the measures for conservation of energy undertaken during the period under review were:

1. By continuous monitoring, Unity Power factor is maintained through out year, saving Rs.42 lacks as an Incentive in electricity bills.

2. Studied the peak and lowest demand of compressed air for different shops and accordingly compressor run pattern decided and implemented results in saving of electrical power of Rs.3.5 lacks per year.

3. Mercury and sodium street lights replaced by modern CFL of low wattage installed.

4. Thyrister control AC drive for heaters installed for sursulf salt bath furnace maintaining temperature at 565 degree Celsius constantly results in saving of Rs.63000/- per year.

5. Compressed air pipe of nylon braded is replaced with PU tube fittings in Gear box assembly line and Aluminum machine shop.

6. CFL spiral lamps fitted in office area replacing 40 watt tube fittings.

7. In Aluminum line energy efficient tube fittings installed, replacing 250 watt mercury lamps. Saving Rs. 2 Lacks per year.

8. For paint baking and bond rising tank water heating thermopac operates during load period instead of continuous. Savings Rs.1.5 lacks per year.

9. Compressed air measurement carried out for all machines in different shops.

10. About 3500 liters of oil is extracted from drained coolant per year.

11. Compressed air leakages from the welded joints in pipe line arrested.

12. Fire hydrant line 3 inches under ground water leakage arrested by replacing with new line, save about 5 lacks liters of water per year.

The above measures have resulted in significant saving in energy cost.

Foreign exchange earnings and outgo

The information on foreign exchange earnings and outgo is contained in Point No. 10 & 11 in Notes to the Accounts. Directors responsibility statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

1. In preparation of the accounts for the period under review, the Company has followed the applicable accounting standards

2. Appropriate accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31st March, 2012.and of the profit of the company for the year ended on that date.

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities

4. The annual accounts for the period under review have been prepared on a 'going concern' basis Corporate governance

Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, a report on Corporate Governance with certificate of the Auditors of your company on Compliance with the conditions of Corporate Governance is given as annexure to the Directors' report.

Fixed deposits

During the period under review fixed deposits amounting to Rs.0.10 lac were repaid on maturity. The balance as on 31.3.2012 standing in the fixed deposit account was Rs.0.75 lac.

Directors

In accordance with the provisions of the Companies Act, 1956 as well as the Articles of Association of the Company, Dr. N. A. Kalyani, Mr. S. R. Kotecha & Mrs. Sulajja Firodia Motwani, directors, retire at the ensuing Annual General Meeting, and are eligible for re-appointment.

The directors Mr. Arun H. Firodia, Mr. Ajinkya A. Firodia & Mrs. Sulajja Firodia Motwani are related to each other.

Mr. Jinendra H. Munot was appointed as an Additional Director by the Board, and holds office as such director until the ensuing Annual General Meeting. The Company has received a notice u/s 257 of the Companies Act, 1956, proposing the candidature of Mr. Jinendra H. Munot as a director of the Company.

Mrs. Sulajja Firodia Motwani and Mr. Arun H. Firodia were appointed as Vice - Chairperson and Chairman by the Board of Directors in their meetings respectively held on 9th December 2011 and 30th May 2012. Members are requested to approve their appointment.

Auditors

The auditors M/s P. G. Bhagwat, Chartered Accountants, hold office until the ensuing Annual General Meeting, and have furnished a certificate in terms of Sec. 224(1) of the Companies Act, 1956, about their eligibility.

Employees

Particulars of Employees as required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 form part of this report. However, as per the provisions of Section 219(1)(b)(IV) of the Companies Act, 1956, the report and the accounts are being sent to the shareholders of the company, excluding the statement of particulars of employees under Section 217(2A) of the Companies Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company at the Registered Office of the Company.

Acknowledgement

The directors express their sincere thanks to Reliance Capital Limited, Clearwater Capital Partners India Limited, banks, suppliers and stakeholders for the support extended to the Company and also wish to place on record their appreciation of the dedicated services rendered by the employees of the Company.

For and on behalf of the Board of Directors

A. H. Firodia

Chairman

Pune : 30th May, 2012 Regd. Off. :

D1Block, Plot No.18/2, MIDC, Chinchwad, Pune - 411019.


Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting the 40th Annual Report on the business and operations of Kinetic Engineering Limited and the Audited Financial Accounts for the financial year ended 31st March, 2011.

FINANCIAL HIGHLIGHTS

For the Financial Year, the net income from operations was Rs.91.17 crore, while the net loss after tax was Rs.10.91 crore.

The results for the current financial year are not strictly comparable with the results for the preceding financial year, as the current financial year is a period of 12 months, while the preceding financial year was a period of 9 months.

The company has crossed a gross revenue of Rs.90 cr. for the financial year 2010 - 2011. As you may be aware, your company entered the field of auto-components few years ago, after totally restructuring its operations from manufacture of two- wheelers to manufacture of various automotive components, and assemblies; and hence this marks a landmark in the company's continued vision to become a substantially large player in the auto-component field.

Some Highlights:

2010-2011 2009-2010

(12 months) (9 months)

Net Sales and Income Rs. 9117 lac Rs. 4920 lac Increase in operating income from Operations

Material Cost 67% 78% Substantial decrease in material cost as a percent of sales

Employment cost 19% 24% Decrease in employment cost as a percent of sales

Due to the same, the company has registered a EBITDA of Rs. 284 lacs during the said period. The Company has registered a net loss of Rs. 1091 lacs; largely due to the high depreciation costs (Rs. 799 lacs) incurred on basis of capex initiatives for new programs.

Business Overview

During the year, your company continues to consolidate its position as a specialized manufacturer of high technology components and assemblies with a focus on Power Train Components and assemblies. This year there has been a good progress in the ramp-up of existing production programs and development of new programs.

As a result, there has been substantial growth in company's sales revenues. This has been largely led by:

- Commencement and ramp up of mass volume production for gear sets for Tata Nano, the lowest priced car in the world. The supply of Gear-sets for Tata Nano which had commenced last year, saw a significant ramp- up this year.. Your Company has set up a world class manufacturing facility with the best in class equipments to manufacture high quality components in large volumes. Your Company is well positioned to grow production in line with the anticipated increased production of Tata Nano and, we expect this program to grow further in the coming years.

- Ramp up of supply of key power-train components and assemblies for different scooter models of Mahindra Two Wheelers Limited (MTWL), a company in which Kinetic Motor Company Limited, an entity promoted by your Company and where it holds a substantial equity, holds a 20% equity stake. Your company supplies various engine and transmission assemblies to MTWL, one of India's fastest growing forces in the Indian 2 wheeler field. Start up for programmes for transmission components for Mahindra Farm Equipment Sector (FES), the worlds largest producer of tractors.

- Start up for programmes for Mahindra Auto Sector, one of country's largest and fastest growing automobile companies

- Start up of relationship with Enfield, one of country's premium manufacturer of top end motorcycles by supplying painted parts to the company.

As a result of the above, KINETIC's revenues have increased from Rs.49.19 cr. in the financial year 2009-10 (9 months) to Rs.91.17 cr. in the financial year 2010-11 (12 months).

Continued growth in the Indian automotive industry gives the confidence to your Directors that the Company would continue to see revenue increase from existing programs, though at a pace lower than the last year. Your company remains diversified in its product category and customer base. The representation is as follows :

In addition, your company has made significant progress on development of prestigious new contracts, namely: complete Gear box assembly development for Mahindra Navistar & Piaggio.

These new programs have been under development and testing during 2010-11 and they are now nearing completion. Being large and complex programmes, company expects them to start in the coming financial year and gain momentum in the 3rd quarter of the year, to be productionised during 2011-12, Further, the Company continues to add more parts from its existing customers including Mahindra and Mahindra, Carraro, Tata Motors as well as Tomos SPA. Once the new programs are in full production and based on projections given by our customers, company is confident of further increasing its revenues With a quality system set up in tune with the requirements of ISO 9001, and with ISO/TS 16949:2002 certification, the Company plans to leverage its skills in domestic as well as international market, by further striving for total customer satisfaction through relationship building and providing superior products and technological solutions to its customers. In the coming years, the Company will focus on strengthening its technological base and customer relationships to establish its position as a leading Powertrain components and assemblies specialist. Your Company would also like adopt best manufacturing practices and has appointed the TPM club of India to embark upon the journey of TPM to meet its objectives of zero breakdowns, quality improvements, efficiency maximization and cost savings.

Finance Overview

After achieving a significant reduction in debt in the preceding year, the Company has been successful in obtaining working capital limits of Rs.10 crore, from Saraswat Co-operative Bank Ltd.

Research & Development

Research and development is viewed as crucial for development of the Company. These activities aid in expanding and upgrading the product portfolio and improving the offerings to the customers.

Total amount spent on Research & Development (R&D) during the period under review was Rs. 102.45 lacs, which represents 1.13 % of the Company's turnover.

Conservation of energy

Some of the measures for conservation of energy undertaken during the period under review were:

1. Unity Power factor maintained through out the year, saving Rs.45 lacs as an Incentive in electricity bills.

2. 600 CFM Godrej make Sulair compressor installed replacing 1000 CFM Reciprocating type compressor saving 50000 units per year.

3. CFL Street lights installed of capacity 36 watt replacing 70 watt Sodium Lamps.

4. Energy efficient tube fittings installed in Hall No.22 instead off 250 watt Mercury lamps, results in 8000 units saving per year.

5. Sursulf furnace converted in to gas fire instead of electrical heating, saving of Rs 5 lacks per year in heat treatment section.

6. Arrested oil leakages in Nano gear line machine shop.

7. Air line leakages arrested by new PU pipe and fittings

8. Air Compressor running pattern study and adjusted accordingly saving 1,20000 unit.

9. 20 Watt CFL spiral lamps fitted in Administration building and 40 watt tube fittings removed Save Rs.1 lac per year.

10. In variator line energy efficient tube fittings installed in Hall No.9A replacing 250 watt mercury lamps. Saving 30000 units per year.

11. ThermopacTPB 10 operate during load period instead of continious. Saving 40000 units per year.

12. Treated waste water from Effluent Treatment Plant 60000 liters of water used for Gardening and tree plantation.

13. From Coolent treatment plant 8000 liters oil extracted from the coolent on yearly basis. The above measures have resulted in significant saving in energy cost.

Awards and Recognitions

Your company has received the prestigious Regional Award as "Star Performers in Product Group Trophy" in the category of Large Enterprises by EEPCIndia (Enginerring Export Promotion Council). This award recognizes your company's efforts in successfully increasing exports from India and has come due to the increased volume, ability to meet stringent quality parameters, and on time delivery and other performance related parameters.

Foreign exchange earnings and outgo

The information on foreign exchange earnings and outgo is contained in Schedule-16 Notes to the Accounts (Point Nos. 13&14)

Directors responsibility statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

1. In preparation of the accounts for the period under review, the Company has followed the applicable accounting standards

2. Appropriate accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31 st March, 2011 and of the profit of the company for the year ended on that date.

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities

4. The annual accounts for the period under review have been prepared on a 'going concern' basis

Corporate governance

Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, a report on Corporate Governance with certificate of the Auditors of your company on Compliance with the conditions of Corporate Governance is given as annexure to the Directors' report.

Fixed deposits

During the period under review fixed deposits amounting to Rs.0.25 lac were repaid on maturity. The balance as on 31.3.2011 standing in the fixed deposit account was Rs.0.85 lac.

Directors

In accordance with the provisions of the Companies Act, 1956 as well as the Articles of Association of the Company, Dr. K.H.Sancheti, Mr. S. C. Shah and Mr. S. R. Sanghi, directors, retire at the ensuing Annual General Meeting, and are eligible for re-appointment.

The directors Mr. Arun H. Firodia, Mr. Ajinkya A. Firodia & Mrs. Sulajja Firodia Motwani are related to each other.

Auditors

The auditors M/s P. G. Bhagwat, Chartered Accountants, hold office until the ensuing Annual General Meeting, and have furnished a certificate in terms of Sec. 224(1) of the Companies Act, 1956, about their eligibility.

Employees

Particulars of Employees as required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 form part of this report. However, as per the provisions of Section 219(1 )(b)(IV) of the Companies Act, 1956, the report and the accounts are being sent to the shareholders of the company, excluding the statement of particulars of employees under Section 217(2A) of the Companies Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company at the Registered Office of the Company.

Acknowledgement

The directors express their sincere thanks to Reliance Capital Limited, Clearwater Capital Partners India Limited, banks, suppliers and stakeholders for the support extended to the Company and also wish to place on record their appreciation of the dedicated services rendered by the employees of the Company.

For and on behalf of the Board of Directors

A. H. Firodia

Pune : 30th May, 2011 Chairman

Registered Office:

D1 Block, Plot No. 18/2, MIDC, Chinchwad

Pune - 411019


Mar 31, 2010

The Directors have pleasure in presenting the 39th Annual Report on the business and operations of KINETIC ENGINEERING LIMITED (KINETIC) and the Audited Financial Accounts for the 9 months period ended 31st March, 2010.

FINANCIAL HIGHLIGHTS

For the Financial Year, the gross income from operations was Rs.8584 lac, while the net profit after tax was Rs.235 lac.

The accounts of the Company have been made for a period of 9 months ending 31st March, 2010 (the Financial Year).The results for the current Financial Year are not strictly comparable with the results for the preceding Financial Year, for the following reasons :

- The current Financial Year is a period of 9 months, whereas the preceding Financial Year was a period of 15 months.

- The preceding Financial Year results were announced incorporating the effect of the merger of the Auto Components and Investment division of erstwhile Jaya Hind Sciaky Limited, which was approved by the high court on 27.07.2009 and the Company announced audited consolidated results effective 01.04.2005

Business Overview

During the year, your company made significant progress in establishing itself as a specialized manufacturer of high technology components and assemblies with a focus on Powertrain assemblie. This year has seen a significant production ramp-up in existing programs won earlier and recorded a growth in monthly revenues from Rs. 40 million p.m. in Oct 2009 to Rs. 70 million p.m. in March 2010. The Key initiatives have been :

- Commencement of mass volume production for gear sets for Tata Nano, the lowest priced car in the world. The supply of gear-sets for Tata Nano has commenced (earlier, the project was delayed due to the last minute shifting of the project from Singur to Sanand). During 2010-2011, with the anticipated increased production of Tata Nano, we expect this programme to grow further

- Ramp up of supply of key powertrain components and assemblies for different scooter models of Mahindra Two Wheelers Limited (MTWL), a company in which Kinetic Motor Company Limited, (an entity promoted by your Company and where it holds a substantial equity) holds 20% equity stake. MTWL scooter volumes have crossed a volume of 12,000 per month, within 10 months of launch. We are confident of continued growth going forward.

- Development of Arvin Meritor program for supply of transmission components and commencement of supplies.

Continued growth in the Indian automotive industry gives a confidence to your Directors that the Company would continue to see revenue increase from existing programs, though at a pace lower than the last year.

In addition, your company won a number of prestigious new contracts strengthening its position and future potential as a specialized Powertrain manufacturer. These include orders from well established and prestigious auto companies i.e. Tata Motors, Mahindra & Mahindra, Mahindra Navistar and Piaggio, for the development and manufacture of fully assembled gear boxes and parts. These orders are expected to be productionised during 2010- 2011, and upon full ramp up, the annualised value of these orders is expected to be about Rs.500-600 million per year.

Together with continued ramp-up in existing programs, and a strong order book from present & new customers, your Company is likely to see revenues touch Rs. 100 mn p.m. mark by June, 2010 and Rs.160 mn p.m. by March, 2010. At this level of operations, your Directors expect the Company to report healthy cash profits and be net profit positive.

Further, the Company has also received additional order for a second engine from Tomos (a moped manufacturer in Europe), which is under development.

Auto Component Industry is looking forward to a continuous growth as it has a direct bearing on the performance of the Auto Companies. In India, automobile sales have been increasing at a rapid rate which augurs well for the future of Auto Component Industry.

With a quality system set up in tune with the requirements of ISO 9001, and with ISO/TS 16949:2002 certification, the Company plans to leverage its skills in domestic as well as international market, by further striving for total customer satisfaction through relationship building and providing superior products and technological solutions to its customers. In the coming years, the Company will focus on strengthening its technological base and customer relationships to establish its position as a leading Powertrain components and assemblies specialist.

Finance Overview

The current Financial Year has been a year of consolidation for the Company, after merging the auto components business, as transferred from the erstwhile Jaya Hind Sciaky Limited.

Significant steps were taken by your Company to reduce debt during the current year:

During November, 2009, the Company has sold a non core asset, a property situated at Chinchwad, Pune. The proceeds from the above transaction, of Rs. 44.07 crores, have been primarily used for pre-paying a substantial part of the debt of the Company, thereby substantially reducing the interest burden of the Company. The secured debt outstanding as at the commencement of the period under review, of Rs.71.2 crore, has been substantially reduced to Rs.25.6 crore by the end of March, 2010. The Company has also divested some of its financial investments in shares, to raise funds for servicing and reduction of debt as well as to augment working capital required for its growth. During the Financial Year, the equity share capital of the Company has increased due to the conversion of 16,44,231 Compulsorily Convertible Cumulative Preference Shares, earlier allotted to the investor AIG. Also, during the Financial Year, the Company has issued and allotted 17,82,774 equity shares to the shareholders of Jaya Hind Sciaky Limited, pursuant to a Scheme of Merger, as approved by the Hon’ble Bombay High Court, a provision in respect of was already made in the financial statements of the preceding Financial Year.

As a result of the above steps taken during the year, Company’s debt-equity has reduced from 2.2 multiple to 1.7 multiple. A large proportion of this debt is unsecured debt, which is in the form of Foreign Currency Optionally Convertible Bonds that are convertible into equity of the Company up to February 2013. Conversion of these bonds into equity will further reduce debt of the company substantially.

Research & Development and Technology Absorption

Research and development is viewed as crucial for development of the Company. These activities aid in expanding and upgrading the product portfolio and improving the offerings to the customers.

Total amount spent on Research & Development (R&D) during the period under review was Rs. 69 lacs, which represents 1.4 % of the Company’s turnover.

Conservation of Energy

Some of the measures for conservation of energy undertaken during the period under review were:

1. Additional Power capacitors installed for improving the power factor

2. Transparent roof sheets (in place of cement sheets) fitted on all shop floors, to save day-time electricity consumption

3. Energy efficient Tube lights fittings installed

4. Air leakages arrested in the Gear hobbing and gear shaving line

5. Low CFM compressors installed to operate second and third shifts, avoiding running of high CFM compressors.

6. Oil leakages arrested in Variator line machine shop

7. Instead of indivisual Endo Gas generator, studied the process and succeed to run both the CGC Furnace and SQF furnace on one ENDO Gas generator. Resulting in LPG Gas saving.

8. A 200 CFM separate compressor kept off and run the CGC furnace on Main compressor in regular working days. Saving 50,000 units per year.

The above measures have resulted in significant saving in energy cost.

Foreign Exchange Earnings and Outgo

The information on foreign exchange earnings and outgo is contained in Schedule-15 Notes to the Accounts (Point Nos. 13 & 14)

Directors Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

1. In preparation of the accounts for the period under review, the Company has followed the applicable accounting standards

2. Appropriate accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31st March, 2010 and of the profit of the company for the year ended on that date.

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities

4. The annual accounts for the period under review have been prepared on a going concern basis

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, a report on Corporate Governance with certificate of the Auditors of your company on Compliance with the conditions of Corporate Governance is given as annexure to the Directors’ report.

Fixed Deposits

During the period under review fixed deposits amounting to Rs.0.65 lac were repaid on maturity. The balance as on 31.3.2010 standing in the fixed deposit account was Rs.1.10 lac.

Directors

In accordance with the provisions of the Companies Act, 1956 as well as the Articles of Association of the Company, Dr. N. A. Kalyani, Mr. Ashish Kumar and Mr. Santosh Senapati retire at the ensuing Annual General Meeting, and are eligible for re-appointment.

The directors Mr. Arun H. Firodia, Mr. Ajinkya A. Firodia & Mrs. Sulajja Firodia Motwani are related to each other.

Auditors

The auditors M/s P. G. Bhagwat, Chartered Accountants, hold office until the ensuing Annual General Meeting, and have furnished a certificate in terms of Sec. 224(1) of the Companies Act, 1956, about their eligibility.

Particulars of Employees

Particulars of Employees as required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 form part of this report. However, as per the provisions of Section 219(1)(b)(IV) of the Companies Act, 1956, the report and the accounts are being sent to the shareholders of the company, excluding the statement of particulars of employees under Section 217(2A) of the Companies Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company at the Registered Office of the Company.

Acknowledgement

The directors express their sincere thanks to Reliance Capital Limited, Clearwater Capital Partners India Limited, banks, suppliers and stakeholders for the support extended to the Company and also wish to place on record their appreciation of the dedicated services rendered by the employees of the Company.

For and on behalf of the Board of Directors

Arun H. Firodia

Chairman

Pune, 12th August, 2010


Jun 30, 2009

The Directors present their 38th Annual Report on the business and operations of the Company and the audited financial accounts for the 15 months period ended 30th June, 2009.

FINANCIAL HIGHLIGHTS

The accounts of the Company have been made for a period of 15 months ending 30th June, 2009. (period under review) During the year, the accounts for the period under review have been prepared after giving effect to the merger of Auto Division of Jaya Hind Sciaky Limited with the Company; and as such the current year results are not comparable with the previous year results. The gross income from operations was Rs.9228.31 lac, while the loss before tax was Rs.3133.47 lac.

The merger has added value to KEL, by way of strengthening of the balance sheet as well as assets and net worth position of the Company, due to the transfer of the assets from Jaya Hind Sciaky Limited. Furthermore, the merger will also add to the Auto Component business of the Company.by way of addition of the Variator manufacturing business of Jaya Hind Sciaky Limited, which will add to the top line and bottom line of the Company for years to come.

RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION

Research and development is viewed as crucial for development of the Company. These activities aid in expanding and upgrading the product portfolio and improving the offerings to the customers.

Total amount spent on Research & Development (R&D) during the period under review was Rs. 88.42 lacs, which represents 1 % of the Companys turnover.

CONSERVATION OF ENERGY

Some of the measures for conservation of energy undertaken during the period under review were:

1. Additional Power capacitors installed for improving the power factor

2. Transparent roof sheets (in place of cement sheets) fitted on all shop floors, to save day-time electricity consumption

3. Energy efficient Tube lights fittings installed in Nano Machine shop

4. Air leakages arrested in the Gear hobbing and gear shaving line

5. Low CFM compressors installed to operate second and third shifts, avoiding running of high CFM compressors.

The above measures have resulted in significant saving in energy cost.

FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on foreign exchange earnings and outgo is contained in Schedule-16 Notes to the Accounts (Point Nos. 13&14)

SUBSIDIARY COMPANY

Company did not have any subsidiary, during the period under review.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

1. In preparation of the accounts for the period under review, theCompany has followed the applicable accounting standards

2. Appropriate accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 30th June, 2009.

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities

4. The annual accounts for the period under review have been prepared on a going concern basis

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, a report on Corporate Governance with certificate on Compliance with the conditions of Corporate Governance is given as annexure to the Directors report.

FIXED DEPOSITS

During the period under review fixed deposits amounting to Rs.0.66 lac were repaid on maturity. The balance as on 30.6.2009 standing in the fixed deposit account was Rs. 1.75 lac.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 as well as the Articles of Association of the Company, Dr. K. H.Sancheti, Mr. S. R. Kotecha and Mrs. Sulajja Firodia Motwani retire at the ensuing Annual General Meeting, and are eligible for re-appointment.

Mr. Ajinkya A. Firodia was appointed as the Additional Director, underthe provisions of Section 260 of the Companies Act, 1956, and holds office as such director till the ensuing Annual General Meeting. The Company has received a notice from a shareholder under the provisions of Section 257 of the Companies Act, 1956, proposing the candidature of Mr. Ajinkya A. Firodia as a director of the Company.

During the year, Mr. M. K. Khera resigned as a director (and as a Managing Director), with effect from 20.4.2009, and Mr. Ajinkya A. Firodia was appointed in his place as the Managing Director of the Company, subject to the approval of Central Government.

The directors Mr. Arun H. Firodia, Mr. Ajinkya A. Firodia & Mrs. Sulajja Firodia Motwani are related to each other.

AUDITORS

The auditors M/s P. G. Bhagwat, Chartered Accountants, hold office until the ensuing Annual General Meeting, and have furnished a certificate in terms of Sec. 224(1) of the Companies Act, 1956, about their eligibility.

PARTICULARS OF EMPLOYEES

Particulars of Employees as required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 form part of this report. However, as per the provisions of Section 219(1)(b)(IV) of the Companies Act, 1956, the report and the accounts are being sent to the shareholders of the company, excluding the statement of particulars of employees under Section 217(2A) of the Companies Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company at the Registered Office of the Company.

ACKNOWLEDGEMENT

The directors express their sincere thanks to Reliance Capital Limited, Clearwater Capital Partners India Limited, banks, suppliers and stakeholders for the support extended to the Company and also wish to place on record their appreciation of the dedicated services rendered by the employees of the Company.

For and on behalf of the Board of Directors

A. H. FIRODIA

Chairman Pune : 2nd March 2010

Find IFSC