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Notes to Accounts of Kirloskar Brothers Ltd.

Mar 31, 2016

Basis used to determine the overall expected return:

Life Insurance Corporation of India (LIC) manages the investments of Employee Gratuity Scheme.
Expected rate of return on investments is determined based on the assessment made by the LIC at the
beginning of the year on the return expected on its existing portfolio, along with the estimated
incremental investments to be made during the year. Yield on the portfolio is calculated based on a
suitable mark-up over the benchmark Government securities of similar maturities.

a) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)

1 Discount rate as at 31 -03-2016 - 7.80%

2 Expected return on plan assets as at 31 -03-2016 - 9.00%

3 Salary growth rate: For Gratuity Scheme -10%

4 Attrition rate: For gratuity scheme the attrition rate is taken at 9.33%

5 The estimates of future salary increase considered in actuarial valuation take into account
inflation, seniority, promotion and other relevant factors, such as supply and demand in the
employment market.

b) General descriptions of defined plans:

1 Gratuity Plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to
fifteen days salary last drawn for each completed year of service. The same is payable on
termination of service or retirement whichever is earlier. The benefit vests after five years of
continuous service.

2 Company''s Pension Plan:

The company operates a Pension Scheme for specified ex-employees wherein the beneficiaries are
entitled to defined monthly pension.

i) The Company expects to fund X 39,404,773 ^ 41,181,916/-) towards its gratuity plan in the
year2016-17.


C-1 Related Party Disclosures

(A) Names of the related party and nature of relationship where control exists

Sr. No. Name of the related party Nature of relationship

1 Karad Projects and Motors Limited Subsidiary Company

2 The Kolhapur Steel Limited Subsidiary Company

3 Kirloskar Systech Limited Subsidiary Company

4 Kirloskar Corrocoat Private Limited Subsidiary Company

5 Kirloskar Brothers International B. V. Subsidiary Company

6 SPP Pumps Limited Subsidiary of Kirloskar Brothers International B.V.

7 Kirloskar Brothers(Thailand) Limited Subsidiary of Kirloskar Brothers International B.V.

8 SPP Pumps (MENA) LLC Subsidiary of Kirloskar Brothers International B.V.

9 Kirloskar Pompen B. V Subsidiary of Kirloskar Brothers International B.V.

10 Micawber 784 (Proprietary Limited) Subsidiary of Kirloskar Brothers International B.V.

11 Kirloskar Brothers International PTY Ltd. Subsidiary of Kirloskar Brothers International B.V.

12 Certified Engines Limited Subsidiary of SPP Pumps Limited

13 SPP France S A S Subsidiary of SPP Pumps Limited

14 SPP Pumps, Inc. Subsidiary of SPP Pumps Limited

15 SPP Pumps France EURL Subsidiary of SPP Pumps Limited (up to 02.06.2015)

16 SPP Pumps Holdings LLC Subsidiary of SPP Pumps Limited (up to 20.07.2015)

17 SPP Pumps Management LLC Subsidiary of SPP Pumps Limited (up to 20.07.2015)

18 SPP Pumps (South Africa Pty.) Limited Subsidiary of Kirloskar Brothers International PTY Ltd.

19 Braybar Pumps (Proprietary) Limited Subsidiary of Kirloskar Brothers International PTY Ltd.

20 Rodelta Pumps International B.V. Subsidiary of Kirloskar Pompen B.V. (from 17.07.2015)

21 Rotaserve Overhaul B.V. Subsidiary of Kirloskar Pompen B.V. (from 04.01.2016)

22 SPP Pumps Real Estate LLC Subsidiary of SPP Pumps Inc.

23 SyncroFlo Inc. Subsidiary of SPP Pumps Inc.


(D) Names of related parties with whom transactions have been entered into:

1) Subsidiary Companies Karad Projects and Motors Limited

The Kolhapur Steel Limited

Kirloskar Systech Limited

Kirloskar Corrocoat Private Limited

SPP Pumps Limited

SPP Pumps (South Africa Pty.) Limited

SPP Pumps (MENA) LLC

SPP Pumps, Inc.

Kirloskar Pompen B.V.

Braybar Pumps (Proprietary) Limited

Kirloskar Brothers (Thailand) Limited

2) Joint Venture Kirloskar Ebara Pumps Limited

3) Key Management Personnel Mr. Sanjay Kirloskar

Mr. J. R. Sapre (up to May 31, 2015)

4) Relatives of Key Management Mrs. Pratima Kirloskar Wife of Mr. Sanjay Kirloskar Personnel Mr.
Alok Kirloskar Son of Mr. Sanjay Kirloskar

Mrs. Suman Kirloskar Mother of Mr. Sanjay Kirloskar

Ms. Rama Kirloskar Daughter of Mr. Sanjay Kirloskar

Ms. Preeti Sapre (up to May 31, 2015) Daughter of Mr. J. R. Sapre

5) Enterprises over which key

managerial personnel or their relatives Prakar Investments Private Limited exercise significant
influence


B Loans and advances in the nature of loans to firms/companies in which directors are interested:
NIL

C Investment by the loanee (borrower) in the shares of the Company or subsidiary of the Company :
NIL

Note:- Loans to employees including directors under various schemes of the company (such as housing
loan, furniture loan, education loan etc.) have been considered to be outside the purview of this
disclosure requirements.

c) Contingent liabilities, if any, incurred in relation to interest in Joint Ventures:
Rs,6,520,638/- (* 442,454/-)

d) Capital commitments, if any, in relation to interest in Joint Ventures: Rs, 22,374,462/-
(Rs,4,016,540/-)


C-2 Stock Option Schemes:

Under the Employees'' "Share a Vision" - Stock Option Scheme, 2007 (ESOS-2007), equity shares of Rs,
21- each would be issued and allotted against stock options, at an Exercise price of Rs, 200/- or
Rs, 21- per share based on performance and other eligibility criteria.

Subject to the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the terms of the ESOS - 2007, the options granted would
vest, after one year of the grant, in 3 annual installments of 30%, 30% and 40% and the same would
be exercisable within a period of 3 years from the date of vesting.

Ist tranche of options i.e. 30% of the total options have been vested on August 31, 2008. The
vesting of the IInd tranche (August 31,2009) stands cancelled due to non achievement of the
performance targets specified in the performance matrix. IIIrd tranche of options i.e. 40% of the
total options have been vested on August 31,2010.

The details of the grants under the Stock Option Scheme are summarized below.


C-3 Effective from April 1,2014 the Company has charged depreciation based on the revised
remaining useful life of the assets as per the requirement of Schedule II of the Companies Act,
2013. Due to above, depreciation charge for the year ended March 31,2015 is higher byRs,
153,496,015/-. Further, an amount of Rs,61,740,367/- (net of tax of Rs, 40,754,517/-) representing
the carrying amount of assets with revised useful life as nil, has been charged to the retained
earnings as on April 01,2014 pursuant to the Companies Act, 2013.

C-4 Kirloskar Brothers Limited(KBL) has infused additional Rs, 10 crores (Rs, 15 crores) by way of
preference shares during the current year in The Kolhapur Steel Limited its subsidiary company and
will continue to support its operations going forward as the KBL management is confident of its
growth and expects a turnaround in the near future.

C-5 Kirloskar Systech Limited (KSL), a wholly owned subsidiary of the Company has filed a Petition
to sanction the proposed scheme of amalgamation between KSL and the Company with the Honourable
High Court of Judicature at Bombay, on April 20, 2016. The said petition has been admitted by the
Honourable High Court subject to the compliance of certain conditions.

C-6 The figures have been regrouped / rearranged wherever necessary to confirm to current year''s
disclosure. Figures in bracket relate to previous year.


Mar 31, 2015

A) Rights of equity shareholder:

The company has only one class of equity shares, having par value of Rs. 2/- per share. Each holder of equity share is entitled to one vote per share and has a right to receive dividend as recommended by the Board of Directors subject to the necessary approval from the shareholders. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

For the year ended March 31,2015 the Board of Directors have proposed dividend of Rs. 0.50 (Rs. 2.50) per share subject to shareholders'' approval.

c) Details of share holders holding more than 5% shares

C-1 Contingent liabilities :

a) Claims against the company not acknowldged as debts

Alstom (Switzerland) Limited a foreign customer of KBL, has invoked Arbitration clause as per contractual provisions and issued notice of arbitration demanding a payment of EUR 5,295,000/- (7 359,080,425/-) and GBP 3,215,000/-(Rs. 297,516,100/-) over quality issues. KBL''s contention is that the pumps were supplied as per technical specifications. KBL has replied to the Alstom''s notice of arbitration and made a counter claim of EUR 1,161,688/- (7 78,779,872/-). Both parties have appointed their respective arbitrators and the arbitrators are yet to appoint the presiding arbitrator. Once the arbitral tribunal is constituted, arbitration proceedings will commence.

Basis used to determine the overall expected return:

Life Insurance Corporation of India (LIC) manages the investments of Employee Gratuity Scheme. Expected rate of return on investments is determined based on the assessment made by the LIC at the beginning of the year on the return expected on its existing portfolio, along with the estimated incremental investments to be made during the year. Yield on the portfolio is calculated based on a suitable mark-up over the benchmark Government securities of similar maturities.

f) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)

1 Discount rate as at 31-03-2015 - 7.80%

2 Expected return on plan assets as at 31-03-2015 - 9.00%

3 Salary growth rate : For Gratuity Scheme - 10%

4 Attrition rate: For gratuity scheme the attrition rate is taken at 9.25%

5 The estimates of future salary increase considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

h) General descriptions of defined plans:

1 Gratuity Plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.

i) The Company expects to fund Rs. 41,181,916/- (Rs. 31,085,773/-) towards its gratuity plan in the year 2015-16.

2 Company''s Pension Plan:

The company operates a Pension Scheme for specified ex-employees wherein the beneficiaries are entitled to defined monthly pension.

C-17 Related Party Disclosures

(A) Names of the related party and nature of relationship where control exists

Name of the related party Nature of relationship

1 Karad Projects and Motors Limited Subsidiary Company

2 The Kolhapur Steel Limited Subsidiary Company

3 Kirloskar Systech Limited Subsidiary Company

4 Kirloskar Corrocoat Private Limited Subsidiary Company

5 Kirloskar Brothers International B V Subsidiary Company

6 SPP Pumps Limited Subsidiary of Kirloskar Brothers International B.V

7 Kirloskar Brothers(Thailand) Limited Subsidiary of Kirloskar Brothers International B.V

8 SPP Pumps (MENA) L.L.C. Subsidiary of Kirloskar Brothers International B.V

9 Kirloskar P°mpen I3.V Subsidiary of Kirloskar Brothers International B.V (earstwhile Kirloskar Brothers Europe B V)

10 Micawber 784 (Proprietary Limited) Subsidiary of Kirloskar Brothers International PTY Ltd.

11 Kirloskar Brothers International PTY Ltd. Subsidiary of Kirloskar Brothers International B.V

12 SPP Pumps France EURL Subsidiary of SPP Pumps Limited

13 Certified Engines Limited Subsidiary of SPP Pumps Limited

14 SPP Pumps (South Africa Pty.) Limited Subsidiary of Kirloskar Brothers International PTY Ltd.

15 SPP Pumps Holdings LLC Subsidiary of SPP Pumps Limited

16 SPP Pumps Management LLC Subsidiary of SPP Pumps Limited

17 SPP France S A S Subsidiary of SPP Pumps Limited

18 SPP Pumps LP(doing business as SPP Pumps Inc) Owned by Partnership firm of SPP Pumps Holding

19 SPP Pumps Real Estate LLC Owned by SPP Pumps LP

20 Braybar Pumps (Proprietary) Limited Subsidiary of Kirloskar Brothers International PTY Ltd.

21 SyncroFlo Inc. Owned by SPP Pumps LP

(D) Names of related parties with whom transactions have been entered into:

1) Subsidiary Companies :

Karad Projects and Motors Limited

The Kolhapur Steel Limited

Kirloskar Systech Limited

Kirloskar Corrocoat Private Limited

SPP Pumps Limited

SPP Pumps (South Africa Pty.) Limited

SPP Pumps (MENA) LLC

SPP Pumps LPd/b/a SPP Pumps , Inc.

Kirloskar Pompen B.V

Braybar Pumps (Proprietary) Limited

Kirloskar Brothers (Thailand) Limited

2) Joint Venture Kirloskar Ebara Pumps Limited

3) Key Management Personnel Mr. Sanjay Kirloskar

Mr. J R Sapre

4) Relatives of Key Management Personnel

Mrs. Pratima Kirloskar Wife of Mr. Sanjay Kirloskar

Mr. Alok Kirloskar Son of Mr. Sanjay Kirloskar

Mrs. Suman Kirloskar Mother of Mr. Sanjay Kirloskar

Ms. Rama Kirloskar Daughter of Mr. Sanjay Kirloskar

Ms. Preeti Sapre Daughter of Mr. J R Sapre

5) Enterprises over which key managerial personnel or their relatives exercise significant influence : Kirloskar Proprietary Limited

C Loans and advances in the nature of loans to firms/companies in which directors are interested: NIL

D Investment by the loanee (borrower) in the shares of the Company or subsidiary of the Company : NIL

Note:- Loans to employees including directors under various schemes of the company (such as housing loan, furniture loan, education loan etc.) have been considered to be outside the purview of this disclosure requirement.

c) Contingent liabilities , if any , incurred in relation to interest in Joint Ventures : Nil (Rs 1,052,807/)

d) Capital commitments , if any , in relation to interest in Joint Ventures : Nil (Rs 11,539,847/-)

e) List of Jointly controlled operations :

Name of the Jointly Description Ownership Country of controlled operation Interest Incorpor- ation

HCC - KBL Jointly controlled N A India operations

KBL - MCCL Jointly controlled N A India operations

KCCPL - IHP - BRC - Jointly controlled N A India TAIPPL - KBL JV operations

IVRCL - KBL JV Jointly controlled N A India operations

Maytas - KBL JV Jointly controlled N A India operations

Larsen & Toubro - KBL JV Jointly controlled N A India operations

KBL-MEIL-KCCPL JV Jointly controlled N A India operations

KBL - PLR JV Jointly controlled N A India operations

KBL - Koya - VA Tech Jointly controlled N A India operations

KBL - PIL Consortium Jointly controlled N A India operations

Larsen & Toubro - Jointly controlled N A India KBL - Maytas operations

IVRCL - KBL - MEIL Jointly controlled N A India operations

Pioneer - Avantica - Jointly controlled N A India ZVS - KBL operations

AMR - Maytas - KBL - WEG Jointly controlled N A India operations

Indu - Shrinivasa JV Jointly controlled N A India Constructions - KBL - WEG operations

MEIL - KBL - IVRCL Jointly controlled N A India operations

MEIL - Maytas - KBL Jointly controlled N A India operations

KCCPL - TAIPPL - KBL Jointly controlled N A India operations

KBL-SPML Jointly controlled N A India operations

MEIL - KBL JV Jointly controlled N A India operations

KIRLOSKAR - MEMWPL JV Jointly controlled N A India operations

MAYTAS - MEIL - KBL JV Jointly controlled N A India operations

Gondwana - KBL JV Jointly controlled N A India operations

MEIL -PRASAD-KBL CONSORTIUM Jointly controlled N A India operations

JCPL - MEIL - KBL CONSORTIUM Jointly controlled N A India operations

KBL -PTIL UJV Jointly controlled N A India operations

KBL - RATNA - JOINT VENTURE Jointly controlled N A India operations

MEIL-KBL-WEG CONSORTIUM Jointly controlled N A India operations

MEIL-KBL- ( KDWSP ) Jointly controlled N A India operations

KBL and TCIPL JOINT VENTURE Jointly controlled N A India operations

ACPL & KBL JV Jointly controlled N A India operations

Kirloskar Brothers Ltd. JV Jointly controlled N A India operations

ITD CEMENTATION INDIA Ltd JV Jointly controlled N A India operations

GSJ - KBL JV Jointly controlled N A India operations

JBL-KBL-GSJ JV Jointly controlled N A India operations

KBL SYNERGE JV Jointly controlled N A India operations

C-22 Stock Option Schemes:

Under the Employees'' "Share a Vision" - Stock Option Scheme, 2007 (ESOS-2007), equity shares of Rs. 2/- each would be issued and allotted against stock options, at an Exercise price of Rs. 200/- or Rs. 2/- per share based on performance and other eligibility criteria.

Subject to the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the terms of the ESOS - 2007, the options granted would vest, after one year of the grant, in 3 annual instalments of 30%, 30% and 40% and the same would be exercisable within a period of 3 years from the date of vesting.

Ist tranche of options i.e. 30% of the total options have been vested on August 31,2008. The vesting of the IInd tranche (August 31,2009) stands cancelled due to non achievement of the performance targets specified in the performance matrix. IlIrd tranche of options i.e. 40% of the total options have been vested on August 31, 2010.

The details of the grants under the Stock Option Scheme are summarised hereinafter.

C-23 The identification of suppliers as micro, small and medium enterprise defined under "The Micro, Small and Medium Enterprises Development Act, 2006" was done on the basis of information to the extent provided by the suppliers of the Company. There were no outstanding dues to micro, small and medium enterprises which were outstanding for more than the stipulated period.

C-24 Effective from April 1,2014 the Company has charged depreciation based on the revised remaining useful life of the assets as per the requirement of Schedule 11 of the Companies Act, 2013. Due to above, depreciation charge for the year ended March 31,2015 is higher by Rs. 153,496,015/-. Further, an amount of Rs. 61,740,367/- (net of tax of Rs. 40,754,517/-) representing the carrying amount of assets with revised useful life as nil, has been charged to the retained earnings as on April 01,2014 pursuant to the Companies Act, 2013.

C-25 During the year Company has purchased additional 40,000 shares at fair value in its wholly own subsidiary Kirloskar Systech Ltd as part of business strategy in exchange of certain fixed assets.

C-26 The net worth of The Kolhapur Steel Ltd. (TKSL), a subsidiary company of Kirloskar Brothers Ltd. (KBL) has turned negative in previous year and the company has made an application to Board of Industrial Financial Reconstruction (BIFR) under Sick Industrial Companies Act, 1985.(SICA). KBL has infused Rs. 150,000,000/- by way of preference shares during the current year and will continue to support its operations going forward as the KBL management is confident of its growth and expects a turnaround in the near future. In view of the same and taking into consideration the realizable value of TKSL''s assets, diminution in value of KBL''s investment in TKSL is temporary in nature and as such no provision for the same is considered necessary as per AS-13, Accounting for Investment, notified under The Companies (Accounts) Rules, 2014.

C-27 The company as per its policy on Corporate Social Responsibility has spent Rs. 45,000,000/- towards education in the current financial year through a registered trust and debited surplus account under Reserves and Surplus.

C-28 The previous year''s figures have been regrouped / rearranged wherever necessary to conform to current year''s disclosure. Figures in bracket relate to previous year.


Mar 31, 2014

Corporate information

Kirloskar Brothers Limited (KBL) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. KBL is engaged in providing global fluid management solutions and is the largest manufacturer and exporter of centrifugal pumps and valves from India. The core businesses of the company are large infrastructure projects (Water Supply, Power Plants and Irrigation), Project and Engineered Pumps, Industrial Pumps, Agriculture and Domestic Pumps, Valves, Motors and Hydro turbines.

Rs.

Figures as at the Figures as at the end of current end of previous reporting period reporting period ending on ending on March 31, 2014 March 31, 2013

C-1 Contingent liabilities not provided for in respect of:

a) Guarantees:

By the Company to Citibank N A. on behalf of SPP

Pumps Ltd., UK [USD-10,500,000] 629,055,000 572,775,000 By the Company to Weatherford Oil Tool Middle East Ltd. on behalf of SPP Pumps Ltd.,UK [GBP- 89,785] 8,934,416 -

By the Company to Citibank N. A. on behalf of Kirloskar Brothers (Thailand) Ltd. [USD-3,000,000] 179,730,000 163,650,000

By the Company to Citibank N. A. on behalf of Kirloskar Brothers Europe B.V. [USD- 5,000,000] 299,550,000 272,750,000

By the Company to Citibank N. A. on behalf of Braybar Pumps (Proprietary) Ltd. [USD-2,000,000] 119,820,000 109,100,000

By the Company to Citibank N. A. on behalf of erstwhile Hematic MotorsPvt. Ltd. (Now Karad Projects and Motors Ltd.)[USD-6,000,000] 359,460,000 327,300,000

By the Company to Indian Overseas Bank Ltd. on behalf of erstwhile Kirloskar Constructions & Engineers Ltd., Chennai (Now Karad Projects and Motors Ltd.) 500,000,000 500,000,000

b) Other money for which the Company is contingently liable for

i) Central Excise and Service tax (Matter Subjudice) 1,104,102,095 667,822,343

li) Sales Tax (Matter Subjudice) 193,552,873 83,439,571

lii) Income Tax (Matter Subjudice) 738,708,203 738,172,539

iv) Labour Matters (Matter Subjudice) 48,119,314 42,793,722

v) Other Legal Cases (Matter Subjudice) 72,590,410 560,307,661

vil I etters of Credit Outstanriinn 629.139.241 677 131468

C-11 Employee Benefits:

i Defined Contribution Plans:

Amount of Rs. 47,093,714/- (Rs. 41,338,375 /-) is recognised as an expense and included in "Employees benefits expense" (PartA-22)inthe Profit and Loss Account.

Basis used to determine the overall expected return:

Life Insurance Corporation of India (LIC) manages the investments of Employee Gratuity Scheme. Expected rate of return on investments is determined based on the assessment made by the LIC at the beginning of the year on the return expected on its existing portfolio, along with the estimated incremental investments to be made during the year. Yield on the portfolio is calculated based on a suitable mark-up over the benchmark Government securities of similar maturities.

f) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)

1 Discount rate as at 31 -03-2014 - 9.20%

2 Expected return on plan assets as at 31 -03-2014 - 9%

3 Salary growth rate: For Gratuity Scheme -11 %

4 Attrition rate: For gratuity scheme the attrition rate is taken at 6%

5 The estimates of future salary increase considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

h) General descriptions of defined plans:

1 Gratuity Plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.

2 Company''s Pension Plan:

The Company operates a Pension Scheme for specified ex-employees wherein the beneficiaries are entitled to defined monthly pension.

i) The Company expects to fund Rs. 31,085,373/- (Rs. 23,197,736/-) towards its gratuity plan in the year 2014-15.

C-17 (D) Names of related parties with whom transactions have been entered into:

1) Subsidiary companies

Karad Projects and Motors Limited

The Kolhapur Steel Limited

Kirloskar Systech Limited

Kirloskar Corrocoat Private Limited

SPP Pumps Limited

SPP Pumps (South Africa) (Pty.) Limited

SPP Pumps (MENA) LLC

SPP Pumps LP (doing business as SSP Pumps, INC)

Kirloskar Brothers Europe B.V.

Braybar Pumps (Proprietary) Limited

Kirloskar Brothers (Thailand) Limited

2) Joint Venture Kirloskar Ebara Pumps Limited

3) Key Management Personnel

Mr. Sanjay Kirloskar Mr. J R Sapre

4) Relatives of Key Management Personnel

Mrs. Pratima Kirloskar Wife of Mr. Sanjay Kirloskar

Mr. Alok Kirloskar Son of Mr. Sanjay Kirloskar

Mrs. Suman Kirloskar Mother of Mr. Sanjay Kirloskar

Ms. Preeti Sapre Daughter of Mr. J R Sapre

5) Enterprises over which key managerial personnel or their relatives exercise significant influence

Kirloskar Proprietary Limited

C Loans and advances in the nature of loans to firms/companies in which directors are interested: NIL D Investment by the loanee (borrower) in the shares of the Company or subsidiary of the Company: NIL

Note:- Loans to employees including directors under various schemes of the Company (such as housing loan, furniture loan; education loan etc.) have been considered to be outside the purview of this disclosure requirements.

c) Contingent liabilities, if any, incurred in relation to interest in Joint Ventures : Rs. 1,052,807/- (Rs. 1,052,807/-)

d) Capital commitments, if any, in relation to interest in Joint Ventures : Rs. 11,539,847/- (Rs. 4,809,255/-)

C-22 Employees Stock Option Schemes:

U nder the Employees'' "Share a Vision" - Stock Option Scheme, 2007 (ESOS-2007), equity shares of Rs. 21- each would be issued and allotted against stock options, at an Exercise price of Rs. 200/- or Rs. 21- per share based on performance and other eligibility criteria.

Subject to the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the terms of the ESOS-2007, the options granted would vest, after one year of the grant, in 3 annual instalments of 30%, 30% and 40% and the same would be exercisable within a period of 3 years from the date ofvesting.

Ist tranche of options i.e. 30% of the total options have been vested on August 31, 2008. The vesting of the IInd tranche (August 31, 2009) stands cancelled due to non achievement of the performance targets specified in the performance matrix. IIIrd tranche of options i.e. 40% of the total options have been vested on August 31,2010.

The details of the grants under the Stock Option Scheme are summarised below.

C-23 As per the information available with the Company till date; none of the suppliers have informed the Company about their having registered themselves under the "Micro, Small and Medium Enterprises Development Act, 2006". As such, information as required under this Act, cannot be compiled and therefore, not disclosed for the year

C-24 Exceptional item represents net foreign exchange loss.

C-25 During the year, Company has executed an agreement with Kirloskar Systech Ltd. (KSL), a Company''s wholly owned subsidiary company for transfer of certain assets as a part of business strategy.

C-26 The figures have been regrouped / rearranged wherever necessary. Figures in bracket relate to previous year.


Mar 31, 2013

Corporate information

Kirloskar Brothers Limited (KBL) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. KBL is engaged in providing global fluid management solutions and is the largest manufacturer and exporter of centrifugal pumps and valves from India. The core businesses of the company are large infrastructure projects (Water Supply, Power Plants, and Irrigation), Project and Engineered Pumps, Industrial Pumps, Agriculture and Domestic Pumps, Valves, Motors and Hydro turbines.

Basis used to determine the overall expected return:

Life Insurance Corporation of India (LIC) manages the investments of Employee Gratuity Scheme. Expected rate of return on investments is determined based on the assessment made by the LIC at the beginning of the year on the return expected on its existing portfolio, along with the estimated incremental investments to be made during the year. Yield on the portfolio is calculated based on a suitable mark-up over the benchmark Government securities of similar maturities.

a) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)

1 Discount rate as at 31-03-2013 - 7.9%

2 Expected return on plan assets as at 31-03-2013 - 9.0%

3 Salary growth rate : For Gratuity Scheme - 10%

4 Attrition rate: For gratuity scheme - 15%

5 The estimates of future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

b) General descriptions of defined plans:

1 Gratuity Plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.

2 Company''s Pension Plan:

The company operates a pension scheme for specified ex-employees wherein the beneficiaries are entitled to defined monthly pension.

A Loans and advances in the nature of loans to firms/companies in which directors are interested: NIL

B Investment by the loanee (borrower) in the shares of the Company or subsidiary of the Company : NIL

Note:- Loans to employees including directors under various schemes of the company (such as housing loan, furniture loan, education loan etc.) have been considered to be outside the purview of this disclosure requirements.

A-1 Employees Stock Option Scheme :

Under the Employees'' "Share a Vision" - Stock Option Scheme, 2007 (ESOS-2007), equity shares of Rs. 2/- each would be issued and allotted against stock options, at an Exercise price of Rs. 200/- or Rs. 2/- per share based on performance and other eligibility criteria.

Subject to the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the terms of the ESOS - 2007, the options granted would vest, after one year of the grant, in 3 annual instalments of 30%, 30% and 40% and the same would be exercisable within a period of 3 years from the date of vesting.

Ist tranche of options i.e. 30% of the total options have been vested on August 31, 2008. The vesting of the IInd tranche (August 31, 2009) stands cancelled due to non achievement of the performance targets specified in the performance matrix. IIIrd tranche of options i.e. 40% of the total options have been vested on August 31, 2010.

The details of the grants under the Stock Option Scheme are summarised below.

A-2 As per the information available with the Company till date none of the suppliers have informed the company about their having registered themselves under the "Micro, Small and Medium Enterprises Development Act, 2006". As such, information as required under this Act, cannot be compiled and therefore, not disclosed for the year.

A-3 The Income Tax department based on its survey, had raised additional tax liability on the Company, which has been paid during the quarter ending March 31, 2013. The short provision for tax in respect of earlier years, consequent to the additional tax claim, has been appropriately provided and disclosed by the Company in the financial for the year ended on March 31, 2013.

A-4 The figures have been regrouped / rearranged wherever necessary. Figures in bracket relate to previous year.


Mar 31, 2012

1. Figures as at the Figures as at the end of current end of previous reporting period reporting period ending on ending on March 31, 2012 March 31, 2011

C-2 Contingent liabilities not provided for in respect of :

a) Guarantees:

By the company to ICICI Bank Ltd. on behalf of SPP Pumps Ltd., UK, 570,192,000 506,170,000 (GBP 7,000,000) By the company to Barclays Bank Ltd. on behalf of SPP Pumps Ltd., UK - 289,240,000 (GBP 4,000,000)

By the company to Citibank N.A.on behalf of SPP Pumps Ltd, UK 534,135,000 578,480,000 (USD 10,500,000)(GBP 8,000,000)

By the company to Indian Overseas Bank Ltd., on behalf of Kirloskar Construction and Engineers Ltd., Chennai 800,000,000 800,000,000

By the company to Bank of Maharashtra on behalf of Gondwana 82,500,000 82,500,000

By the company to Citibank N. A. on behalf of Kirloskar Brothers 152 610,000 44,820,000 (Thailand) Ltd., [ (USD 3,000,000 (1,000,000) ]

By the company to Citibank N. A. on behalf of Kirloskar Brothers Europe B V (USD 5,000,000) 254,350,000 -

By the company to Citibank N. A. on behalf of Braybar Pumps 101,740,000 - (USD 2,000,000)

By the company to Citibank N. A. on behalf of Hematic Motors Pvt Ltd. 254,350,000 - (USD 5,000,000)

b) Central Excise and Service tax (Matter Subjudice) 209,270,117 35,401,656

c) Sales Tax (Matter Subjudice) 89,608,533 91,450,224

d) Income Tax (Matter Subjudice) 871,135,476 861,935,476

e) Labour Matters (Matter Subjudice) 40,055,045 40,864,825

f) Other Legal Cases ( Matter Subjudice ) 560,307,661 535,279,635

g) Letters of Credit Outstanding1,170,034,222 3,273,973,870

C-12 Employee Benefits :

i Defined Contribution Plans:

Amount of Rs. 36,509,153/- (Rs. 41,627,171/-) is recognised as an expense and included in "Employees benefits expense" (Part A-22) in the Profit and Loss Account.

f) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)

1 Discount rate as at 31-03-2012 - 8.5%

2 Expected return on plan assets as at 31-03-2012 - 9.0%

3 Salary growth rate : For Gratuity Scheme - 10%

4 Attrition rate: For gratuity scheme the attrition rate is taken at 15%

5 The estimates of future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

h) General descriptions of defined plans:

1 Gratuity Plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.

2 Company's Pension Plan:

The company operates a pension scheme for specified ex-employees wherein the beneficiaries are entitled to defined monthly pension.

C-23 Employee Stock Option Scheme

Under the Employees' “Share a Vision” – Stock Option Scheme, 2007 (ESOS-2007), equity shares of Rs. 2/- each would be issued and allotted against stock options, at an Exercise price of Rs. 200/- Rs. 2/- per share based on performance and other eligibility criteria.

Subject to the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the terms of the ESOS – 2007, the options granted would vest, after one year of the grant, in 3 annual instalments of 30%, 30% and 40% and the same would be exercisable within a period of 3 years from the date of vesting.

Ist tranche of options i.e. 30% of the total options have been vested on August 31, 2008. The vesting of the IInd tranche (August 31, 2009) stands cancelled due to non achievement of the performance targets specified in the performance matrix. IIIrd tranche of options i.e. 40% of the total options have been vested on August 31, 2010.

The details of the grants under the Stock Option Scheme are summarised below.

C-24 As per the information available with the Company till date; none of the suppliers have informed the company about their having registered themselves under the "Micro, Small and Medium Enterprises Development Act, 2006". As such, information as required under this Act, cannot be compiled and therefore, not disclosed for the year.

C-25 On September 13, 2011 the Company has formed a subsidiary company in Egypt namely SPP Pumps (MENA) LLC through its Wholly Owned Subsidiary - Kirloskar Brothers International B. V., Netherlands (KBI BV). KBI BV holds 100% equity in SPP Pumps (MENA) LLC.

C-26 In terms of the Scheme of Arrangement and in accordance with the Honorable Bombay High Court orders dated April 23, 2010, 2,500 equity shares of Rs. 2/- each were reduced against earlier 10,000 equity shares of Rs. 2/- each, earlier kept in abeyance.

C-27 On May 14, 2011, Company has sold its 100% investment in its subsidiary Gondwana Engineers Limited to Doshion Veolia Water Solution Pvt. Ltd., Ahmedabad for Rs. 474,400,000/-.

C-28 Kirloskar Construction and Engineers Ltd. had assigned claims of Rs. 735,118,217/- to Kirloskar Brothers Ltd. After all out efforts to recover the claims, the Company is of the view that claims of Rs. 65,117,000/- are recoverable, claims of Rs. 147,725,744/- are to be provided for in view of the pending legal cases and claims of Rs. 485,487,034/- are considered as irrecoverable at the year end.

The Company management has therefore decided to give effect to the above in its books of accounts. C-29 The figures have been regrouped / rearranged wherever necessary. Figures in bracket relate to previous year.


Mar 31, 2010

1 Interest paid -others Rs.251,349,429/- (Rs.256,796,495/-) is net of Rs.23,369,940/- (Rs.27,020,156/-) being interest received from customers and on deposits. [Tax deducted at source Rs.2,219,806/- (Rs. 1,724,577/-)]

2 Net gain (loss) on foreign currency transactions on revenue accounts recognised in the Profit and Loss Account is Rs.61,235,183/-(Rs.107,867,741/-).

3 Contingent liabilities not provided for in respect of: 2010 2009 Rupees Rupees a) Guarantees: By the company to ICICI Bank Ltd. on behalf of SPP Pumps Ltd. (GBP 3,500,000) 239,540,000 257.320,000 By the company to Barclays Bank Ltd. on behalf of SPP Pumps Ltd. (GBP 4,000,000) 273,760,000 294,080,000 By the company to Citi Bank N A. on behalf of SPP Pumps Ltd. (GBP 8,000,000) 547,520,000 588,160,000 By the company to Indian Overseas Bank Ltd. on behalf of Kirloskar Constructions & Engineers Ltd., Chennai 800,000,000 800,000,000 By the company to Bank of Maharashtra on behalf of Gondwana Engineers Limited 145,000,000 145,000,000 By the company to Citi Bank N.A. on behalf of Kirloskar Brothers (Thailand) Ltd, (USD 500,000) 22,640,000 - b) Central Excise (Matter Subjudice) 30,627,618 14,347,263 c) Sales Tax (Matter Subjudice) 89,009,579 89,056,373 d) Income Tax (Matter Subjudice) 522,425,350 395,323,477 e) Labour Matters (Matter Subjudice) 37,474,843 39,278,282 f) Other Legal Cases (Matter Subjudice) 585,161,252 18,792,301 g) Letters of Credit Outstanding 2,201,793,248 2,366,640,832

4 Employee Benefits :

i Defined Contribution Plans:

Amount of Rs. 50,678,337/- (Rs. 43,120,522/-) is recognised as an expense and included in "Payments and Benefits to Employees" (Schedule 21) in the Profit and Loss Account.

Basis used to determine the overall expected return:

Life Insurance Corporation (LIC) manages the investments of Employee Gratuity Scheme. Expected rate of return on investments is determined based on the assessment made by the LIC at the beginning of the year on the return expected on its existing portfolio, along with the estimated incremental investments to be made during the year. Yield on the portfolio is calculated based on a suitable mark-up over the benchmark Government securities of similar maturities.

f) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)

1 Discount rate as at 31-03-2010 - 7.5%

2 Expected return on plan assets as at 31 -03-2010 - 9%

3 Salary growth rate: For Gratuity Scheme -10%

4 Attrition rate: For gratuity scheme-19%

5 The estimates of future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

h) General descriptions of defined plans:

1 Gratuity Plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.

2 Companys Pension Plan:

The company operates a Pension Scheme for specified ex-employees wherein the beneficiaries are entitled to defined monthly pension.

Notes :

a) Licensed Capacity includes registered capacities for activities existing prior to the Industries (Development Regulation) Act, 1951, but does not include licenses held for captive capacities.

b) It is not practicable to indicate precisely installed capacity of each type of product manufactured by the Company, as the capacity of various facilities avaiiable is overlapping for each product. Besides, the Company manufactures a very large range amongst the licensed products which, in turn, is decided by actual demand from time to time. Also the Company buys components, parts and other services from outside. The installed capacities as indicated above are estimates as certified by the Managing Director and accepted by the Auditors.

c) In terms of notification no. 477E dt. 25-7-91 issued by Department of Industrial Development, industrial licenses are not required for the products manufactured by the Company except centrifugal pumps manufactured at Dewas below 10 cm x 10 cm which are reserved for small scale sector. Revalidation of industrial license in this range of pumps is under process.

C Loans and advances in the nature of loans to firms/Companies in which directors are interested: NIL

D Investment by the loanee (borrower) in the shares of the Company or subsidiary of the Company: NIL

Note: Loans to employees including directors under various schemes of the company (such as housing loan, furniture loan, education loan etc.) have been considered to be outside the purview of this disclosure requirements.

Product Warranty

Accruals have been made in respect of warranties given by the Company for the sales made and services rendered during the year based on past experience.

6. Stock Option Scheme

a) The grant of options to the employees under the Stock Option Scheme is on the basis of their performance and other eligibility criteria. The Options are vested over a period of three years subject to the discretion of the Management and fulfilment of certain conditions.

b) The maximum term of ESOP is three years from the vesting date. The ESOP will be settled in the form of Equity Shares.

7. As per the information available with the Company till date; none of the suppliers have informed the Company about their having registered themselves under the "Micro, Small and Medium Enterprises Development Act, 2006". As such, information as required under this Act, cannot be compiled with and therefore, not disclosed for the year.

8. A Scheme of Arrangement between Kirloskar Brothers Limited (Company), Kirloskar Brothers Investments Limited (KBIL) and their respective shareholders, was duly approved by all the requisite regulatory authorities including Honourable High Court of Judicature at Bombay.

The Company has complied with the conditions stipulated in the High Court order and effective-date of the scheme is March 2, 2010. The appointed date of Scheme of Arrangement is April 16, 2009. As contemplated in the scheme, certain specified investments, as listed in the Scheme of Arrangement, held by the Company stand transferred to and vested in KBIL without any further acts, deeds and actions.

The subscribed and paid-up equity share capital of the Company which was Rs. 211,528,710/- consisting of 105,764,355 equity shares of Rs. 21- each stands reduced to Rs. 158,646,532/- consisting of 79,323,266 equity shares of Rs. 21- each. This excludes further subscribed and Paid-up equity share capital of Rs. 20,000/- consisting of 10,000 equity shares of Rs. 21- each, issued and allotted under the Companys Employees Stock Option Scheme during the year. These 10,000 shares are kept in abeyance for want of specific Bombay High Court orders for giving effect to terms of scheme with regard to capital reduction in the Company.

Pursuant to the scheme, the carrying cost of investments transferred and the amount of the reduction in the share capital of the Company has been charged / credited to the General Reserve. The Company has also written off the amount of the original investment made during the current year in KBIL. Pursuant to the scheme, every shareholder in the Company has been issued specified shares in KBIL.

9. On September 19, 2009, Bettervalue Holdings Private Limited (BVHPL) has sold all the shares held of Kirloskar Brothers Limited, through inter se transfer amongst the group, to other promoters. As a result, BVHPL has ceased to be the holding company of Kirloskar Brothers Limited.

10. On November 12, 2009, Kirloskar Brothers Limited has acquired additional shares of the following companies and has become the holding company of these companies:

- Kirloskar Corrocoat Pvt. Ltd. - Hematic Motors Pvt. Ltd. - Pressmatic Electro Stampings Pvt. Ltd. - Quadromatic Engineering Pvt. Ltd.

Prior to the above acquisition of additional shares, Kirloskar Corrocoat Pvt Ltd was only a joint venture company and the other companies were fellow subsidiary companies.

11. On February 15, 2010, Kirloskar Brothers Limited (KBL) has sold the shares held in its Wholly Owned Subsidiary - SPP Pumps Ltd (SPP) to its Wholly Owned Subsidiary based in the Netherlands, namely Kirloskar Brothers International B.V (KBI). KBI has issued 1000 shares of Euro 100 each to KBL at a premium, towards the consideration for transfer of SPP shares to them by KBL.

12. The figures have been regrouped / rearranged wherever necessary. Figures in bracket relate to previous year.