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Directors Report of Kirloskar Electric Company Ltd.

Mar 31, 2014

The Shareholders

The Directors have pleasure in presenting the 67th Annual Report on the business operations of the company, together with the Audited Statement of Accounts for the year ended 31st March, 2014. The financial highlights on the Business operations of the Company are as follows:

Company''s Performance

During the year under report, your Company has achieved a turnover of Rs. 67,984.27 lakhs (previous year Rs.80,194.27 lakhs). The operations have resulted in a net loss of Rs.4,100.96 lakhs (previous year net profit of Rs. 416.03 lakhs). Industry Outlook

The market for your company products remains subdued. The present manufacturing capacity in India is in far excess of the existing demand. This has lead to very aggressive competition and subsequent negative pressure on the prices of products. Your Company has taken several steps to mitigate the impact of this by taking several measures for optimizing the capacity utilization, market reach and performance.

Dividend

In order to conserve resources for Company'' s growth, your Directors do not propose to declare any dividend for the year under report. The Company has not transferred any amount to its General Reserve.

Subsidiary - Kirsons B.V.

The operations of Kirsons B.V., your subsidiary have resulted in net loss of € 2.94 lakhs (Previous year € 1.04lakhs). Subsidiary Companies

The Company as of March 31, 2014 had one subsidiary, viz., Kirsons B.V., Netherlands (Kirsons). Kirsons is having two subsidiaries - Lloyd Dynamowerke GmbH & Co. KG, Germany and Lloyd Beteiligungs-GmbH, Germany. Pursuant to section 212 of the Companies Act, the annual accounts of subsidiary companies for the year ended 31st March, 2014 along with the statements referred to in the said section, are attached with Consolidated Financial Statements as required.

Lloyd Dynamowerke GmbH & Co. KG, Germany (LDW)

As you are aware, your Company holds 94.89% shares in Lloyd Dynamowerke GmbH & Co. KG, Germany and the entire shareholding in Lloyd Beteiligungs-GmbH, Germany through its subsidiary in The Netherlands - Kirsons B.V. Lloyd Dynamowerke GmbH & Co. KG,Germany is a limited partnership existing in accordance with the Laws of Germany which owns an electrical machine manufacturing plant at Bremen. During the year ended 31st March, 2014 Lloyd Dynamowerke GmbH & Co. KG, had turnover of € 390.41 lakhs(Rs.31,622.97 lakhs) {Previous year € 399.57 lakhs (Rs. 27,942 lakhs)} with a net loss after tax of € 58.43 lakhs(Rs.4,826.92 lakhs) {Previous year net loss € 64.60 lakhs (Rs.4,496 lakhs)}. Rotating Machines Group

During the year under review the sales under Rotating Machines Group amounted to Rs.68,983.02 lakhs as against Rs.69,935.88 lakhs in 2012-13.

Power Generation and Distribution Group

During the year under review the sales under Power Generation and Distribution Group amounted to Rs.31,608.77 lakhs as against Rs.40,861.21 lakhs in 2012-13.

Others

During the year under review the sale of other Electrical Products amounted to Rs.5,368.11 lakhs as against Rs.4,719.32 lakhs in 2012-13.

Human Resources

The Company considers its employees as its most valuable asset. Employees at all levels have put in their best to the services of the Company and the Board puts on record the sincere appreciation of their dedication and loyalty. The Company focuses on building an organization through induction and development of talent to meet current and future needs. Various HR initiatives have been taken to align the HR Policies of the Company with the growth projections of the Company. The Company has 1686 employees as on 31.03.2014.

Environment, Safety and Energy Conservation

As required by the Companies (Disclosure of particulars in the Report of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and other details are given in the Annexure to this report.

Particulars of Employees

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975,the names and other particulars of specified employees are set out in the Annexure to the Directors Report. However having regard to the provisions of section 219(1 )(b)(iv) of the Companies Act, 1956, the Annual Report is being sent to all members of the Company, excluding the aforesaid information. Any member interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company.

Corporate Governance

Pursuant to the requirements of the Listing Agreements with Stock Exchanges, your Directors are pleased to annex the following:

1. Management Discussion and Analysis Report

2. Report on Corporate Governance

3. Auditors Certificate regarding compliance of conditions of Corporate Governance

4. CEO & CFO Certificate

5. CEO Certificate regarding compliance with the Code of Conduct.

These annexures form part of this report.

Directors

Mr.A.S.Lakshmanan retire by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.

The Board has appointed Mr. K.Ganesh as an Additional Director of the Company at their meeting held on 30th September, 2013. Mr. K.Ganesh hold office upto the date of the Annual General Meeting and has been proposed for appointment.

The Board has appointed Mr.S.N.Agarwal, Mr.Sarosh J Ghandy, Mr.Anil Kumar Bhandari, Mr.V.P.Mahendra, Mr.Kamlesh Gandhi and Mr.Ram J Shahaney, as non Executive Independent Directors for a period of five years from the date of this Annual General Meeting and are not liable to retire by rotation.

The Board has appointed Mr. Vinayak Narayan Bapat as an Additional Director of the Company at their meeting held on 12th August, 2014. Mr. Vinayak Narayan Bapat hold office upto the date of the Annual General Meeting and has been proposed for appointment. He is appointed as Managing Director for a period of three years w.e.f. 12th August 2014.

The Board has appointed Mr. Anand B Hunnur as an Additional Director of the Company at their meeting held on 12th August, 2014. Mr. Anand B Hunnur hold office upto the date of the Annual General Meeting and has been proposed for appointment. He is appointed as Director - Sales for a period of three years w.e.f. 12th August 2014.

The Board has appointed Mr.Vijay R Kirloskar as Executive Chairman for a term of three years w.e.f. 12th August 2014. Mr.Alok Kumar Gupta, Joint Managing Director, resigned from the services of the Company from the close of office hours on 25th April, 2014. Your Directors place on record their appreciation of the valuable services rendered by Mr. Gupta during his tenure as a Director of the Company.

Directors'' Responsibility Statement

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

1. In the preparation of the annual accounts, the applicable accounting standards have been generally followed.

2. Appropriate accounting policies have been selected and applied consistently and Directors have 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, 2014 and of the Profit and Loss Account for the year ended 31st March, 2014.

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 have been prepared on a going concern basis.

Auditors

M/s. B. K. Ramadhyani & Co., Chartered Accountants and M/s. Sundar & Associates, Chartered Accountants, are the retiring Auditors in India and Malaysia respectively. They are eligible for re-appointment. The required certificates to the effect that the re-appointments, if made, will be within the limit specified in Section 224(1 B) of the Companies Act, have been received from M/s. B. K. Ramadhyani & Co., and M/s. Sundar & Associates.

Fixed Deposits

40 persons had not claimed repayment of their matured deposits amounting to Rs.61.30 lakhs as at 31st March, 2014. Out of the above upto the date of this report, 34 Fixed Deposit amounting to Rs.57.60 lakhs has been repaid and balance 6 Fixed Deposit amounting to Rs.3.70 lakhs had not been claimed.

Directors'' Responsibility Statement

The Directors'' Responsibility Statement in conformity with the requirement of the Companies Act, 1956 and the Companies Act, 2013 has been included in the Directors'' Report to the Shareholders. A Management Discussion and Analysis Report in terms of item IV (F) of Clause 49 of the Listing Agreement has been annexed to the Directors'' Report.

The financial accounts are in conformity with the requirements under the Companies Act, 1956 and the Companies Act, 2013. These accounts reflects the form and substance of transactions and present a true and fair view of the Company''s financial conditions and the results of operations.

The Company has a system of internal control which is reviewed, evaluated and updated on an ongoing basis. The Internal Audit Department has conducted periodic audit of systems and procedures to provide reasonable assurance that the activities are conducted in a manner not prejudicial to the interests of the Company.

The financial statements have been audited by M/s B.K. Ramadhyani & Co., Chartered Accountants and have been reviewed by and discussed in the Audit Committee Meeting.

Information pursuant to Clause 49 IV (G) (i) ( c) of the Listing Agreement

The details required under Clause 49 IV (G) (i) ( c) of the Listing Agreement are given in the notice convening the meeting.

Acknowledgements

The Board of Directors take this opportunity to express its sincere appreciation for the continued support and confidence received from the Company'' s Bankers, Financial Institutions, Customers, Suppliers, Depositors, Shareholders and Employees.

For and on behalf of the Board of Directors of Kirloskar Electric Company Limited

Place : Bangalore Vijay R Kirloskar

Date : August 12, 2014 Chairman


Mar 31, 2013

To The Shareholders

The Directors have pleasure in presenting the 66th Annual Report on the business operation of the company, together with the Audited Statement of Accounts for the year ended 31st March, 2013. The financial highlights on the Business operations of the Company are as follows:

FINANCIAL HIGHLIGHTS

(Rs.in Lakhs) Particulars Year ended Year ended 31.03.2013 31.03.2012

Income 80,194.27 87,173.97

Expenditure 59,121.75 65,585.89

Gross Profit 21,072.52 21,588.08

Operating expenses 16,339.37 15,486.09

Operating Profit before interest and depreciation 4,733.15 6,101.99

Interest 3,357.92 3,830.46

Depreciation, amortisation and provisions 1,703.29 1,838.89

Operating profit before tax and extraordinary items (328.06) 432.64

Other income (net) 901.83 576.26

Net profit before tax and after extraordinary items 573.77 1,008.90

Provision for taxation 157.74 52.08

Net profit after tax and after extraordinary items 416.03 956.82

Company Performance

During the year under report, your Company has achieved a turnover of Rs. 80,194.27 lakhs (previous year Rs. 87,173.97 lakhs). The operations have resulted in a net profit of Rs. 416.03 lakhs (previous year Rs. 956.82 lakhs).

Industry Outlook

The market for your company products remains subdued. The present manufacturing capacity in India is in far excess of the existing demand. This has lead to very aggressive competition and subsequent negative pressure on the prices of products. Your Company has taken several steps to mitigate the impact of this by taking several measures for optimizing the capacity utilization market reach and performance.

Dividend

In order to conserve resources for Company''s growth, your Directors do not propose to declare any dividend for the year under report. The Company has not transferred any amount to its General Reserve.

Subsidiary- Kirsons B.V.

The operations of Kirsons B.V. your subsidiary have resulted in net loss of € 1.04 lakhs (Previous year € 0.71 lakhs).

Subsidiary Companies

The Company as of March 31, 2013 had one subsidiary, viz., Kirsons B.V., Netherlands (Kirsons). Kirsons is having two subsidiaries - Lloyd Dynamowerke GmbH & Co. KG, Germany and Lloyd Beteiligungs-GmbH, Germany. Pursuant to section 212 of the Companies Act, the annual accounts of subsidiary companies for the year ended 31st March, 2013 along with the statements referred to in the said section, are attached with Consolidated Financial Statements as required.

Lloyd Dynamowerke GmbH & Co. KG, Germany (LDW)

As you are aware, your Company holds 94.89% shares in Lloyd Dynamowerke GmbH & Co. KG, Germany and the entire shareholding in Lloyd Beteiligungs-GmbH, Germany through its subsidiary in The Netherlands - Kirsons B.V. Lloyd Dynamowerke GmbH & Co. KG, Germany is a limited partnership existing in accordance with the Laws of Germany which owns an electrical machine manufacturing plant at Bremen. During the year ended 31st March, 2013 Lloyd Dynamowerke GmbH &Co. KG, had turnover of € 399.57 lakhs (Rs. 27,942 lakhs) {Previous year € 333.33 lakhs (Rs. 22,066 lakhs)} with a net loss after tax of € 64.60 lakhs (Rs. 4,496 lakhs) {Previous year net loss € 5.50 lakhs (Rs. 311 lakhs)}.

Rotating Machines Group

During the year under review the sales under Rotating Machines Group amounted to Rs. 69,935.88 lakhs as against Rs. 63,566.02 lakhs in 2011-12.

Power Generation and Distribution Group

During the year under review the sales under Power Generation and Distribution Group amounted to Rs. 40,861.21 lakhs as against Rs. 46,369.66 lakhs in 2011-12.

Others

During the year under review the sale of other Electrical Products amounted to Rs. 4,719.32 lakhs as against Rs. 6,916.69 lakhs in 2011 -12.

Human Resources

The Company considers its employees as its most valuable asset. Employees at all levels have put in their best to the services of the Company and the Board puts on record the sincere appreciation of their dedication and loyalty. The Company focuses on building an organization through induction and development of talent to meet current and future needs. Various HR initiatives have been taken to align the HR Policies of the Company with the growth projections of the Company. The Company has 1742 employees as on 31.03.2013.

Environment, Safety and Energy Conservation

As required by the Companies (Disclosure of particulars in the Report of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and other details are given in the Annexure to this report.

Particulars of Employees

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of specified employees are set out in the Annexure to the Directors Report. However having regard to the provisions of section 219(1 )(b)(iv) of the Companies Act, 1956, the Annual Report is being sent to all members of the Company, excluding the aforesaid information. Any member interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company.

Corporate Governance

Pursuant to the requirements of the Listing Agreements with Stock Exchanges, your Directors are pleased to annex the following:

1. Management Discussion and Analysis Report

2. Report on Corporate Governance

3. Auditors Certificate regarding compliance of conditions of Corporate Governance

4. CEO & CFO Certificate

5. CEO Certificate regarding compliance with the Code of Conduct. These annexures form part of this report.

Directors

Mr. Anil Kumar Bhandari Mr. V.P.Mahendra and Mr.Kamlesh Gandhi, Directors retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment.

The Board has appointed Mr. Ram J Shahaney as Additional Director of the Company at their meeting held on 9th August, 2012. Mr. Ram J Shahaney hold office upto the date of the Annual General Meeting and has been proposed for appointment.

The Board of Directors appointed Mr.Alok Kumar Gupta as the Joint Managing Director of the Company at their Board Meeting held on 8th February, 2013. Mr. Alok Kumar Gupta has assumed the office on 15th March, 2013. The remuneration of Mr. Alok Kumar Gupta has been approved by the Remuneration & Compensation Committee.

Mr. Anuj Pattanaik, Deputy Managing Director, resigned from the services of the Company during the year under review. Your Directors place on record their appreciation of the valuable services rendered by Mr. Pattanaik during his tenure as a Director of the Company.

Mr.D.Devender Singh and Mr. Berthold Groeneveld, resigned as Directors of the Company. Your Directors place on record their appreciation of the valuable services rendered by Mr.D.Devender Singh and Mr. Berthold Groeneveld during their tenure as Directors of the Company.

Directors'' Responsibility Statement

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

1. In the preparation of the annual accounts, the applicable accounting standards have been generally followed.

2. Appropriate accounting policies have been selected and applied consistently and Directors have made judgements 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, 2013 and of the Profit and Loss Account for the year ended 31st March, 2013.

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 have been prepared on a going concern basis.

Auditors

M/s. B. K. Ramadhyani & Co., Chartered Accountants and M/s. Sundar & Associates, Chartered Accountants, are the retiring Auditors in India and Malaysia respectively. They are eligible for re-appointment. The required certificates to the effect that the re-appointments, if made, will be within the limit specified in Section 224(1 B) of the Companies Act, have been received from M/s. B. K. Ramadhyani &Co., and M/s. Sundar & Associates.

Auditor''s Report

The comments/observations of the Auditors are self-explanatory and the Company''s explanations thereto have been given in relevant notes in the Notes to Accounts. Further explanations in regard to the reservations/qualifications in the Auditors Report are furnished below:

Para (i) of Basis of Qualified Opinion of Auditors

The Company has sought written confirmation from all its vendors to let us know if they are either micro, small or medium enterprises. Once these details are updated, particulars of dues to micro, small and medium enterprises could be ascertained. This is a continuous process and the management would intensify its efforts to collect the required details.

Para (ii) of Basis of Qualified Opinion of Auditors and Para 4 of the Annexure to the Auditors Report

Confirmation is ongoing process. The Company has initiated certain actions to approach these parties and to get the written confirmations.

However it has no impact on financial results of the Company.

Para (NO of Basis of Qualified Opinion of Auditors and Para 2(e) of Auditors'' Report on Other Legal and Regulatory Requirements and Para 4 of the Annexure to the Auditors'' Report

The relevant details of inventory are available for verification .The Company has made good progress in this subject and initiated several actions to address this observation. The Company regularly undertakes physical verification of inventory at all the locations & differences, if any, identified are suitably adjusted in the books. The majority of inputs used by the Company do have long shelf life and the Company is of the opinion that such inputs, if in inventory, are useable. The company will continue with its efforts to bring in the necessary changes so that the valuation of work in progress is in line with Accounting Standard 2, however it has no impact on financial results of the Company.

Para (iv) of Basis of Qualified Opinion of Auditors

The Company has used and relied upon its market intelligence to judge the realizable value of assets held for sale. The estimated realizable value is judged to be in line with the market valuation.

Para 2(a) of the Annexure to the Auditors'' Report

Confirmations have been received from some parties and from some they are expected. This is a continuous process and the management would intensify its efforts to collect the required details.

Para 2 (c) and Para 8 of the Annexure to the Auditors'' Report

During the year, the Company has completed implementation of SAP ECC 6 System at the remaining units. SAP is an integrated software where all the inventory records are maintained. The Company has from time to time taken physical inventory at all locations. Since the valuation of inventory was done on the basis of physical inventory count performed as on 31 st March, 2013, the discrepancies, if any, have been properly dealt with in the books of accounts. The discrepancies were not material in nature.

Fixed Deposits

26 persons had not claimed repayment of their matured deposits amounting to Rs. 22.80 lakhs as at 31st March, 2013. Out of the above upto the date of this report, 10 Fixed Deposit amounting to Rs. 9 lakhs has been repaid and Fixed Deposit amounting to Rs. 8.60 lakhs has been renewed and balance 8 Fixed Deposit amounting to Rs. 5.2 lakhs had not been claimed.

Acknowledgements

The Board of Directors take this opportunity to express its sincere appreciation for the continued support and confidence received from the Company''s Bankers, Financial Institutions, Customers, Suppliers, Depositors, Shareholders and Employees.

For and on behalf of the Board of Directors

Place: Bangalore Vijay R Kirloskar

Date : September 2, 2013 Chairman & Managing Director


Mar 31, 2012

The Directors present the Company's 65th Annual Report with the Audited Balance Sheet as at 31st March, 2012 and Profit and Loss Account for the year ended 31st March, 2012.

Results of Operations Rs in Million

2011-12 2010-11

Income 8717.4 8238.7

Expenditure 6558.6 6330.9

Gross Profit 2158.8 1907.8

Operating expenses 1548.6 1444.4

Operating Profit before interest and depreciation 610.2 463.4

Interest 383.0 317.1

Depreciation, amortisation and provisions 183.9 161.9

Operating profit before tax and extraordinary items 43.3 (15.6)

Other income (net) 57.6 36.9

Net profit before tax and extraordinary items 100.9 21.3

Extraordinary Income (Expenditure)

Net profit before tax and after extraordinary items 100.9 21.3

Provision for taxation 5.2 0.2

Net profit after tax and after extraordinary items 95.7 21.1

Company Performance

During the year under report, your Company has achieved a turnover (Gross) of Rs. 8.72 billion (previous year Rs. 8.24 billion). The operations have resulted in a net profit of Rs.95.7 million (previous year Rs. 21.1 million).

Industry Outlook

Indian Economy performed relatively well against the backdrop of weak global atmosphere. Global economies appear to be going through a phase which is having greater share of volatility than that of stability. There are signs of inertia in Indian Economy as well. Your Company has taken several steps to mitigate the impact of this, rather to have better results by stress upon actions oriented towards goals and performance which should enable the Company to do well, barring unforeseen circumstances.

Appropriations

Dividend

In order to conserve resources for Company's growth, your Directors regret their inability to declare any dividend for the year under report. The Company has not transferred any amount to its General Reserve.

Subsidiary - Kirsons B.V.

The operations of Kirsons B.V.,your subsidiary have resulted in net loss of Euro 0.071million.

Subsidiary Companies

The Company as of March 31, 2012 had one subsidiary, viz., Kirsons B.V., Netherlands (Kirsons). Kirsons is having two subsidiaries - Lloyd Dynamowerke GmbH & Co. KG, Germany and Lloyd Beteiligungs-GmbH, Germany. Pursuant to section 212 of the Companies Act, the annual accounts of subsidiary companies for the year ended 31st March, 2012 along with the statements referred to in the said section, are attached with Consolidated Financial Statements as required. Further, pursuant to Accounting Standard - 21 (AS-21) prescribed under the Companies (Accounting Standard) Rules, 2006, Consolidated Financial Statement presented by the Company includes financial information about its subsidiaries.

Environment, Safety and Energy Conservation

As required by the Companies (Disclosure of particulars in the Report of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and other details are given in the Annexure to this report.

Particulars of Employees

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of specified employees are set out in the Annexure to the Directors Report. However having regard to the provisions of section 219(1 )(b)(iv) of the Companies Act, 1956, the Annual Report is being sent to all members of the Company, excluding the aforesaid information. Any member interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company.

Corporate Governance

Pursuant to the requirements of the Listing Agreements with Stock Exchanges, your Directors are pleased to annex the following :

1. Management Discussion and Analysis Report

2. Report on Corporate Governance

3. Auditors Certificate regarding compliance of conditions of Corporate Governance

4. CEO & CFO Certificate

5. CEO Certificate regarding compliance with the Code of Conduct.

These annexures form part of this report.

Directors

Mr.Berthold Groeneveld, Mr. D.Devender Singh and Mrs.Meena Kirloskar retire by rotation and being eligible offer themselves for re-appointment. Directors' Responsibility Statement

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

1. In the preparation of the annual accounts, the applicable accounting standards have been generally followed.

2. Appropriate accounting policies have been selected and applied consistently and Directors have made judgements 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, 2012 and of the Profit and Loss Account for the year ended 31st March, 2012.

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 have been prepared on a going concern basis.

Human Resources

The Company considers its employees as its most valuable asset. Employees at all levels have put in their best to the services of the Company and the Board puts on record the sincere appreciation of their dedication and loyalty. The Company focuses on building an organization through induction and development of talent to meet current and future needs. Various HR initiatives have been taken to align the HR Policies of the Company with the growth projections of the Company.

Segmentwise Operational Performance Rotating Machines Group

During the year under review the sales under Rotating Machines Group amounted to Rs. 6356.60 million as against Rs. 6401.65 million in 2010-11.

Power Generation and Distribution Group

During the year under review the sales under Power Generation and Distribution Group amounted to Rs. 4636.97 million as against Rs. 4646.76 million in 2010-11.

Others

During the year under review the sale of other Electrical Products amounted to Rs.691.67 million as against Rs. 535.90 million in 2010-11. Lloyd Dynamowerke GmbH & Co. KG, Germany (LDW)

As you are aware the Company holds approximately 95% stake in Lloyd Dynamowerke GmbH & Co. KG, Germany and the entire shareholding in Lloyd Beteiligungs-GmbH, Germany through its subsidiary in The Netherlands - Kirsons B.V. Lloyd Dynamowerke GmbH & Co. KG, Germany is a limited partnership existing in accordance with the laws of Germany which owns an electrical machine manufacturing plant at Bremen, which is being operated by the said limited liability firm. During the year ended 31st March, 2012 Lloyd Dynamowerke GmbH & Co. KG, had turnover of Euros 33.333 ( Rs.222 crores ){ Previous year -Euros 43.509 million (Rs.263 crores)} with a net loss after tax of Euros 0.550 million ( Rs.3.10 crores ) {Previous year net profit Euros 1.270 million (Rs.9.06 crores)}.

AUDITORS' REPORT

The comments/observations of the Auditors are self-explanatory and the Company's explanations thereto have been given in relevant notes in the Notes to Accounts. Further explanations in regard to the reservations/qualifications in the Auditors Report are furnished below :-

Para 10(i) of the Auditors' Report

The Company has sought written confirmation from all its vendors to let us know if they are either micro, small or medium enterprises. Once these details are updated, particulars of dues to micro, small and medium enterprises could be ascertained.

Para 10 (ii) of the Auditors' Report

Confirmations have been received from some parties and from some they are expected. Confirmation is an ongoing process. However, this has no impact on financial results of the Company.

Para 8 and Para 10 (iii) of the Auditors' Report.

This has no impact on the accounts. The Company has complied with Accounting Standard 2 in respect of valuation of raw materials, stores and components and in respect of work in progress and finished goods. The Company has from time to time initiated steps to bring the valuation of inventory at all units in line with Accounting Standard -2 (Valuation of Inventory). The relevant details of inventory are available for verification.

Para 10 (iv) of the Auditors' Report.

The Company has used and relied upon its market intelligence to judge the realizable value of assets held for sale. The estimated realizable value is judged to be in line with the market valuation.

Para 10 (v) of the Auditors' Report

The Company is confident of realising the amounts due from certain companies referred to therein.

Para 2 a of the Annexure to the Auditors' Report

Confirmations have been received from some parties and from some they are expected. Confirmation is an ongoing process.

Para 2 b of the Annexure to the Auditors' Report

The Company has already identified the key focus areas and has started taking the necessary steps to make the inventory verification reasonable and adequate.

Para 2 c and Para 8 of the Annexure to the Auditors' Report

During the year, the Company has completed implementation of SAP ECC 6 System at certain units and it will implement it at the remaining units in phased manner in the current year. SAP is an integrated software where all the inventory records are maintained. The company has from time to time taken physical inventory at all locations. Since the valuation of inventory was done on the basis of physical inventory count performed as at 31st March 2012, the discrepancies, if any, have been properly dealt with in the books of accounts. The discrepancies were not material in nature.

Para 5 a of the Annexure to the Auditors' Report

The Company is in the process of applying to the Central Government to seek its approval in respect of these contracts.

Para 7 of the Annexure to the Auditors' Report

The Company appointed an independent reputed professional agency to perform internal audit of operations of the Company. The scope of the internal audit is decided considering the risk assessment carried out by the Company. The internal audit work at several of its plants, branches and offices are at advanced stage of completion and the final report is expected soon.

Para 9 b of the Annexure to the Auditors' Report

The Company has made necessary arrangements to pay these dues.

Auditors

M/s. B. K. Ramadhyani & Co., Chartered Accountants and M/s. Sundar & Associates, Chartered Accountants, are the retiring Auditors in India and Malaysia respectively. They are eligible for re-appointment. The required certificates to the effect that the re-appointments, if made, will be within the limit specified in Section 224(1-B) of the Companies Act, have been received from M/s. B. K. Ramadhyani & Co., and M/s. Sundar & Associates.

Fixed Deposits

12 persons had not claimed repayment of their matured deposits amounting to Rs.5.94 lakhs as at 31st March, 2012.

Acknowledgements

The Directors takes this opportunity to express its sincere appreciation for the continued support and confidence received from the Company's Bankers, Financial Institutions, Customers, Suppliers, Depositors and Shareholders. Your Directors place on record their appreciation of the efforts of employees at all levels and look forward to their continued support in the future as well.

For and on behalf of the Board of Directors,

Bangalore Vijay R Kirloskar

Date : May 28, 2012 Chairman


Mar 31, 2011

The Shareholders

The Directors present the Company's 64th Annual Report with the Audited Balance Sheet as at 31st March, 2011 and Profit and Loss Account for the year ended 31st March, 2011.

Results of Operations Rs. in miliion

2010-11 2009-10

Income 8238.7 8407.3

Expenditure 6330.9 6151.3

Gross Profit 1907.8 2256.0

Operating expenses 1482.3 1499.7

Operating Profit before interest and depreciation 425.5 756.3

Interest 257.6 225.7

Depreciation, amortisation and provisions 182.5 175.6

Operating profit before tax and extraordinary items (14.6) 355.0

Other income (net) 36.9 119.5

Net profit before tax and extraordinary items 22.3 474.5

Extraordinary Income (Expenditure) (1) 6.4

Net profit before tax and after extraordinary items 21.3 480.9

Provision for taxation 0.2 105.0

Net profit after tax and after extraordinary items 21.1 375.9

Company Performance

During the year under report, your Company has achieved a turnover (Gross) of Rs. 8.24 billion (previous year Rs. 8.41 billion). The operations have resulted in a net profit of Rs. 21.1 million (previous year Rs. 375.9 million).

Industry Outlook

The Electrical Industry has been witnessing consistent growth during last few years but for a lull during 2008-09 on account of worldwide recession, which affected all industries. The performance of the industry is directly related to the country's GDP growth. If the monsoon is good, forecast for which is "normal", the Electrical Industry should perform well in 2011-12 also.

Appropriations

Dividend

In order to conserve resources for Company's growth, your Directors regret their inability to declare any dividend for the year under report. The Company has not transferred any amount to its General Reserve.

Subsidiary - Kirsons B.V.

The operations of Kirsons B.V.,your subsidiary have resulted in net profit of Euro 3.947 million after accounting for profits of its subsidiaries.

Subsidiary Companies

The Company as of March 31, 2011 had one subsidiary, viz., Kirsons B.V., Netherlands (Kirsons). Kirsons is having two subsidiaries - Lloyd Dynamowerke GmbH & Co. KG, Germany and Lloyd Beteiligungs-GmbH, Germany. Pursuant to section 212 of the Companies Act, the annual accounts of subsidiary companies for the year ended 31st March, 2011 along with the statements referred to in the said section, are attached with Consolidated Financial Statements as required. Further, pursuant to Accounting Standard - 21 (AS-21) prescribed under the Companies (Accounting Standard) Rules, 2006, Consolidated Financial Statement presented by the Company includes financial information about its subsidiaries.

Environment, Safety and Energy Conservation

As required by the Companies (Disclosure of particulars in the Report of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and other details are given in the Annexure to this report.

Particulars of Employees

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of specified employees are set out in the Annexure to the Directors Report. However having regard to the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report is being sent to all members of the Company, excluding the aforesaid information. Any member interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company.

Corporate Governance

Pursuant to the requirements of the Listing Agreements with Stock Exchanges, your Directors are pleased to annex the following :

1. Management Discussion and Analysis Report

2. Report on Corporate Governance

3. Auditors Certificate regarding compliance of conditions of Corporate Governance

4. CEO & CFO Certificate

5. CEO Certificate regarding compliance with the Code of Conduct. These annexures form part of this report.

Directors

Mr.A.S.Lakshmanan, Mr. S.N.Agarwal and Mr.Sarosh J Ghandy retire by rotation and being eligible offer themselves for re-appointment.

The Board of Directors have at their meeting held on 23rd September, 2010 appointed Mr.Anuj Pattanaik as additional director and have also appointed him as Deputy Managing Director for a period of five years from 23.9.2010, subject to approval of shareholders and such other approvals as may be required.

Mr.Anuj Pattanik is a B.Tech in Mettalurgical Engineering from Indian Institute of Technology, Kanpur with rich experience of over three decades of working with well known national and international organizations.

Mr.P.S.Malik, Joint Managing Director, retired from the services of the Company during the year under review, after over 13 years of service in the Company. Your Directors place on record their appreciation of the valuable services rendered by Mr.Malik during his tenure as a Director of the Company.

Directors' Responsibility Statement

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

1. In the preparation of the annual accounts, the applicable accounting standards have been generally followed.

2. Appropriate accounting policies have been selected and applied consistently and they have made judgements 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 31s' March, 2011 and of the Profit and Loss Account for the year ended 31st March, 2011.

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 have been prepared on a going concern basis.

Human Resources

Employees at all levels have put in their best to the services of the Company and the Board puts on record the sincere appreciation of their dedication and loyalty. The Company considers its employees as its most valuable asset. The Company focuses on building an organization through induction and development of talent to meet current and future needs. Various HR initiatives have been taken to align the HR Policies of the Company with the growth projections of the Company.

Mr.R.K.Gupta, CFO, left the services of the Company during the year under review for personal reasons, after a long distinguished service.

Segmentwise Operational Performance Rotating Machines Group

During the year under review the sales under Rotating Machines Group amounted to Rs. 6401.65 million as against Rs. 7536.26 million in 2009-10.

Power Generation and Distribution Group

During the year under review the sales under Power Generation and Distribution Group amounted to Rs. 4646.76 million as against Rs. 4496.14 million in 2009-10.

Others

During the year under review the sale of other Electrical Products amounted to Rs. 535.90 million as against Rs. 444.49 million in 2009-10.

Lloyd Dynamowerke GmbH & Co. KG, Germany (LDW)

As you are aware the Company holds approximately 95% stake in Lloyd Dynamowerke GmbH & Co. KG, Germany and the entire shareholding in Lloyd Beteiligungs-GmbH, Germany through its subsidiary in The Netherlands - Kirsons B.V. Lloyd Dynamowerke GmbH & Co. KG, Germany is a limited partnership existing in accordance with the laws of Germany which owns an electrical machine manufacturing plant aKBremen, which is being operated by the said limited liability firm. During the year ended 31s' March, 2011 Lloyd Dynamowerke GmbH & Co. KG, had turnover of Euros 43.509 million ( Rs. 263 crores ) with a net profit after tax of Euros 1.270 Million (Rs. 9.06 crores).

Auditors' Report

The comments/observations of the Auditors are self-explanatory and the Company's explanations thereto have been given in relevant notes in the Notes to Accounts. Further explanations in regard to the reservations/qualifications in the Auditors Report are furnished below :-

Para 10 (i) of the Auditors Report and Para 4 of the Annexure to the Auditors Report

Confirmations have been received from some parties and from some they are expected. Confirmation is ongoing process. However, this has no impact on financial results of the Company.

Para 8 and Para 10 (ii) of the Auditors Report

This has no impact on the accounts. The Company has complied with Accounting Standard 2 in respect of valuation of raw materials, stores and components and in respect of work in progress and finished goods. The Company has from time to time initiated steps to bring the valuation of inventory at all units in line with Accounting Standard-2 (Valuation of Inventory).

Para 10 (iii) of the Auditors Report

The Company has used and relied upon its internal market intelligence to estimate the realizable value of assets held for sale. The estimated realizable value is judged to be in line with the market valuation.

Para 10 (iv) of the Auditors Report

The Company is confident of realising the amounts due from certain companies referred to therein.

Para 2 a of the Annexure to the Auditors' Report

Confirmations have been received from some parties and from some they are expected. Confirmation is an ongoing process.

Para 2 b of the Annexure to the Auditors' Report

The Company has already identified the key focus areas and has started taking the necessary steps to make the inventory verification reasonable and adequate.

Para 2 c and Para 8 of the Annexure to the Auditors Report

During the year, the Company has completed implementation of SAP ECC 6 System at certain units and it will implement it at the remaining units in phased manner in the current year. SAP is an integrated software where all the inventory records are maintained. The Company has from time to time taken physical inventory at all locations. Since the valuation of inventory was done on the basis of physical inventory count performed as at 31st March 2011, the discrepancies, if any, have been properly dealt with in the books of accounts. The discrepancies were not material in nature.

Para 7 of the Annexure to the Auditors' Report

The Company has started the initiatives to strengthen the internal audit system to make it commensurate with the size and nature of its business.

Para 9 b of the Annexure to the Auditors' Report

The Company has made necessary arrangements to pay these dues.

Auditors

M/s. B. K. Ramadhyani & Co., Chartered Accountants and M/s. Sundar & Associates, Chartered Accountants, are the retiring Auditors in India and Malaysia respectively. They are eligible for re-appointment. The required certificates to the effect that the re-appointments, if made, will be within the limit specified in Section 224(1-B) of the Companies Act, have been received from M/s. B. K. Ramadhyani & Co., and M/s. Sundar & Associates.

Fixed Deposits

7 persons had not claimed repayment of their matured deposits amounting to Rs.. 2.44 lakhs as at 31s' March, 2011.

Acknowledgements

The Directors place on record their appreciation of efforts of employees at all levels. They would like to place on record their sincere appreciation for the continued co-operation and support provided by the Bankers, Financial Institutions, Customers, Suppliers, Depositors and Shareholders.

For and on behalf of the Board of Directors,

Bangalore Vijay R Kirloskar

Date : May 28, 2011 Chairman

 
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