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Directors Report of Kirloskar Ferrous Industries Ltd.

Mar 31, 2016

The Directors have pleasure in presenting 25th Annual Report together with the Audited Annual Accounts for the year ended 31 st March, 2016.

I. FINANCIAL PERFORMANCE

The financial results of the Company for the financial year 2015-16 as compared with the previous year are as follows-

(Amount in Rs,)

2015-2016 2014-2015

Total Revenue 11,161,782,223 13,682,020,676

Profit before tax 852,256,486 71,445,295

Tax Expenses 274,912,535 225,681,433

Profit for the year 577,343,951 492,763,862

Balance of Profit brought forward from previous year 1,575,423,721 1,339,436,682

Profit available for appropriation 2,152,767,672 1,832,200,544 APPROPRIATIONS

Your Directors propose to appropriate the Profit as under:

Interim Dividend 171,635,102 -

Final Dividend - 171,635,102

Tax on above Dividend 35,713,506 35,141,721

Transfer to General Reserves 50,000,000 50,000,000

Balance carried to Surplus in Statement of Profit and Loss 1,895,491,064 1,575,423,721

DIVIDEND

Your Directors at their meeting held on 10th March, 2016 declared an Interim Dividend of 25 percent (Rs, 1.25 per equity share). The date of payment of interim dividend was 29th March, 2016. The interim dividend paid is being placed for the confirmation of the shareholders at the ensuing Annual General Meeting. No additional dividend is being proposed and Interim Dividend declared shall be the final dividend.

II. MANAGEMENT DISCUSSION AND ANALYSIS A. Economy and Industry Overview Global Economy:

Global economic growth for 2015 was 3.1 percent.

In United States, an improving labour market continues to support a consumption-led recovery; manufacturing activity remained sluggish with decline in exports. The US economy grew at 2 percent in third quarter and expanded to 2.4 percent for all of 2015. The US Fed, raised interest rates by 0.25 percent for the first time since 2006. US Fed has given its growth projection as 2.2 percent for 2016 and 2.1 percentfor2017.

China''s economy grew 6.9 percent in 2015, which was at the slowest pace but relatively fast among major economies. China''s slowdown has been a central factor in the recent falls in global commodity prices viz.oil, metals and gas.

In the Euro zone, improving labour market and financing conditions are supporting consumer spending and business investment. In Japan, the combination of exceptional monetary accommodation and fiscal stimulus has failed to spur sustainable domestic demand so far.

Rapid falls in oil and commodity prices impacted the Latin American economies and also that of oil producing countries. This resulted in the outflow of funds from the investment made in developing countries. In the emerging markets, the growth of Russia and Brazil deteriorated more rapidly.

Weakening of the Chinese economy and the depreciation of their currency resulted in Capital outflows from China triggering sell-offs across Advanced Economies (AE) and Emerging Market Economies (EMEs). Crude oil prices fell below US $ 30 per barrel - a 12-year low. Prices of gold remained high and Dollar appreciated against other currencies with increased demand for the same in view of volatility in the international market. This has also resulted in capital outflows from emerging markets.

The International Monetary Fund has forecast global growth to 3.4 percent in 2016.

Indian Economy:

India''s growth is projected between 7 to 7.5 percent for FY 2015-16. Indian economic activity lost momentum in Quarter 3 of 2015-16, pulled down by slackening agricultural and industrial growth. In the first two months of Quarter 3 of 2015-16, industrial activity slowed in relation to the preceding quarter.

The Indian rupee lost ground in February 2016 and closed atRs, 68.50 per US Dollar (USD) on 19 February 2016 and reached an all time high level of Rs, 68.792 during intra- day trading on 29th February 2016. Strong demand for the U.S. dollar fuelled the depreciation of rupee. However, during the last month of FY 2015-16, rupee started to rise against US Dollar after the budget with Government''s decision to stick to the fiscal deficit target of 3.5 percent for fiscal year 2017 and also due to sustained foreign capital inflows and selling of dollars by exporters, Rupee closed at Rs, 66.26 against the dollar on 31st March 2016.

Heightened global uncertainty put Indian stock markets under pressure and has led to a selloff of Indian stocks at the beginning of 2016.

For April 2015 to March 2016, cumulative exports declined by 15.85 percent to USD 261.13 billion, as against USD 310.30 billion in 2014-15 and imports dipped by 15.28 percent to USD 379.6 billion, leaving a trade deficit of USD 118.45 billion (against the trade gap of USD 137.65 billion in 2014-15).

India''s exports remained in contraction mode, although there are indications of a sequential bottoming out. Softer Petroleum, Oil and Lubricants (POL) and commodity prices helped to contain the trade deficit.

India''s foreign exchange reserves on 1st April, 2016 was $ 359.759 billion and Gold reserves increased to $20.115 billion.

Sensex which was at 27,957.49 on 31st March, 2015 had gone down to a low level of 23,962.21 on 28th January, 2016 before closing at a level of 25,341.86 on 31 st March, 2016.

Since the start of 2015, the Reserve Bank of India (RBI) has reduced interest rates by 1.25 percent but commercial banks have not passed on reduction to the borrowers to the same extent. For the full transmission of rates, the RBI has asked banks to follow the marginal cost of funds while setting the base rate.

Expectations of a normal monsoon after two consecutive years of rainfall deficiency, may result in improving real incomes of households and lower input costs. Weak domestic private investment demand, re-emergence of concerns relating to stalled projects, excess capacity created in the industry, sluggish external demand conditions reducing export can be a dampener to the growth.

Steel Industry:

India is the third-largest steel producer in the world. In 2015, India produced 91.46 Million Tonnes (MT) of finished steel. Driven by rising infrastructure development and growing demand for automotives, steel consumption is expected to reach 104 MT by 2017. The Government of India has allowed 100 percent Foreign Direct Investment (FDI) in the steel sector under the automatic route.

Due to adverse Global conditions, there has been a large inflow of imports. This has also manifested in a series of price cuts for the domestic steel industry during the year, leading to a squeeze on margins earned by steel producers.

Iron ore Mines:

The Supreme Court, in its final order on illegal mining in Karnataka in April 2013, had asked the State Government to cancel 51 ''C category leases for involving in illegal mining and re-allot them to end users through a transparent bidding mechanism.

Pursuant to the apex court order of April 2013, 51 C-Category mining leases were cancelled by the Government of Karnataka.

Government of Karnataka vide notification and notice dated 22nd December, 2015 invited tender for grant of mining lease of 14 ''C category mines in Bellary and Chitradurga districts.

As per the assessment of Department of Mines and Geology, these 14 mines together possess around 195.77 million tonnes of iron ore reserves.

As per the tender document issued by the Government of Karnataka, the state owned Metal Scrap Trade Corporation (MSTC) Ltd. will conduct e-auction.

Currently, 24 mining leases are approximately producing an average 21 MT per annum of iron ore in the state of Karnataka while the requirement of iron ore by steel mills in and around the state is estimated at 35 MT. This includes two mining leases of state owned NMDC.

Iron Ore:

The Central Government on 29th February, 2016 proposed to remove the export duty on low grade iron ore fines and lumps in a bid to make the domestic mining sector, competitive amid a fall in prices globally.

While the Steel Ministry''s plea to revisit the proposal to reduce duty on higher-grade iron ore exports would help domestic miners, the steel industry would not be happy, as it might lead to a price escalation for them.

Coke:

In the case of metallurgical coke, availability of coke from China for imports (after the removal of export duty and quota restrictions), has helped manufacturers of iron and steel to import coke for their manufacturing operations at competitive prices.

Domestic coke manufacturers have requested the Government to levy anti dumping duty on coke import from China as domestic Industry has been affected due to dumping of coke by China at a cheaper price.

Auto Industry:

The auto industry produced a total 19.84 million vehicles in April 2015-January 2016, including passenger vehicles, commercial vehicles, three wheelers and two wheelers, as against 19.64 million in April 2014-January 2015.

Domestic sales of Passenger Vehicles grew by 8.13 percent in April 2015-January 2016 over the same period last year. The domestic sales of Commercial Vehicles increased by 9.43 percent in April 2015-January 2016 over the same period last year. Sales of Medium and Heavy Commercial Vehicles (M&HCVs) increased at 30.19 percent.

In order to keep up with the growing demand, several auto makers have started investing heavily in various segments of the industry during the last few months. The industry has attracted Foreign Direct Investment (FDI).

Auto Industry outlook:

Government of India encourages foreign investment in the automobile sector and allows 100 percent FDI under the automatic route. Some of the major initiatives taken by the Government inter alia are as follows:

to make automobiles manufacturing the main driver of ''Make in India'' initiative to promote eco-friendly cars in the country i.e. CNG based vehicle, hybrid vehicle, and electric vehicle and also made mandatory of 5 percent ethanol blending in petrol.

has formulated a Scheme for Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India, under the National Electric Mobility Mission 2020 to encourage the progressive induction of reliable, affordable and efficient electric and hybrid vehicles in the country.

The Indian automotive sector has the potential to generate up to US$ 300 billion in annual revenue by 2026, create 65 million additional jobs and contribute over 12 percent to India''s Gross Domestic Product, as per the Automotive Mission Plan 2016-26 prepared jointly by the Society of Indian Automobile Manufacturers (SIAM) and Government.

SIAM expects market to expand to 6 to 8 percent during FY 2016-17.

Tractor industry:

According to a rating agency, domestic tractor volumes will be down by approximately 7 to 8 percent for the fiscal year 2016. This can be attributed to sluggish levels of demand going by the economic conditions and due to weak monsoon resulting into second straight slump year for the domestic tractor industry. There was a 13 percent decline in FY 2015.

Tractor sales fell by 13.1 percent between April 2015 to December 2015 to 4.12 lakh owing to deficient monsoon with consequent effect on rural income. Rabi crop in the first half of 2015-16 was damaged by unseasonal rains.

Tractor industry Outlook:

In the Union budget of 2015-16, the Government has announced to provide credit ofRs, 8,500 billion (US$ 127.5 billion) to farmers, which is expected to boost the tractors segment sales.

For FY 2016-17, domestic sales are expected to rebound from the lows of 2015-16. Over the long term, tractor sales are expected to increase at a healthy pace with lowering of the replacement cycle, stable farm income, and increased focus of the Government on agricultural and rural development.

The forecast of surplus rainfall, well-distributed during the year 2016-17 after two consecutive droughts, has raised hopes of farmers. This may result in surge in rural demand after expected good harvest propelling economic growth and lead to a growth in Tractor Industry.

Increased investments in the infrastructure and investment in the rural economy should help few segments of tractor industry.

Crude oil prices:

After touching an all time low price below USD 30 per barrel, the prices have recovered around USD 39.20 per barrel.

Opec Countries lead by Saudi Arabia and Russia are trying to cap crude oil production.

B. Company Performance

Your Company achieved net sales ofRs, 11,139 Million (previous year Rs. 13,650 Million).

The profit before tax for the year under review stood at Rs, 852.26 Million as compared to Rs, 718.44 Million of the previous year after providing for depreciation and amortization.

C. Operational Performance

Your Company sold 289,485 MT of pig iron valued at Rs, 6,231.19 Million during FY2015-16 as compared to 318,023 MT of pig iron valued atRs, 8,436.59 Million in the previous year.

Both the Mini-blast furnaces were operational throughout the year except for stoppage for Robo-gunning for a short period for both the furnace. Further one furnace was also taken up for refractory relining for a period of 45 days from 15th February, 2016. The relining of the furnace was completed on 4th April, 2016. Your Company was able to sell the pig iron produced. The pig iron prices dropped by 18.4 percent compared to prices in April 2014 to March 2015, due to drop in the prices in the market.

The slowdown in tractor and auto industry has impacted the demand for castings. However, your Company managed to maintain sales on the strength of its ''strategic planning''.

Your Company sold 56,661 MT castings aggregating to Rs, 4,606.68 Million during FY 2015-16 as compared to 57,257 MT castings aggregating to Rs,4,744.56 Million in the previous year.

Coke price which was at around US $ 190 per MT at the beginning of the year came down to a level of US$ 117 per MT by the end of the year. Rupee depreciation and the premium paid for hedging the risk resulted in higher input cost.

Your Company succeeded to keep the cost of production under check through good procurement policy and continuous cost reduction drive.

D. Cost Control

Your Company adopted following measures to reduce cost: increased use of sinters to reduce operational cost. procurement strategies for raw material and consumables.

improvement projects through Kaizens, involvement of cross functional teams to bring cost reductions. Improved operational efficiencies and cost control measures at both Koppal and Solapur Plant.

E. Concerns and Threats

Demand for the auto and tractors have a direct impact on the performance of your Company and any adverse market condition for these sectors will result into reduced capacity utilization and profitability.

Further, depreciation of Rupee vis-a-vis US dollar can lead to an increase in price of coke and in the price of crude oil, resulting in increased input costs, thereby putting pressure on profitability.

F. Prospects for the Current Year

Government of Karnataka has issued tender document for participation in mines auction vide notification dated 22nd December, 2015. Your Company will participate in the e-auction to get suitable iron ore mine for its captive use depending on economic viability.

Demand for pig iron is expected to remain stable considering the growth projections by auto sector and tractor sector and infrastructure enhancement plans. Also some of the present pig iron manufacturers are diversifying to value addition products. This may give the opportunity to your Company to increase the market base.

Productionisation of castings on the new molding line is in progress as per the plan and can bring increase in volume of casting production progressively.

Cautionary Statement

Statements in this report, particularly those which relate to Management Discussion and Analysis, describing the Company''s objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.

G. Internal Control Systems and their adequacy

The Company has a proper and adequate system of controls in order to ensure that all assets are safeguarded against loss from unauthorized use or disposal. All transactions are properly checked, verified, recorded and reported correctly.

Regular Internal Audit checks are carried out to ensure that the responsibilities are executed effectively and that proper and adequate systems are in place.

H. Safety, Health and Environment

Your Company believes in "Safety First" and is committed to provide "Safe Workplace" by addressing safety, health and environment related issues. Employees are regularly trained to update their awareness and skills. New employees are being given intensive safety induction training and are being issued with "Safety Passports" related to their work area. All the statutory requirements related to safety, health and environment are being complied with. As a proactive approach, the periodical safety audit is being conducted to identify unsafe conditions and take proper safety measures. "Near Miss Report Card" has been introduced to report the near miss incidents.

Your Company is having an "Occupational Health Centre" with a full-time Doctor and qualified nurses. The pre-employment medical check-up of the employees is being conducted and also thereafter during the continuance of the employment. The Company has provided well equipped new ambulance which is available at all times.

Your Company is certified for Quality Management Systems under ISO TS16949:2009, Environmental Management System under ISO 14001:2004 and also certified for Occupational Health and Safety Assessment Series (OHSAS 18001:2007) by Indian Register Quality Systems (I RQS).

Requirements of environmental acts and regulations are complied with. Monitoring and analysis of water, stack emissions and ambient air quality etc., are undertaken periodically to verify whether the level of environmental parameters are maintained, well within the specified limits.

Sewage Treatment Plant (STP) with 250 KLD (kilo liters per day) capacity is operated to treat domestic waste water with extended biological aeration system. Sludge generated from STP is being used as manure for garden and treated waste water is used for gardening.

For effective suppression of dust emissions, jet type fixed sprinklers are provided.

Under ISO: 14001 and OHSAS: 18001, the following management programs have been taken-up and completed during FY2015-16 at its plant at Koppal.

1. As a part of environmental improvement project, porous fence (mesh) of 42 meters length and of 12 meters height has been erected near the crusher house area to prevent the fugitive dust emission going out to nearby settlement taking total length to 250 meters.

2. Construction of around 170 meters of concrete roads near truck tippler to prevent dust emission due to vehicular movement; till date total of 1675 meters concrete road has been provided.

3. Installation of two Continuous Stack Emission Monitoring Systems for RMHS 1 and RMHS 2 stacks for effective monitoring.

4. Atruck mounted TPS road sweeping machine has been provided to clean the plant roads and thus reducing the dust emission.

5. Plantation of around 5,000 tree saplings in and around the plant premises to increase the green belt taking the total tally to around 143,000.

I. Social Responsibility:

Your Company has taken following measures as a part of its corporate responsibility to the society. The Company focuses on rural education, health and hygiene to serve the society in the local vicinity of the plant. Major activities undertaken during the year are as follows:

Rural Education:

Company has provided school bags and note books to the students of Government Higher Primary Schools of neighboring villages.

Coaching classes conducted for 10th standard students of 2015 batch of Bevinahalli village.

Financial Assistance has been given to a Psychological Counseling Centre. This center has adopted 5 schools for 3 years to give guidance / address the problems of unemployed youth and students dropping out from High School education.

Financial assistance provided to Government Higher Primary School of Bevinahalli for providing educational tour for children.

Rural Health and Hygiene:

Implementing Kirloskar WaSH initiatives at Koppal and Solapur for eight schools (clean and beautiful school) each - 7,945 students are covered.

Organised cancer screening camp for ladies of Bevinahalli village in coordination with Gram Sheekshana Charity Trust, Hubli.

Organized pulse polio program in co-ordination with Health Department Koppal at Bevinahalli.

Provided pure drinking water facility by installing Reverse Osmosis (R/O) plant in Shahapur village.

Financial assistance given for providing free 100 nos hearing aid equipment at Jagatguru Gavisiddeshwara Ayurvedic College, Koppal.

Arranged visit of specialist doctors to Bevinahalli village once a week and visit by Company medical officer twice a week. The Company also provided free medicines.

Community Development:

Construction of concrete road at Bevinahalli village in various areas.

Financial contribution given to flood victims of Chennai.

To create environmental awareness amongst the school children, college students and general public, 4 days "Vasundhara International Film Festival" was organized in Koppal, Hospet and Solapur.

J. Human Resource

Your Company considers human resource to be an important and valuable asset for the organization. Therefore, it constantly strives to attract and retain best "Talents" for the present and future business needs.

The Company has taken-up the following initiatives:

In order to face the future challenges effectively the Company has initiated a programme on developing a leadership and management pipeline for the Company.

As a part of identifying the future leaders, the Company through selection process selects young professionals for the Company level "fast trackers" scheme. The identified fast trackers are given intensive training through internal and external faculty, to help them to acquire required skills for taking up new role in the Company.

The marketing and purchase functions have been strengthened by inducting new talent from premier''B-School''.

In order to upgrade the skills on continuous basis necessary training programmes i.e., technical and soft skills have been organized with the help of internal as well as external experts.

More focus is being given to "Work Life Balance" of the employees through various initiatives.

The action plan on feedback report on "employee engagement survey" has been chalked out. The actions undertaken through various initiatives will improve the employee engagement.

The talented employees are continuously recognized and are motivated through rewards and awards.

Performance of employees is monitored through an effective performance management system.

As on 31st March, 2016 the total number of salaried employees stood at 1,249. The Employer - Employee relations have been generally cordial throughout the year.

III. PARTICULARS OF INFORMATION FORMING PART OF THE BOARD''S REPORT PURSUANT TO SECTION 134 OF THE COMPANIES ACT, 2013, RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014 AND RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

1. EXTRACT OF ANN UAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 are annexed herewith as Annexure "A".

2. NUMBER OF MEETINGS OF THE BOARD

During the Financial Year 2015-16 six Board Meetings were convened and held, the details of which are given in Clause 2(b) of the Corporate Governance Report.

3. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 134(5) of the Companies Act, 2013 in respect of Directors'' Responsibility Statement, your Directors state that:

a) in the preparation of the annual accounts for the year ended 31st March, 2016, the applicable accounting standards had been followed and there were no material departures;

b) accounting policies as mentioned in Note 2 of the Notes forming part of the Financial Statements have been selected and applied consistently. Further, 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 at 31st March, 2016 and of the profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken 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 other irregularities;

d) the annual financial statements have been prepared on a going concern basis;

e) proper internal financial controls were laid down and such internal financial controls were adequate and were operating effectively; and

f) proper systems to ensure compliance with the provisions of all applicable laws were in place and such systems were adequate and operating effectively.

4. STATEMENT ON DECLARATION BYTHE INDEPENDENT DIRECTORS

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

5. NOMINATION AND REMUNERATION POLICY

The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, KMPs and Senior Management Personnel and their remuneration. The policy is annexed herewith as Annexure "B".

6. EXPLANATION OR COMMENTS ON AUDITORS'' REPORT AND SECRETARIAL AUDIT REPORT

There are no qualifications, reservations or adverse remarks or disclaimer made by the statutory auditors in their audit report or by the practicing company secretary in the secretarial audit report.

7. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The Company has granted loans aggregating to Rs, 21,859,000 during the year ended 31 st March, 2016. These primarily consist of loans to employees as per the policies of the Company and loans to suppliers in the normal course of business of the Company. The closing balances of these loans are disclosed under the schedule of Loans and advances in the financial statements. The Company has not given any guarantees or made any investments during the year, which would be covered by Section 186 of the Companies Act, 2013.

8. RELATED PARTY TRANSACTIONS

Pursuant to Section 134 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of contracts or arrangements entered into by the Company with Related Parties have been done at arm''s length and are in the ordinary course of business. Hence, no particulars are being provided in Form AOC-2.

9. STATE OF COMPANY''S AFFAIRS

Discussion on state of Company''s affairs has been covered as part of the Management Discussion and Analysis.

10. AMOUNTS PROPOSED TO BE CARRIED TO RESERVES

Particulars of the amounts proposed to be carried to reserves have been covered as part of the financial performance of the Company.

11. MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING FINANCIAL POSITION OF THECOMPANY

There are no adverse material changes or commitments occurring after 31st March, 2016 which may affect the financial position of the Company or may require disclosure.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

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

13. RISK MANAGEMENT POLICY

The Company has a robust risk management framework which comprises risk governance structure and risk mitigation plans deployed to enable the Company to mitigate the risk that the Company may face in the future. The risk management processes encompass risk identification, classification, evaluation and risk mitigation and follow up across strategic, financial and operating risks faced by the Company.

The Company has set up a Risk Review Team ("Team") to review the risks faced by the Company and to monitor the development and deployment of the risk mitigation action plans. The Team reports to the Board of Directors and the Audit Committee who provide oversight for the entire risk management framework in the Company.

This year as well, the Directors have reviewed the risk management policy and processes and also the risks faced by the Company and the corresponding mitigation plans deployed. The Company is on track in respect of its risk mitigation activities.

14. CORPORATE SOCIAL RESPONSIBILITY(CSR) ACTIVITIES

The Company has been carrying out Corporate Social Responsibility (CSR) activities. These activities are carried out in terms of Section 135 read with Schedule VII of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014.

Annual Report on CSR activities includes details about the CSR policy developed and implemented by the Company. CSR initiatives taken during the year is annexed herewith as Annexure "D".

15. BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration and other statutory committees. Performance evaluation has been carried out as per the Nomination and Remuneration Policy.

16. CHANGE IN THE NATURE OF BUSINESS

During the year under review, there has been no change in the nature of business of the Company.

17. DETAILS OF APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Rahul C. Kirloskar retires by rotation and being eligible, offers himself for re-appointment.

Directors appointed during the FY 2015-16

Mr. A. N. Alawani retired by rotation and was reappointed in the Annual General Meeting held on 30th July, 2015.

Key Managerial Personnel (KMP) appointed during the FY2015-16

There was no change in the Key Managerial Personnel during the financial year2015-2016.

Directors and KMP''s resigned during FY2015-16

Mr. C. V. Tikekar ceased to be an Independent Director of the Company with effect from 13th August, 2015 on completion of his tenure.

18. NAMES OF THE COMPANIES WHICH HAVE BECOME/ CEASED TO BE SUBSIDIARIES, JOINT VENTURES ORASSOCIATE COMPANIES DURING THE YEAR

The Company did not have any subsidiaries, associates or joint ventures during the year.

19. DEPOSITS

The Company has not accepted deposits under Chapter V of the Companies Act, 2013.

20. SIGNIFICANT ORDERS PASSED BY REGULATORS, COURTS OR TRIBUNALS IMPACTING GOING CONCERN AND COMPANY''S OPERATIONS

To the best of our knowledge, the Company has not received any such orders from Regulators, Courts or Tribunals during the year, which may impact the going concern status or the Company''s operations in future.

21. INTERNAL FINANCIAL CONTROLS

The Company has strong two tier internal control framework comprising entity level controls and process level controls. The entity level controls of the Company include elements such as defined code of conduct, whistle blower policy, rigorous management reviews and MIS and strong internal audit mechanism. There are robust financial control processes with appropriate checks and balances, defined policies and procedures, defined delegation of powers with authority limits to ensure reasonable assurance with regard to financial information. Process controls deployed ensure adherence to policies and procedures, efficiency in operations and reduce risk of frauds.

Regular management oversight and rigorous periodic testing of internal controls make the internal controls environment strong in the Company. The Audit Committee along with the Management oversees results of the internal audit and implementation of action plans.

22. INFORMATION PURSUANT TO RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

Sr. Information Required Input

No.

1 The ratio of the remuneration of each Director Please refer Annexure ''E-1'' to the median remuneration of the employees of the Company for the financial year.

2 The percentage increase in remuneration of Please refer Annexure ''E-2'' each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year. 3 The percentage increase in the median 18.43 percent remuneration of employees in the financial year.

4 The number of permanent employees on the 1,249 rolls of Company.

5 The explanation on the relationship between The increase in remuneration is not solely average increase in remuneration and based on Company performance but also Company performance. includes various other factors like individual performance vis-a-vis individual Key Performance Indicators ("KPIs"),industry trends, economic situation, future growth prospects etc. The Board believes that the increase is in line with industry.

6 Comparison of the remuneration of the Key The increase in remuneration is not solely Managerial Personnel against the based on Company performance but also performance of the Company. includes various other factors like individual

performance vis-a-vis individual KPIs, industry trends, economic situation, future growth prospects, etc. The Board believes that the increase is in line with industry.

Sr. Information Required Input

No. 7 Variations in the market capitalization of the Company, price earnings ratio as at the closing 31/03/2016 31/03/2015 date of the current financial year and previous Market 618 725

financial year and percentage increase over Capitalization decrease in the market quotations of the (^Crores) shares of the Company in comparison to rate at which the Company came out with the | PE ratio 10.711 14.71 last public offer in case of listed companies and in case of unlisted companies, the Percentage increase in market quotations over variations in the net worth of the Company as at last IPO price: Public issue of equity shares the close of the current financial year and was done in March 1994 at a price ofRs, 10 per previous financial year. share. In comparison, the market price

increase as at 31st March, 2016 is 350 percent.

8 Average percentile increase already made in Average percentile increase in salaries of the salaries of employees other than the managerial personnel: 52 percentile. managerial personnel in the last financial year Average percentile increase in salaries of and its comparison with the percentile increase non-managerial personnel: 48 percentile. in the managerial remuneration and The salary increases are a function of various justification there of and point out if there are factor like individual performance vis-a-vis any exceptional circumstances for increase in individual KPIs industry trends, economic the managerial remuneration. situation, future growth prospects, etc. besides

Company performance. There are no exceptional circumstances for increase in the managerial remuneration.

9 Comparison of each remuneration of the Key The individual remuneration of the Key Managerial Personnel against the Managerial Personnel is not directly performance of the Company. comparable against the performance of the Company. As stated in 8 above, the salary increase is a function of various factors like individual performance vis-a-vis individual KPIs, industry trends, economic situation, future growth prospects etc. besides Company performance. There are no exceptional circumstances for increase in the managerial remuneration.

10 The key parameters for any variable Remuneration to Directors includes sitting fees component of remuneration availed by the and commission. Directors. Sitting Fees may vary year to year based on number of meetings held during the year and the number of meetings attended by the Directors.

As per the Nomination and Remuneration Policy of the Company, the amount of commission is calculated on the basis of the performance evaluation of the Directors.

11 The ratio of the remuneration of the highest There are no such cases. paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year.

12 Affirmation that the remuneration is as per the The remuneration paid to the Directors is asremuneration policy of the Company. per the Remuneration policy of the Company.

Sr. Information Required Input

No.

13 Statement showing the name of every Please refer Annexure'' employee of the Company, who- (i) if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than sixty lakh rupees; (ii)if employed for a part of the financial year was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than five lakh rupees per month; (iii)if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the Managing Director or Whole-time Director or Manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the Company.

IV. VIGIL MECHANISM /WHISTLE BLOWER POLICY

The Board of Directors has adopted the Vigil Mechanism / Whistle Blower Policy. The policy has provided a mechanism for Directors, Employees and other persons dealing with the Company to report to the Chairman of the Audit Committee, any instance of unethical behavior, actual or suspected fraud or violation of the Code of Conduct of the Company.

The details of the policy has been uploaded at the website of the Company, viz. www.kfil.com

V. COMPOSITION OF AUDIT COMMITTEE

The composition of the Audit Committee has been mentioned in the Corporate Governance Report annexed to this report.

VI. AUDITORS

1. Statutory Auditors

M/s P. G. Bhagwat, Chartered Accountants hold office as statutory auditors till the conclusion of forthcoming annual general meeting of the Company.

M/s. P. G. Bhagwat have been statutory auditors of the Company since inception of the Company. As per the provisions of Section 139(2) of the Companies Act, 2013 no listed company shall appoint or reappoint an audit firm as auditor for more than two terms of five consecutive years and every Company existing on the commencement of the Act is required to comply with the requirements of Section 139(2) within 3 years from the date of commencement of the Act, i.e. before 1st April, 2017.

The Board of Directors of the Company have, subject to the approval of members, proposed a change in the statutory auditors to be in line with regulatory requirements.

The Company has received a certificate from M/s. Kirtane & Pandit LLP, Chartered Accountants to the effect that the appointment as statutory auditor, if made, will be in accordance with the limit specified in Section 141 of the Companies Act, 2013.

The Board has recommended the appointment of M/s. Kirtane & Pandit LLP, Chartered Accountants to hold office for a term of 5 years from the conclusion of 25th Annual General Meeting till the conclusion of 30th Annual General Meeting.

The Board of Directors places on record its appreciation for the services rendered by M/s. P. G. Bhagwat as statutory auditor of the Company.

2. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Regulations and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Mr. M. J. Risbud, Practicing Company Secretary to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as Annexure "G".

3. Cost Auditor

The Board of Directors at its meeting held on 29th April, 2016 has appointed M/s. Parkhi Limaye and Co, Cost Accountants as the Cost Auditors of the Company to conduct the audit of cost records maintained by the Company for the financial year ending 31st March, 2017.

VII. CORPORATE GOVERNANCE

The Company conforms to the norms of Corporate Governance as envisaged in the Listing Regulations with the BSE Limited. Pursuant to Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Report on the Corporate Governance and the Auditors Certificate on Corporate Governance are annexed to this report.

VIII. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

During the year under review, there were no cases filed pursuant to the aforesaid Act.

IX. APPRECIATION

Your Directors wish to place on record their appreciation towards the contribution of all the employees of the Company and their gratitude to the Company''s valued customers, bankers, vendors and members for their continued support and confidence in the Company.

For and on behalf of the Board of Directors



ATUL C. KIRLOSKAR

Chairman

Pune : 29th April, 2016 DIN 00007387


Mar 31, 2015

THE MEMBERS

The Directors have pleasure in presenting 24th Annual Report together with the Audited Annual Accounts for the year ended 31st March, 2015.

I. FINANCIAL PERFORMANCE

The financial results of the Company for the financial year 2014-15 as compared with the previous year are as follows -

(Amount in Rs.) 2014 - 2015 2013 - 2014

Total Revenue 13,682,020,676 12,352,360,181

Profit before tax 718,445,295 579,866,258

Tax Expenses 225,681,433 181,489,308

Profit for the year 492,763,862 398,376,950

Balance of Profit brought forward from previous year 1,339,436,682 1,191,864,220

Profit available for appropriation 1,832,200,544 1,590,241,170

APPROPRIATIONS

Your Directors propose to appropriate the Profit as under :

Proposed Dividend 171,635,102 171,635,102

Tax on above Dividend 35,141,721 29,169,386

Transfer to General Reserve 50,000,000 50,000,000

Balance carried to Surplus in Statement of Profit and Loss 1,575,423,721 1,339,436,682

DIVIDEND

Your Directors have recommended a dividend of 25 percent (Rs. 1.25 per equity share).

III. PARTICULARS OF INFORMATION FORMING PART OF THE BOARD''S REPORT PURSUANT TO SECTION 134 OF THE COMPANIES ACT, 2013 , RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014 AND RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

1. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 are annexed herewith as Annexure "A".

2. NUMBER OF MEETINGS OF THE BOARD

During the financial year 2014-15 seven Board Meetings were convened and held, the details of which are given in Clause 1(b) of the Corporate Governance Report.

3. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 134(5) of the Companies Act, 2013 in respect of Directors'' Responsibility Statement, your Directors state that:

a) in the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards had been followed and there were no material departures;

b) accounting policies as mentioned in Note 2 of the Notes forming part of the Financial Statements have been selected and applied consistently. Further, 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 at 31st March, 2015 and of the profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken 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 other irregularities;

d) the annual financial statements have been prepared on a going concern basis;

e) proper internal financial controls were laid down and such internal financial controls were adequate and were operating effectively; and

f) proper systems to ensure compliance with the provisions of all applicable laws were in place and such systems were adequate and operating effectively.

4. STATEMENT ON DECLARATION BY THE INDEPENDENT DIRECTORS

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

5. NOMINATION AND REMUNERATION POLICY

The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, KMPs and Senior Management Personnel and their remuneration. The policy is annexed herewith as Annexure "B".

6. EXPLANATION OR COMMENTS ON AUDITORS'' REPORT AND SECRETARIAL AUDIT REPORT

There are no qualifications, reservations or adverse remarks or disclaimer made by the statutory auditors in their audit report or by the practicing company secretary in the secretarial audit report.

7. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The Company has granted loans aggregating to Rs. 14,945,000 during the year ended 31st March, 2015. These primarily consist of loans to employees as per the policies of the Company and loans to suppliers in the normal course of business of the Company. The closing balances of these loans are disclosed under the schedule of Loans and advances in the financial statements. The Company has not given any guarantees or made any investments during the year, which would be covered by Section 186 of the Companies Act, 2013.

8. RELATED PARTY TRANSACTIONS

Pursuant to Section 134 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of contracts or arrangements entered into by the Company with Related Parties have been done at arm''s length and are in the ordinary course of business. Hence, no particulars are being provided in Form AOC-2.

9. STATE OF COMPANY''S AFFAIRS

Discussion on state of Company''s affairs has been covered as part of the Management Discussion and Analysis.

10. AMOUNTS PROPOSED TO BE CARRIED TO RESERVES

Particulars of the amounts proposed to be carried to reserves have been covered as part of the financial performance of the Company.

11. MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no adverse material changes or commitments occurring after 31st March, 2015 which may affect the financial position of the Company or may require disclosure.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

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

13. RISK MANAGEMENT POLICY

The Company has a robust risk management framework comprising risk governance structure and defined risk management processes. The risk governance structure of the Company is a formal organisation structure with defined roles and responsibilities for risk management.

The processes and practices of risk management of the Company encompass risk identification, classification and evaluation. The Company identifies all strategic, operational and financial risks that the Company faces, by assessing and analysing the latest trends in risk information available internally and externally and uses the same to plan for risk mitigation activities. Accordingly, the Company had identified Government policies especially with respect to iron ore mining to be a critical risk for the Company. However, with robust risk mitigation plans, your Company was able to face the challenges well.

The Company has set up a Risk Review Team (''Team'') to review the risks faced by the Company and monitor the development and deployment of risk mitigation action plans. The Team reports to the Board of Directors and the Audit Committee who provide oversight for the entire risk management framework in the Company.

Accordingly, this year as well, the Directors have reviewed the risk management policy and processes and also the risks faced by the Company and the corresponding risk mitigation plans deployed. The Company is on track in respect of its risk mitigation activities.

14. CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES

The Company has been carrying out Corporate Social Responsibility (CSR) activities. These activities are carried out in terms of Section 135 read with Schedule VII of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014.

Annual Report on CSR activities that includes details about the CSR policy developed and implemented by the Company on CSR initiatives taken during the year is annexed herewith as Annexure "D".

15. BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration and Compliance Committees. Performance evaluation has been carried out as per the Nomination and Remuneration Policy.

16. CHANGE IN THE NATURE OF BUSINESS

During the year under review, there has been no change in the nature of business of the Company.

17. DETAILS OF APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. A.N. Alawani retires by rotation and being eligible, offers himself for re-appointment.

Directors appointed during the FY 2014-15

Name of Director Note Designation Reference

Mr. Atul C. Kirloskar 1 Director

Mr. Rahul C. Kirloskar 2 Director

Mr. S. N. Inamdar 3 Independent Director

Mr. A. R. Jamenis 3 Independent Director

Mr. S. G. Chitnis 3 Independent Director

Mr. C. V. Tikekar 3 Independent Director

Mrs. Nalini Venkatesh 4 Independent Director

Mr. B. S. Govind 4 Independent Director

Mr. R. Sampath Kumar 4 Independent Director

Name of Director Term of Upto

Mr. Atul C. Kirloskar - -

Mr. Rahul C. Kirloskar - -

Mr. S. N. Inamdar Five consecutive 12th August, 2019 years

Mr. A. R. Jamenis Four consecutive 12th August, 2018 years

Mr. S. G. Chitnis Two consecutive 12th August, 2016 years

Mr. C. V. Tikekar One year 12th August, 2015

Mrs. Nalini Venkatesh Five consecutive 12th August, 2019 years

Mr. B. S. Govind Five consecutive 12th August, 2019 years

Mr. R. Sampath Kumar Five consecutive 12th August, 2019 years

Notes:

1. Mr. Atul C. Kirloskar retired by rotation and was reappointed in the Annual General Meeting held on 13th August, 2014.

2. Mr. Rahul C. Kirloskar was co-opted as an Additional Director on 28th October, 2013 and was appointed in the Annual General Meeting held on 13th August, 2014.

3. These Directors were on the Board of Directors of the Company in the previous year and were reappointed as Directors to comply with the provisions relating to tenure of Independent Directors as per Section 149 of the Companies Act, 2013.

4. These Independent Directors were newly appointed as Additional Directors on 16th July, 2014 and were regularised in the Annual General Meeting held on 13th August, 2014.

Key Managerial Personnel (KMP) appointed during the FY 2014-15

Name of KMP Designation

Mr. R. V. Gumaste Managing Director

Mr. R. S. Srivatsan Chief Financial Officer

Mr. C. S. Panicker Company Secretary

Directors and KMP''s resigned during the FY 2014-15

Mr. Sanjay C. Kirloskar resigned from the Directorship with effect from 8th April, 2014. No KMP''s

resigned during the year.

18. NAMES OF THE COMPANIES WHICH HAVE BECOME/ CEASED TO BE SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR

The Company did not have any subsidiaries, associates or joint ventures during the year.

19. DEPOSITS

The Company has not accepted deposits under Chapter V of the Companies Act, 2013.

20. SIGNIFICANT ORDERS PASSED BY REGULATORS, COURTS OR TRIBUNALS IMPACTING GOING CONCERN AND COMPANY''S OPERATIONS

To the best of our knowledge, the Company has not received any such orders from Regulators, Courts or Tribunals during the year, which may impact the going concern status or the Company''s operations in future.

21. INTERNAL FINANCIAL CONTROLS

The Company has developed a strong two tier internal control framework comprising entity level controls and process level controls. The entity level controls of the Company include elements such as defined code of conduct, whistle blower policy, rigorous management review and MIS and strong internal audit mechanism. The process level controls have been ensured by implementing appropriate checks and balances to ensure adherence to Company policies and procedures, efficiency in operations and also reduce the risk of frauds.

Regular management oversight and rigorous periodic testing of internal controls makes the internal controls environment strong at the Company. The Audit Committee alongwith the Management oversees results of the internal audit and reviews implementation on a regular basis.

IV. WHISTLE BLOWER POLICY

The Board of Directors has adopted the Whistle Blower Policy. The policy has provided a mechanism for Directors, Employees and other persons dealing with the Company to report to the Chairman of the Audit Committee, any instance of unethical behavior, actual or suspected fraud or violation of the Code of Conduct of the Company.

The details of the policy has been uploaded at the website of the Company, viz. www.kfil.com.

V. COMPOSITION OF AUDIT COMMITTEE

The composition of the Audit Committee has been mentioned in the Corporate Governance Report annexed to this report.

VI. AUDITORS

1. Statutory Auditors

As per provisions of Section 139(2) of the Companies Act, 2013 and rules thereof, no listed company shall appoint or reappoint an audit firm as auditor for more than two terms of five consecutive years. Every company existing on the commencement of the Act is required to comply with requirements of Section 139(2) within three years from the date of commencement of the Act.

M/s P.G. Bhagwat, Chartered Accountants (Firm Registration No. 101118W) retire as the Auditors at the conclusion of the ensuing Annual General Meeting, and being eligible, offer themselves for re-appointment. The Company has received a certificate from the retiring auditors to the effect that the appointment, if made, will be in accordance with the limit specified in Section 141 of the Companies Act, 2013.

The Board has recommended their re-appointment to hold the office till the conclusion of next Annual General Meeting, i.e. within the transition period allowed as per the Companies Act, 2013.

2. Secretarial Audit

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. M. J. Risbud, Practicing Company Secretary to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as Annexure "G".

VII. CORPORATE GOVERNANCE

The Company conforms to the norms of Corporate Governance as envisaged in the Listing Agreement with the BSE Limited. Pursuant to Clause 49 of the Listing Agreement, a Report on the Corporate Governance and the Auditors Certificate on Corporate Governance are annexed to this report.

VIII. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

During the year under review, there were no cases filed pursuant to the aforesaid Act.

IX. APPRECIATION

Your Directors wish to place on record their appreciation towards the contribution of all the employees of the Company and their gratitude to the Company''s valued customers, bankers, vendors and members for their continued support and confidence in the Company.

For and on behalf of the Board of Directors

ATUL C. KIRLOSKAR Chairman Pune : 28th April, 2015 DIN 00007387


Mar 31, 2013

TO THE MEMBERS

The Directors have pleasure in presenting 22nd Annual Report together with the Audited Annual Accounts for the year ended 31st March, 2013.

FINANCIAL PERFORMANCE

The financial results of the Company for the financial year 2012-2013 as compared with the previous year are as follows -

(Amount in Rs.)

2012 - 2013 2011 - 2012

Sales and Other Income 12,006,002,195 10,917,352,422

Profit before tax 624,191,494 556,612,492

Provision for tax (including Deferred Tax) 233,327,629 185,815,296

Profit after tax 390,863,865 370,797,196

Balance of Profit brought forward from previous year 976,864,750 815,650,438 Excess provision for previous years written back

a) Dividend (64,479,849) (64,479,849)

b) Tax on Dividend (10,460,244) (10,460,244)

Profit available for appropriation 1,442,668,708 1,261,387,727

APPROPRIATIONS

Your Directors propose to appropriate the Profit as under :

Proposed Dividend 171,635,102 201,787,930

Tax on Dividend 29,169,386 32,735,047

Transfer to General Reserve 50,000,000 50,000,000

Balance carried to Surplus Account 1,191,864,220 976,864,750

DIVIDEND

Your Directors have recommended a dividend of 25 percent (Rs. 1.25 per equity share).

WARRANTS CONVERSION IN TERMS OF THE LETTER OF OFFER DATED 2ND JANUARY, 2007

The warrant exercise period commenced on 13th March, 2008. In terms of the Letter of Offer dated 2nd January, 2007, each detachable warrant could be converted into one equity share of Rs. 5 each fully paid at a warrant exercise price Rs. 35 per warrant during the warrant exercise period.

The warrantholders at their meeting held on 14th August, 2009 extended the validity of warrant exercise period by a period of three years from 13th March, 2010 till 13th March, 2013.

The Board of Directors at its meeting held on 25th January, 2013 decided not to extend the validity of warrant exercise period and accordingly to extinguish detachable warrants outstanding at the end of warrant exercise period ie. 13th March, 2013 and not exercised by the warrant holders for conversion into equity shares on or before warrant exercise period.

Further, on the expiry of the warrant exercise period, the Board of Directors extinguished the outstanding 64,479,849 detachable warrants not exercised by the warrantholders for conversion into equity shares.

During the period from 1st April, 2012 till 13th March, 2013 (inclusive), the Company did not receive any application/s from warrantholders for conversion of warrants into equity shares.

DIRECTORS

Mr. A. N. Alawani, Mr. S. N. Inamdar and Mr. C. V. Tikekar retire by rotation and being eligible, offer themselves for re-appointment.

DIRECTORS'' RESPONSIBILITY STATEMENT

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

i. That in the preparation of the Accounts for the financial year ended 31st March, 2013 the applicable Accounting Standards have been followed;

ii. That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 of the Company for the year ended 31st March, 2013;

iii. That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. That the Directors have prepared the accounts for the year ended 31st March, 2013 on a "going concern" basis.

CASH FLOW STATEMENT

A Cash Flow Statement for the year ended 31st March, 2013 is attached with the Annual Audited Accounts of the Company.

AUDITORS

M/s P.G. Bhagwat, Chartered Accountants (Firm Registration No. 101118W) retire as the Auditors at the conclusion of the ensuing Annual General Meeting, and being eligible, offer themselves for re-appointment. The Company has received a certificate from the retiring auditors to the effect that the appointment, if made, will be in accordance with the limit specified in Section 224(1B) of the Companies Act, 1956.

The Board has recommended their re-appointment.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Details of Energy Conservation, Technology Absorption, Research and Development and Foreign Exchange Earnings and Outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are given in the Annexure - A and forms part of this Report.

PARTICULARS OF EMPLOYEES

Information regarding employees in accordance with Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is given in Annexure - B and forms part of this report.

CORPORATE GOVERNANCE

The Company conforms to the norms of Corporate Governance as envisaged in the Companies Act, 1956 and the Listing Agreement with the BSE Limited. Pursuant to Clause 49 of the Listing Agreement, a Report on the Corporate Governance and the Auditors'' Certificate on Corporate Governance are annexed to this report.

APPRECIATION

Your Directors wish to place on record their appreciation towards the contribution of all the employees of the Company and their gratitude to the Company''s valued customers, bankers, vendors and members for their continued support and confidence in the Company.

For and on behalf of the Board of Directors

ATUL C. KIRLOSKAR

Pune : 29th April, 2013 Chairman


Mar 31, 2010

The Directors have pleasure in presenting 19th Annual Report together with the Audited Annual Accounts for the year ended 31st March, 2010.

FINANCIAL PERFORMANCE

The financial results of the Company for the financial year 2009 - 2010 as compared with the previous year are as follows -

(Amount in Rupees)

2009-2010 2008-2009

Sales and other Income 8,172,140,511 7,042,262,288

Profit before tax 702,633,800 202,722,050

Provision for tax (including Deferred Tax) 211,954,791 123,234,490

Profit after tax 490,679,009 79,487,560

Balance of Profit brought forward from previous year 298,584,683 337,138,017

Profit available for appropriation 789,263,692 416,625,577

APPROPRIATIONS

Your Directors propose to appropriate the Profit as under :

Excess provision for 2008-09 written back

a) Dividend (32,246,635) --

b) Tax on Dividend (5,480,315) --

Proposed Dividend 201,787,930 100,893,965

Tax on Dividend 34,293,859 17,146,929

Transfer to General Reserve 50,000,000 --

Balance carried to Balance Sheet 540,908,853 298,584,683

DIVIDEND

Your Directors have recommended a dividend of 20 percent (Re. 1 per Equity share).

MANAGEMENT DISCUSSION AND ANALYSIS

A. Economy and Industry Overview

The world economy which was affected by the slowdown towards the end of 2008 continued for greater part of the year 2009.

However during the year under review, the Indian Economy recorded a growth of around 7.2 % as compared to 6.75 % in the earlier year.

The Domestic Auto Industry achieved an all time high sale of around 12.2 Million units in financial year 2009 - 10 as against the previous sale of 10.1 Million units in 2006 - 07. The strong growth has been from the passenger car volumes, two wheelers and commercial vehicles. This represents a growth of 25.48 % as against 9.7 Million units sold in 2008-09.

Indian Tractor market is the largest in the global tractor market by volume. Tractor Industry is witnessing growth on account of its use in Agriculture, being its primary market, as well as for commercial purposes. 281,056 tractors were manufactured in India during the period from April 2009 to December 2009.

On the Iron and Steel front, the crude steel production in India reached a level of 59.57 million ton against 54 million ton for the previous year, helped by the demand from automobiles, roads and housing sector. India is the fifth largest producer of steel in the world.

Owing to the high coke consumption in China as well as on account of levy of tax on export of coke by the Chinese Government, there has been very little export of coke from China. During the financial year 2009-2010 coke was mainly imported from other countries. Coke prices increased from USD 275 per MTat the beginning of the yearto around USD 500 per MT by the end of the year.

FOB prices of pig iron in the international market have been low as compared to price prevailing in the domestic market resulting in very less export of pig iron during the year.

China is a leading manufacturer of steel and India is among the leading countries in respect of export of iron ore to China. Owing to the huge exports, the price of iron ore has shown an increasing trend in the domestic market during the year under review.

The rupee has also been appreciating against the dollar giving some relief to the importers, who depend on crude oil, metals and other raw materials for their operations.

The Indian Economy is expected to grow more than 8% in 2010-11.

B. Company Performance

During the year under review, your Company could realize the benefits of the upward swing in the economy through its pro-active business strategies. Your Company achieved net sales of Rs. 8,069 Million (previous year Rs. 6,991 Million), resulting in an increase in sales by 15.41 percent over the previous year. The sales value increased as compared to the previous year due to increase in sale volumes of both pig iron and castings. There has been a volume growth in sale of castings by 25.85 percent and that of pig iron by 55.61 percent.

The profit before tax for the year under review stood at Rs.702.63 Million as compared to Rs.202.72 Million of the previous year after providing for depreciation and amortization.

During the year under review, installation of stoves for second Mini Blast Furnace was completed in January 2010. Both furnaces are now operating with stoves resulting into an increased productivity and reduced coke consumption.

The profitability of Company for the year is after absorbing the relining expenses of Rs. 53.43 Million incurred for one of the Mini Blast Furnaces.

On the financial front, your Company was able to negotiate the interest rate at a lower rate on the term loan as well as on the usance interest in respect of the procurement of coke.

During the year under review, the high pressure moulding line, which was installed at Solapur plant in 2008, has achieved 39% of capacity utilization. Castings manufactured on this high pressure moulding line have met with customers expectations.

Consequent to the installation of high pressure moulding line, your Company has reduced the production of castings manufactured in the old foundry at Solapur, which uses old technology and is labour intensive in nature. The majority of the castings that were manufactured in the old foundry, have been shifted to the new high pressure moulding line and the old foundry manufacturing operations will be totally phased out in the financial year 2010 - 2011.

Your Company is in the manufacture and sale of investment castings at Solapur plant, which contributed to less than 1 percent of the total company turnover. Being in a stagnated state for many years and as a step towards remaining lean and profit orientated, the Company has taken a decision to close down the investment castings section with effect from 1 st April, 2010.

Further to the information about the iron ore mines mentioned in the Annual Report 2008-2009, your Company is pleased to inform that the Hble High Court of Karnataka, has given its judgment in favour of your Company. Presently, one case is pending in Supreme Court. Further three cases are also pending in Mines Tribunal, New Delhi. As such, the matter is subjudice as on date.

Your Company has received National Energy Conservation Award conducted by the Ministry of Power, Government of India.

C. Operational Performance

During the year under review, your Company sold 226,507 MT of pig iron valued at Rs. 4,342 Million as compared to 145,559 MT of pig iron valued at Rs. 3,532 Million in the previous year and 49,545 MT castings aggregating to Rs. 2,619 Million as compared to 39,366 MT castings aggregating to Rs. 2,469 Million in the previous year.

The price of iron ore continued to increase throughout the year. The prices increased from the level of Rs. 2,050 per MT at the beginning of the year to Rs. 3,200 per MT by the end of the year. This is on account of the increased demand from China as well as from the domestic industry.

D. Cost Control

Your Company adopted following measures to reduce the cost:

a) Improvement in blastfurnaces

b) Installation of turbo blower

c) Continuation of energy conservation projects.

d) Strengthening of process controls in manufacturing and material procurement.

e) Reduction in interest cost.

E. Concerns and Threats

Continuous increase in coke and iron ore prices will result in increase in input costs and thereby put pressure on profitability margins.

F. Prospects for the Current Year

In order to become cost competitive, your Company has installed stoves for both the furnaces and has identified the following projects forfurther cost saving :

a) Installation of inter plant out the iron ore fines.

b) Installation of turbo blower to utilize the excess blastfurnace gas.

c) Identified energy conservation projects.

Cautionary Statement

Statements in this Report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.

G. Internal Control Systems and their adequacy

The Company has a proper and adequate system of controls in order to ensure that all assets are safeguarded against loss from unauthorised use or disposal. All transactions are properly checked, verified, recorded and reported correctly.

Regular Internal Audit checks are carried out to ensure that the responsibilities are executed effectively and that proper and adequate systems are in place.

H. Safety, Health and Environment

Your Company is giving utmost importance to safety, health and environment related issues. The employees are continuously educated and trained to improve their awareness and skills.

All safety statutory requirements like licenses, mock drills under emergency conditions and testing of lifting tackles and pressure vessels, etc. are being complied with. As a proactive approach, periodical safety audit is conducted to identify and eliminate possible potential causes of accidents.

Medical check up for the employees is being conducted at the pre-employment stage and thereafter at regular intervals during the continuance of the employment period. Based on the medical reports of the employees, necessary measures are taken to improve the health condition of the employees. Your Company has appointed a full time Doctor and qualified nurses for the Occupational Health Centre, which caters to the medical needs of the employees.

Your Company was certified earlier for Quality Management Systems under ISO TS 16949-2002 and Environmental Management System under ISO 14001-2004. Your Company is now certified for Occupational Health & Safety Assessment Series (OHSAS 18001:2007) by Indian Register Quality Systems (IRQS).

Requirements of environmental acts and regulations are complied with. Monitoring and analysis of waste water, stack emissions and ambient air quality are undertaken periodically to verify whether the level of environmental parameters are well within the specified limits. ISO14001-2004 for Environment management systems of your Company has been re-certified by IRQS, in March 2008.

Effluent treatment of waste products and suppression of fugitive emissions through sprinklers is also carried out effectively. Massive tree plantation has been undertaken to improve the greenery all around the plant.

Sewage treatment plant (STP) with 250 KLD (Kilo Litres per day) capacity installed to treat domestic waste water with extended biological aeration system. Sludge generated from STP are being used as manure for garden and treated waste water used for gardening within the plant.

I. Social Responsibility

As a part of its corporate responsibility to the society, your Company has been supporting and providing assistance to nearby villages at Bevinahalli by supply of good quality drinking water and educational assistance for the village people. Also some basic facilities such as roads, drainages, school building and medical centre have been provided though the Trust set up by your Company. Weekly medical check ups by the specialist doctors with medicines are provided and also health camps organized in the neighbouring village.

J. Human Resources

Your Company considers human resource to be an important valuable asset for the organisation and therefore, constantly strives to attract and recruit best talent for the current and future needs. The Company has taken necessary steps to upgrade the skills of present employees by conducting various in-house training programs and courses. Further measures for the safety of the employees are also adopted through training programs on safety and mock drills. As on 31st March, 2010 the total number of salaried employees stood at 1,223. The Employer - Employee Relations have been generally cordial throughout the year.

WARRANTS CONVERSION IN TERMS OF THE LETTER OF OFFER DATED 2ND JANUARY, 2007

The warrant exercise period has commenced on 13th March, 2008. In terms of the Letter of Offer dated 2nd January, 2007, each Detachable Warrant can be converted into one Equity Share of Rs. 5 each fully paid at a warrant exercise price Rs. 35 per warrant during the warrant exercise period.

The warrantholders at their meeting held on 14th August, 2009 have extended the validity of warrant exercise period by a period of three years from 13th March, 201 OtilM 3th March, 2013.

During the financial year 2009 - 2010, the Company had received applications from warrantholders for conversion of 11,197 warrants into equity shares for an amount aggregating to Rs. 3,91,895 (inclusive of securities premium). Out of the above, 2,644 warrants amounting to Rs. 92,540 have been converted into 2,644 Equity Shares of Rs. 5 each (Equity share capital Rs. 13,220 and securities premium Rs. 79,320) during the financial year. The balance 8,553 warrants amounting to Rs. 299,355 were pending for allotment at the end of the financial year and the same were since converted into 8,553 Equity Shares on 10th April, 2010.

DIRECTORS

Mr. S. G. Chitnis, Mr. A. R. Jamenisand Mr. A. N.AIawani retire by rotation and being eligible, offer themselves for re-appointment.

DIRECTORS RESPONSIBILITY STATEMENT

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

i. That in the preparation of the Accounts for the financial year ended 31st March, 2010 the applicable

accounting standards have been followed; ii. That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2010 and of the profit of the Company for the year ended 31 st March, 2010;

iii. That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. That the Directors have prepared the accounts for the year ended 31st March, 2010 on a "going concern" basis.

CASH FLOW STATEMENT

A Cash Flow Statement for the year ended 31 st March, 2010 is attached with the Annual Audited Accounts of the Company.

AUDITORS

M/s P.G. Bhagwat, Chartered Accountants, retire as the Auditors at the conclusion of the ensuing Annual General Meeting, and being eligible, offer themselves for re-appointment. The Company has received a certificate from the retiring auditors to the effect that the appointment, if made, will be in accordance with the limit specified in Section 224(1 B) of the Companies Act, 1956.

The Board has recommended their re-appointment.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO

Details of Energy Conservation, Technology Absorption, Research and Development and Foreign Exchange Earnings and Outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are given in the Annexure - Aand forms part of this Report.

PARTICULARS OF EMPLOYEES

Information regarding employees in accordance with Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is given in Annexure - B and forms part of this report.

CORPORATE GOVERNANCE

The Company conforms to the norms of Corporate Governance as envisaged in the Companies Act, 1956 and the Listing Agreement with the Bombay Stock Exchange Limited. Pursuant to Clause 49 of the Listing Agreement, a Report on the Corporate Governance and the Auditors Certificate on Corporate Governance are annexed to this report.

APPRECIATION

Your Directors wish to place on record their appreciation towards the contribution of all the employees of the Company and their gratitude to the Companys valued customers, bankers, financial institutions, vendors and members for their continued support and confidence in the Company.

For and on behalf of the Board of Directors

ATUL C. KIRLOSKAR Pune : 29th April, 2010 Chairman

 
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