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Directors Report of Kirloskar Ferrous Industries Ltd.

Mar 31, 2023

The Directors are pleased to present the 32nd Annual Report together with the Audited Financial Statements for the financial year ended 31 March 2023 of Kirloskar Ferrous Industries Limited (‘the Company’).

Financial Summary (Standalone) :

(Rs. in Crores)

Particulars

2022-2023

2021-2022

Total Income

4,191.80

3,626.26

Profit before tax

472.03

542.69

Tax Expenses

121.33

136.59

Profit for the year

350.70

406.10

Other Comprehensive Income for the year

(2.74)

3.41

Total Comprehensive Income for the period

347.96

409.51

Profit brought forward from previous year

985.09

659.65

Final Dividend paid on equity shares

(41.65)

(41.53)

Interim Dividend paid on equity shares

(34.73)

(34.67)

Transfer to General Reserves

(5.00)

(5.00)

Balance carried to Surplus in Statement of Profit and Loss

1,254.19

985.09

Dividend :

The Board of Directors at its meeting held on 7 February 2023 declared an Interim Dividend of f 2.50 per equity share of f 5 each (i.e. 50 percent) and the Interim Dividend has been paid to the eligible Members on 3 March 2023.

The Board of Directors at its meeting held on 12 May 2023 has also recommended a Final Dividend of H 3 per equity share of H 5 each (i.e. 60 percent) for approval of the Members at the ensuing annual general meeting.

Accordingly, total dividend payout for the financial year 2022-2023 aggregates to H 5.50 per equity share of H 5 each (i.e. 110 percent).

Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has adopted the Dividend Distribution Policy. Copy of the same is available at the website of the Company, viz. www.kirloskarferrous.com

Company Performance :

The Company achieved Net Sales of H 4,149.42 Crores as compared to H 3,614.97 Crores in the previous year.

Profit Before Tax for the year under review stood at H 472.03 Crores as compared to H 542.69 Crores for the previous year.

During the year under review :

• The Company maintained the market leadership position in the domestic casting business, which recorded a sales

value growth of 30 percent and volume growth of 14 percent over previous year, with substantial capacity utilisation improvement coupled with higher share of critical castings and improved quality in Foundry.

• During the year, the Pig Iron business achieved a sales growth of 8 percent over the previous year in spite of marginal reduction of volume by 3 percent on account of shutdown of furnaces for upgradation and maintenance.

Sale of products :

The Company sold 4,80,472 MT of pig iron valued at H 2,374.20 Crores (which includes 134,651 MT from Hiriyur plant) during the financial year 2022-2023 as compared to 4,95,555 MT of pig iron valued at H 2,201.77 Crores in the previous financial year.

The demand for all the grades of pig iron was good across the sectors throughout the year under review. The average realisation of pig iron for the year was around H 49,500 per MT as against H 44,500 per MT in the previous year.

The Company sold 1,30,345 MT of castings aggregating to H 1,673.26 Crores during the financial year 2022-2023 as compared to 1,14,342 MT castings aggregating to H 1,289.63 Crores during the previous financial year.

The demand for the castings was strong led by the tractor industry and commercial vehicle industry and auto sector in the domestic market and global market.

Operational Improvements :

Pig Iron :

During the year under review, average price of iron ore fluctuated between H 5,100 per MT to H 6,000 per MT for Lumps and H 4,400 per MT to H 6400 per MT with respect to Fines.

The increasing trend in prices of coal continued till first half of the current year. The blended average coal price went upto USD 377 in Q1 and USD 354 in Q2. Thereafter, the prices has fallen to USD 248 and USD 254 in the Q3 and Q4 of the year respectively.

The fluctuation in the coal prices were mitigated by continuous monitoring of the International coal prices and timely booking of coal through spot pricing and optimising the coal blend. The coke oven phase I and Power plant thereto was operated throughout the year, which contributed to the cost reduction. Further, the Company also entered into agreement for converting the coal to coke, which helped the Company to mitigate from price fluctuation of coke.

The Company is also successful in passing on substantial impact of increased price of raw material to its customers.

Upgradation of MBF-1 and MBF-2 helped in improving the productivity and reduction in coke consumption. 100% consumption of captive power helped in optimizing over all cost.

Castings :

Your Company maintained the leadership position in the domestic market in the block and head category castings. The Company also improved the market leadership position in the category for supply of critical castings.

Existing 3 lines of Foundry were operated at the 92 percent of saleable capacity utilisation and Line 4 at Solapur plant started commercial production from the month of March 2023.

During the year under review, the production of castings increased by 12 percent when compared to the previous year.

The Company continuously worked on improving the casting sales volume growth, quality and manufacturing cost at both Koppal and Solapur plants. The Company achieved the lowest casting rejection of 5 percent during the year under review.

The Company is successful in price settlements with the customers from time to time in line with input cost increase.

Finance costs :

During the year, the Reserve Bank of India increased the repo rate from 4.0 percent to 6.5 percent and also Secured Overnight Financing Rate (SOFR) was increased from 0.3 percent to 4.87 percent. Due to the increase in these rates, the finance cost for the Company was impacted. However, the Company worked on optimisation of interest rates by availing credit facilities at competitive rates and effectively managed the working capital to keep the interest expenses under control.

The Company hedged import transactions of input materials by taking forward covers to minimize the impact of fluctuations in the forex currencies.

Full consumption of captive power helped in optimising overall cost.

ICRA Limited has assigned the long-term credit rating of ‘ICRA AA with stable outlook’ reflecting high degree of financial stability.

Updates on customers :

During the year under review, the Company was successful in adding two new Global OEM customers and increase in share of business from current customers. The Company also increased the supply of machined castings and also successful in obtaining new orders in machined condition.

Update on Projects :

Following major projects were completed during the financial year under review :

• Upgradation of MBF-2 at Koppal plant in July 2022 helped to increase the production capacity of Pig Iron by 37,600 MT per annum.

• The Company commenced the operations of Coke Oven phase II in February 2023. This enhanced the capacity of the coke production from 2 lakhs MT per annum to 4 lakhs MT per annum.

• 20MW power plant attached to Coke Oven phase II was commenced in March 2023. This will help in the reduction of power costs.

• The new moulding line (phase I) at Solapur plant started Commercial production in March 2023, thereby increasing the capacity of production of castings by 20,000 MT per annum.

• De-bottlenecking projects and machining capacity expansion projects were undertaken in Foundry.

Following major projects are in progress during the year under review:

• Installation of Pulvarised Coal Injection into Mini Blast Furnaces with Oxygen enrichment facility for cost reduction.

• Bell less top for MBF-1 at Koppal plant to reduce coke consumption.

• Solar power plant at Solapur plant to reduce the cost of power for improving profitability.

• New Moulding line (Phase II) at Solapur plant for increasing the castings capacity by 20,000 MT.

• Expanding machining capacity based on customer requirements.

Changes in the Equity Share Capital

During the financial year; 241,171 equity shares of H 5 each were allotted upon exercise of stock options pursuant to ‘KFIL Employee Stock Option Scheme 2017’. As at the end of the financial year, the issued, subscribed and paid-up share capital of the Company was H 694,791,075 consisting of 138,958,215 equity shares of H 5 each fully paid.

Directors

a) Changes in Directors and Key Managerial Personnel

Mr. Rahul Kirloskar (DIN : 00007319) retires by rotation at the ensuing annual general meeting and being eligible, offers himself for re-appointment.

Upon the recommendation of the Nomination and Remuneration Committee, the Board of Directors at its meeting held on 12 May 2023 has reappointed Mr. R. V. Gumaste as the Managing Director (DIN : 00082829) [‘Key Managerial Person’] for a term of five years with effect from 1 July 2023, subject to approval of the Members at the ensuing annual general meeting.

Upon recommendation of the Nomination and Remuneration Committee; the Board of Directors has sought the approval of the Members for the appointment of Dr. Shalini Sarin as an Independent Director to hold office for a term upto 12 May 2028. In the opinion of the Board of Directors; Dr. Shalini Sarin (DIN : 06604529) possesses integrity, expertise and experience and holds the valid registration with the databank of Independent Directors pursuant to provisions of Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

Changes in Directors during the financial year 2022-2023 :

The Board of Directors at its meeting held on 17 May 2022 co-opted Mr. R. S. Srivatsan, Chief Financial Officer (DIN : 0009607651) as an Additional Director of the Company and also appointed as the Executive Director (Finance) and Chief Financial Officer [‘Key Managerial Person’]. The Members of the Company at their annual general meeting held on 1 August 2022 have appointed him as an Executive Director (Finance) with effect from 17 May 2022 for a term of five years.

The Board of Directors at its meeting held on 5 August 2022 co-opted Mr. Pravir Kumar Vohra as an Additional Director in the category of Independent Director with effect from 5 August 2022. The Members of the Company by way of the postal ballot have appointed him as an Independent Director of the Company to hold office for a term upto 4 August 2027.

Pursuant to the resolution passed by the Members of the Company at their annual general meeting held on 23 July 2019, Mr. R. Sampathkumar has retired as an Independent Director on 12 August 2022. The Board of Directors placed on record its sincere appreciation for his valuable contribution.

Changes in Key Managerial Personnel (KMP) during the financial year 2022-2023 :

There was no change in the Key Managerial Personnel during the financial year 2022-2023.

b) Statement on declarations by Independent Directors

The Company has received declarations from all Independent Directors confirming that they meet the criteria of

independence as laid down under Section 149(6) of the Companies Act, 2013, rules thereof and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and they are in compliance with the Code for Independent Directors as prescribed in Schedule IV to the Companies Act, 2013.

In the opinion of the Board, all Independent Directors possess integrity, expertise, skills and experience for carrying out functions of an Independent Director.

Pursuant to provisions of Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and as amended; the Independent Directors on the Board have confirmed that they hold valid registration certificate with the Databank of Independent Directors.

The Company has laid down a Code for the Board of Directors and Senior Management of the Company. The said Code is available on the website of the Company viz. www. kirloskarferrous.com All the Board Members and Senior Management Personnel of the Company have affirmed compliance with the Code of Conduct.

c) Board Evaluation

Pursuant to provisions of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015; the Board has carried out a formal review for evaluating the performance and effectiveness of the Board, Committees of the Board and of individual directors.

Performance of the Board was evaluated on the basis of criteria such as board composition and structure, effectiveness of board processes, participation in organisation strategy, etc. Performance of various committees was evaluated by the Board based on appropriate criteria.

d) Nomination and Remuneration Policy

Upon recommendation of the Nomination and Remuneration Committee, the Board has adopted a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management Personnel and their remuneration. The policy is available on the website of the Company, viz. www. kirlnskarferrnus.com

e) Number of meetings of the Board :

During the financial year 2022-2023, seven meetings of the Board of Directors were convened and held, details of which are provided in the Report on Corporate Governance.

f) Composition of Audit Committee and other committees of the Board :

Details of composition of committees of the Board, viz. Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee are provided in the Report on Corporate Governance.

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

The Company has granted loans aggregating to H 3.36 Crores during the year ended 31 March 2023. 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. Closing balances of these loans are disclosed in the schedule of loans and advances in the Financial Statements.

During the financial year 2022-2023, the Company has not given any loan or guarantee or acquired any security exceeding the limit prescribed pursuant to provisions of Section 186(2) of the Companies Act, 2013.

Transactions with related parties

During the year under review, all related party transactions entered into by the Company were approved by the Audit Committee and were at arm’s length and in the ordinary course of business.

Pursuant to provisions of Section 134 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014; the material transactions with related party are disclosed in Form AOC-2 annexed herewith as Annexure A.

The policy on related party transactions is available on the website of the Company, viz. www.kirlnskarferrnus.com

General

During the financial year 2022-2023;

• Pursuant to provisions of Section 148 of the Companies Act, 2013 and rules thereof; maintenance of cost records has been mandatory for the Company and such accounts and records relating to utilisation of materials, labour and other items of cost have been prepared and maintained.

• Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Central Government pursuant to Section 118(10) of the Companies Act, 2013 have been complied with.

• The Company has not accepted any public deposit pursuant to provisions of the Companies Act, 2013 and rules thereof.

• There has been no change in the nature of business of the Company.

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

• No case of fraud by any officer or employee of the Company has been reported by any auditor of the Company either to the Audit Committee or the Board pursuant to provisions of Section 143(12) of the Companies Act, 2013.

• Neither any application has been made nor any proceeding has been pending against the Company under the Insolvency and Bankruptcy Code, 2016.

• There was no incidence of settlement in respect of any loan availed from any bank or financial institution.

There is no material change or commitment occurring after the end of the financial year, which may affect the financial position of the Company.

Details of the remuneration received by the Managing Director and the Executive Director from holding / subsidiary company

For the financial year 2022-2023, Mr. R. V. Gumaste, Managing Director has received H 5,60,000 as the sitting fees and would receive H 31,00,000 as the commission (subject to approval of the members of ISMT Limited) from ISMT Limited (subsidiary company). He has not received any remuneration from Kirloskar Industries Limited (holding company).

For the financial year 2022-2023, Mr. R. S. Srivatsan, Executive Director (Finance) and Chief Financial Officer has not received any remuneration from ISMT Limited (subsidiary company) and Kirloskar Industries Limited (holding company).

Subsidiary Company and Consolidated Financial Statements

Consolidated Financial Statements for the year ended 31 March 2023 have been presented in addition to the Standalone Financial Statements of the Company.

During the financial year 2021-2022, the Company acquired sole control over ISMT Limited by acquiring 154,000,000 equity shares of f 5 each of ISMT Limited (i.e. 51.25 percent) by way of preferential allotment. Accordingly, ISMT Limited is a subsidiary of the Company with effect from 10 March 2022 pursuant to the provisions of Section 2(87)(ii) of Companies Act, 2013. Further, the Company has also acquired 5,747 equity shares of f 5 each of ISMT Limited for an aggregate consideration of f 183,390 on 8 April 2022 through the Open Offer pursuant to provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

ISMT Limited (earlier known as The Indian Seamless Metal Tubes Limited) has been incorporated as a public limited company in the year 1977 and commenced production of seamless tubes in the year 1980. It has steel production facility at Jejuri in Maharashtra and seamless tube and pipes manufacturing units at Ahmednagar and Baramati in Maharashtra. It also has a captive power plant (presently not in operation) located at Chandrapur in Maharashtra.

The acquisition of ISMT Limited has facilitated the Company to enter the business segment of manufacturing of alloy steel and seamless tubes.

Performance Highlights for the financial year 2022-2023 :

Name and Registered Office of the Subsidiary

Percentage

Holding

Particulars

Consolidated Financial Results ( H in Crores)

ISMT Limited Panama House, Viman Nagar, Pune 411014 Maharashtra India

51.25

TOTAL INCOME

2,598.18

TOTAL EXPENSES

2,443.16

PROFIT BEFORE EXCEPTIONAL ITEMS AND TAX

155.02

EXCEPTIONAL ITEMS

6.43

PROFIT BEFORE TAX

148.59

TAX EXPENSES

60.85

PROFIT AFTER TAX

87.74

OTHER COMPREHENSIVE INCOME

3.67

TOTAL COMPREHENSIVE INCOME

91.41

The Board of Directors of the Company at its meeting held on 5 November 2022 has considered and approved the Scheme of Arrangement and Merger of ISMT Limited with the Company and their respective shareholders. The Scheme is subject to receipt of necessary statutory and regulatory approvals. Upon the Scheme becoming effective, 17 fully paid-up equity shares of nominal value of f 5 each of the Company will be allotted for every 100 fully paid-up equity shares of nominal value of f 5 each held by the shareholders (except the shareholding of the Company) in ISMT Limited .

Risk Management Framework

The Company has a Risk Management Committee consisting of Mr. V. M. Varma as the Chairman and Mr. R. V. Gumaste, Mr. A. N. Alawani and Mr. M. V. Kotwal as Members of the Committee. Based on the recommendation of the Committee, the Risk Management Policy has been amended to include ESG related risks, information and cyber security risks. The Board reviews effectiveness of risk management activities on regular basis.

The process of risk management covers risk identification and classification of risks, risk rating, risk mitigation and risk monitoring and review. Risks have been classified as strategic, operational, financial, statutory / compliance and reputational.

Based on recommendation of the Risk Management Committee, the Risk Coordinator has been appointed to work with the Risk Owners to identify risks and facilitate development of risk mitigation plans.

Internal Financial Controls

The Company has deployed controls including defined code of conduct, whistle blower policy, management review and MIS mechanisms, internal audit mechanism. The process level controls have been instituted through company policies and procedures and continuous monitoring of efficiency in operations.

There is regular management oversight of the internal controls environment at the Company. The Audit Committee alongwith the Management oversees reports of the internal audit and reviews implementation on a periodic basis.

Vigil Mechanism / Whistle Blower Policy

The Board of Directors has adopted the Vigil Mechanism / Whistle Blower Policy to deal with instances of fraud, unethical behaviour, mismanagement, leakage of Unpublished Price Sensitive Information (UPSI), etc. The policy has provided a mechanism for employees and other persons dealing with the Company to

report to the Chairman of the Audit Committee any such instance. No case was filed during the year.

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

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place a Policy for Prevention of Sexual Harassment at workplace. This would, inter alia, provide a mechanism for the resolution, settlements or prosecution of acts or instances of sexual harassment at workplace and to ensure that all employees are treated with respect and dignity. There was no complaint / case filed / pending with the Company during the year under review.

The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Annual Returns filed with the Ministry of Corporate Affairs (MCA)

Pursuant to provisions of Section 134 read with Section 92(3) of the Companies Act, 2013, as amended; copies of annual returns filed with the MCA are available at the website of the Company viz. www.kirloskarferrous.com and the Annual Return for the financial year 2022-2023 will be uploaded on the website after filing with the MCA.

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

Details on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are annexed herewith as Annexure B.

The Company has always believed in working for the betterment and upliftment of the society. Corporate Social Responsibility (CSR) has been practiced over the years in the Company. Focus areas under CSR include Education, Health and Hygiene, Environment and Rural Development. The Company has been carrying out various CSR activities directly or through implementing agencies.

The composition of CSR Committee and the Report on CSR activities during the financial year is annexed herewith as Annexure C.

Information pursuant to Rule 5 of the Companies (appointment and remuneration of managerial personnel) Rules, 2014

Information relating to remuneration and other details as required pursuant to Rule 5 of the Companies (appointment and remuneration of managerial personnel) Rules, 2014 is annexed herewith as Annexure D.

Employee Stock Options Schemes (ESOS) :

The Company views stock options as an instrument that would enable the employees to share the value they create for the Company and align individual objectives of the employees with the objectives of the Company.

The Company has two employee stock option schemes, viz. KFIL Employee Stock Option Scheme 2017 (‘KFIL ESOS 2017’) and KFIL Employee Stock Option Scheme 2021 (‘KFIL ESOS 2021’) in order to motivate, incentivize and reward employees. The Board of Directors and the Nomination and Remuneration Committee of the Company are authorised to administer both schemes.

During the financial year, the Nomination and Remuneration Committee at its meetings held on 19 May 2022 and 5 November 2022 has granted 1,760,000 and 1,60,000 stock options under ‘KFIL ESOS 2017’ and ‘KFIL ESOS 2021’ respectively.

Pursuant to Regulation 13 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021; certificates from the secretarial auditor that the schemes have been implemented in accordance with these regulations and the resolutions passed by the Members of the Company in the general meetings would be placed before the Members at the ensuing annual general meeting.

Disclosures on schemes, details of options granted, shares allotted upon exercise are enclosed herewith as Annexure E and are available on the website of the Company at www.kirloskarferrous.com

No employee has been granted stock options equal to or exceeding one percent of the issued capital of the Company.

In line with the Indian Accounting Standards (“Ind AS”) 102 on ''Share Based Payments'' issued by the Institute of Chartered Accountants of India (“ICAI”); the Company has computed the cost

of equity-settled transactions by using the fair value of the options at the date of the grant and recognized the same as employee compensation cost over the vesting period.

Auditors

a) Statutory Auditor

The Members of the Company at their annual general meeting held on 27 July 2021 have reappointed M/s. Kirtane & Pandit LLP, Chartered Accountants as the Statutory Auditor of the Company to hold office for another term of five years from the conclusion of 30th Annual General Meeting until the conclusion of 35th Annual General Meeting of the Members of the Company.

The statutory auditor has provided a certificate confirming that requirements prescribed under provisions of Section 141 of the Companies Act, 2013 have been fulfilled.

The report given by the statutory auditor on the standalone and consolidated financial statements of the Company for the financial year 2022-2023 forms part of this Annual report. There is no qualification / reservation / adverse remark in the report given by the statutory auditor.

b) Secretarial Audit

Pursuant to provisions of Section 204 of the Companies Act, 2013 and rules thereof; Mr. Mahesh J. Risbud, Practicing Company Secretary was appointed to conduct the Secretarial Audit of the Company for the financial year 2022-2023. The Secretarial Audit Report is annexed herewith as Annexure F. There is no qualification / reservation / adverse remark in the Secretarial Audit Report.

Pursuant to the SEBI Circular CIR/CFD/CMD1/27/2019 dated 8 February 2019; Mr. Mahesh J. Risbud, Practicing Company Secretary has also issued the Secretarial Compliance Report for the financial year 2022-2023.

c) Cost Auditor

Pursuant to provisions of Section 148 of the Companies Act, 2013 and rules thereof, the Board of Directors has appointed M/s. Dhananjay V. Joshi and Associates, Cost Accountants as the Cost Auditor to conduct the audit of cost records maintained by the Company for the financial year 2022-2023.

Report on Management Discussion and Analysis

Pursuant to provisions of Regulation 34(3) of the SEBI (LODR) Regulations, 2015; the Report on Management Discussion and Analysis forms part of the Annual Report.

The Company conforms to norms of the corporate governance as envisaged in the Listing Agreement executed with the stock exchange. Pursuant to provisions of Regulation 34(3) of the SEBI (LODR) Regulations, 2015; the Report on Corporate Governance forms part of the Annual Report.

A certificate from the statutory auditor, regarding compliance with conditions of corporate governance as required pursuant to provisions of the SEBI (LODR) Regulations, 2015 has been annexed to the Report on Corporate Governance.

Business Responsibility and Sustainability Report

Pursuant to provisions of Regulation 34(2)(f) of the SEBI (LODR) Regulations, 2015; the Business Responsibility and Sustainability Report forms part of the Annual Report.

Directors'' Responsibility Statement

Pursuant to provisions of Section 134 of the Companies Act, 2013 in respect of Directors’ Responsibility Statement; the Directors state that :

a) in the preparation of the annual accounts; the applicable accounting standards have been followed and there were no material departures.

b) accounting policies as mentioned in 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 31 March 2023 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 were in place to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

Cautionary Statement

Statements in this report, particularly those which relate to the 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.

Appreciation

The Directors wish to place on record their appreciation towards the contribution of all 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.


Mar 31, 2022

The Directors are pleased to present the 31st Annual Report together with the Audited Financial Statements for the year ended 31 March 2022 of Kirloskar Ferrous Industries Limited (‘the Company’).

Financial Summary (Standalone)

(? in Crores)

Particulars

2021-2022

2020-2021

Total Income

3,626.26

2,040.91

Profit before tax

542.69

363.19

Tax Expenses

136.59

61.08

Profit for the year

406.10

302.11

Other Comprehensive Income for the year

3.41

(0.82)

Total Comprehensive Income for the period

409.51

301.29

Profit brought forward from previous year

659.65

390.92

Final Dividend paid on equity shares

(41.53)

Nil

Interim Dividend paid on equity shares

(34.67)

(27.67)

Transfer to General Reserves

(5.00)

(5.00)

Balance carried to Surplus in Statement of Profit and Loss

985.09

659.65

Dividend

The Board of Directors at its meeting held on 24 January 2022 declared an Interim Dividend of H 2.50 per equity share of H 5 each (i.e. 50 percent) and the Interim Dividend has been paid to the eligible Members on 18 February 2022.

The Board of Directors at its meeting held on 17 May 2022 has also recommended a Final Dividend of H 3 per equity share of H 5 each (i.e. 60 percent) for approval of the Members at the ensuing annual general meeting.

Accordingly, total dividend payout for the financial year 2021-2022 aggregates to H 5.50 per equity share of H 5 each (i.e. 110 percent).

Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has adopted the Dividend Distribution Policy. Copy of the same is available at the website of the Company, viz. www.kirlnskarferrnus.com

Company Performance

The Company achieved Net Sales of H 3,614.97 Crores as compared to H 2,038.08 Crores in the previous year.

The Profit Before Tax for the year under review stood at f 542.69 Crores as compared to f 363.19 Crores of the previous year after providing for depreciation and amortisation.

During the year under review,

• The Company maintained the leadership position in the Castings business, which recorded a growth of 23.60 percent over previous year, with substantial capacity utilisation improvement in Foundry Line II at Koppal plant.

• The operations of the pig iron plant at Hiriyur stabilised and the sinter project was completed as per the timeline. The plant was operational throughout the year and contributed both in volume and value growth of the company.

Sale of products

The Company sold 4,95,555 MT of pig iron valued at f 2,201.77 Crores (which includes 1,50,431 MT from its Hiriyur plant) during the financial year 2021-2022 as compared to 313,690 MT of pig iron valued at f 1,067.32 Crores in the previous financial year.

The demand for all the grades of pig iron was good across the sectors throughout the year under review. The average realisation of pig iron, which was at around H 34,000 per MT in the previous year went upto around H 44,400 per MT during the year under review.

The Company sold 1,14,342 MT of castings aggregating to f 1,289.63 Crores during the financial year 2021-2022 as compared to 92,507 MT castings aggregating to f 874.40 Crores for the previous financial year.

The demand for the casting was strong led by the tractor industry in first two quarters of the financial year and later led by commercial vehicle industry and auto sector.

Operational Improvements Pig Iron

During the year under review, your Company was successful in increasing sale prices of pig iron with the increase in the input material costs.

During the year under review, iron ore prices increased from around H 6,500 per MT in April 2021 to around H 8,000 per MT by

adding new products from current customers and also increased the supply of machined castings.

Update on Projects

Following projects were completed during the financial year under review :

• The Sinter plant at Hiriyur was commissioned in November 2021 and was stabilised by January 2022. This has helped in reducing the coke consumption and dependency on iron ore lumps by replacing with iron ore fines, thereby reducing the manufacturing costs and increasing the profitability.

• The Company has undertaken various projects for debottlenecking and improving the capacity utilisation and also undertook upgradation on technology / infrastructure in foundry and machine shops both at Koppal and Solapur plants, to meet the increasing demand for castings from customers.

Following projects have been undertaken during the year under review :

• Setting up of new moulding line at Solapur plant with contemporary technology with a capacity of 40,000 MT per annum.

• Establishment of Coke Oven phase II to enhance the capacity from 2 lakhs MT per annum to 4 lakhs MT per annum and Power Plant (using waste gas generated from Coke Oven plant) phase II to enhance the power generation capacity from 20 MW to 40 MW.

• Upgradation of Mini Blast Furnace II with Bell-less top equipment.

• Installation of Pulvarised Coal Injection into Mini Blast Furnaces with Oxygen enrichment facility.

• Expanding machining capacity to add more value.

Changes in the Equity Share Capital

During the financial year; 368,363 equity shares of f 5 each were allotted upon exercise of stock options pursuant to ‘KFIL Employee Stock Option Scheme 2017’. As at the end of the financial year, the issued, subscribed and paid-up share capital of the Company was f 693,585,220 consisting of 138,717,044 equity shares of f 5 each fully paid.

Issue and allotment of Non-Convertible Debentures

2,500 rated, listed, unsecured, redeemable Non-Convertible Debentures (NCDs) of the face value of f 10 lakh each aggregating to f 250 Crores were issued and allotted on 10 March 2022 by way of private placement basis.

Non-Convertible Debentures have the coupon rate of 6.65 percent per annum and were issued in two series, viz. Series A redeemable after 2 years and Series B redeemable after 3 years (with a put/call option at the end of 2 years).

June 2021 and prices remained range bound till October 2021. However, prices started reducing from November 2021 and touched around H 6,000 per MT by March 2022. The fluctuation in iron ore prices are mainly attributed to variation in steel production in China.

During the year under review, prime coking coal prices, which were around USD 135 per MT in first quarter, moved upto USD 430 per MT by January 2022 due to inclement weather and pandemic restrictions resulting in reduced production of coal in Australia. Further, the Russia- Ukraine war contributed to increased prices for prime coking coal from USD 430 per MT to around USD 625 per MT by the end of March 2022.

Your Company mitigated the risk of variation in the coking coal prices by strategic sourcing of coking coal when the prices of coking coal were economical. Further during the year, the agreement for conversion of coal to coke helped in mitigating the coke price fluctuations. Both these strategies contributed to in substantial reduction in coke costs and helped in increasing the profitability of the Company.

The Coke Oven plant and the Power Plant was operated throughout the year at rated capacity, which helped the Company to achieve substantial improvement in cost reduction and thereby contributing to the profitability.

Castings

During the year under review, the revenue from the sale of machined castings increased compared to previous year and was also successful in getting the order to supply castings in machined castings from two more customers.

The Company continuously worked on improving the casting sales volume growth and quality at both Koppal and Solapur plants. This has resulted in increase in the casting sales growth of 23.6 percent over the previous year. Total rejections were around 5.20 percent.

During the year under review, major raw material, alloys and chemicals prices have gone up substantially. The Company was successful in passing the increase in the input costs to the customers through established price adjustment mechanism.

The Company continues to focus on increasing the revenue from supply of castings in machined condition and around 12 percent of castings were sold in machined condition.

Finance costs

The Company worked on optimisation of interest rates by availing credit facilities at competitive rates and effectively managed the working capital thereby reducing the interest expenses.

The Company hedged import transactions of input materials by taking forward covers to minimize the impact of fluctuations in the forex currencies.

Updates on customers

During the year under review, the Company was successful in adding two new customers and increase in share of business, while

ICRA Limited vide its letter dated 28 February 2022 has assigned the long-term rating of ‘ICRA AA with Negative Outlook’ for issue of Debentures by the Company.

Proceeds from issue of Non-Convertible Debentures have been utilised for onward unsecured lending to ISMT Limited and for deposit to the escrow account in respect of Open Offer for acquisition of equity shares from public shareholders of ISMT Limited.

Directorsa) Changes in Directors and Key Managerial Personnel

Mr. Mahesh Chhabria (DIN : 00166049) retires by rotation at the ensuing annual general meeting and being eligible, offers himself for re-appointment.

Upon recommendation of the Nomination and Remuneration Committee, the Board of Directors at its meeting held on 17 May 2022 has recommended re-appointment of Mr. Y. S. Bhave, Independent Director (DIN : 00057170) for another term to hold office upto 15 July 2024, for approval of the Members at the ensuing annual general meeting.

Upon the recommendation of the Nomination and Remuneration Committee, the Board of Directors at its meeting held on 17 May 2022 has co-opted Mr. Raviprakasha Srinivasa Srivatsan, Chief Financial Officer (DIN : 0009607651) as an Additional Director of the Company and also appointed as the Executive Director (Finance) and Chief Financial Officer [‘Key Managerial Person’] with effect from 17 May 2022 for a term of five years, subject to approval of the Members at the ensuing annual general meeting.

Changes in Directors during the financial year 2021-2022

The Board of Directors at its meeting held on 22 October 2021 co-opted Mr. Venkataramani S. as an Additional Director in the category of Independent Director with effect from 22 October 2021. The Members of the Company at their Extra Ordinary General Meeting held on 21 December 2021 have appointed him as an Independent Director of the Company to hold office for a term upto 21 October 2026.

Changes in Key Managerial Personnel (KMP) during the financial year 2021-2022

There was no change in the Key Managerial Personnel during the financial year 2021-2022.

b) Statement on declarations by Independent Directors

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013, rules thereof and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and they are in compliance with the Code for Independent Directors as prescribed in Schedule IV to the Companies Act, 2013.

Pursuant to provisions of Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and as amended; all the Independent Directors have confirmed that they hold valid registration certificate with the Databank of Independent Directors.

The Company has laid down a Code for the Board of Directors and Senior Management of the Company. The said Code is available on the website of the Company viz. www.kirlnskarferrnus.com All the Board Members and Senior Management Personnel of the Company have affirmed compliance with the Code of Conduct.

c) Board Evaluation

Pursuant to provisions of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015; the Board has carried out a formal review for evaluating the performance and effectiveness of the Board, Committees of the Board and of individual directors.

Performance of the Board was evaluated on the basis of criteria such as board composition and structure, effectiveness of board processes, participation in organisation strategy, etc. Performance of various committees was evaluated by the Board based on appropriate criteria.

d) Nomination and Remuneration Policy

Upon recommendation of the Nomination and Remuneration Committee, the Board has adopted a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management Personnel and their remuneration. The policy is available on the website of the Company, viz. www.kirloskarferrous.com

e) Number of meetings of the Board

During the financial year 2021-2022, seven meetings of the Board of Directors were convened and held, details of which are provided in the Report on Corporate Governance.

f) Composition of Audit Committee and other committees of the Board

Details of composition of committees of the Board, viz. Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee are provided in the Report on Corporate Governance.

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

During the financial year under review, the Company has acquired 154,000,000 equity shares of H 5 each of ISMT Limited for an aggregate consideration of H 476.63 Crores on 10 March 2022 by way of preferential allotment pursuant to terms of the Share Subscription Agreement dated 25 November 2021 executed between the Company, ISMT Limited and certain promoters forming the promoter group of ISMT Limited.

Pursuant to terms of the Unsecured Loan Agreement dated 25 November 2021 executed between the Company and ISMT Limited, the sum of H 194 Crores has been granted as unsecured loan to ISMT Limited on 10 March 2022.

The Company has also granted loans to employees as per the company policy and to suppliers in the normal course of business of the Company aggregating to H 2.58 Crores.

Aforesaid loans and investments by the Company are within the limit approved by the Members of the Company pursuant of provisions of Section 186(3) of the Companies Act, 2013.

The Company has not granted any guarantee within the purview of Section 186 of the Companies Act, 2013.

Transactions with related parties

During the year under review, all related party transactions entered into by the Company were approved by the Audit Committee and were at arm’s length and in the ordinary course of business.

Pursuant to provisions of Section 134 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014; there was no material transaction with any related party and accordingly, the disclosure in Form AOC-2 is not applicable to the Company.

The policy on related party transactions is available on the website of the Company, viz. www.kirloskarferrous.com

General

During the financial year 2021-2022;

• Pursuant to provisions of Section 148 of the Companies Act, 2013 and rules thereof; maintenance of cost records has been mandatory for the Company and such accounts and records relating to utilisation of materials, labour and other items of cost have been prepared and maintained.

• Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Central Government under Section 118(10) of the Companies Act, 2013 have been complied with.

• The Company has not accepted any public deposit pursuant to provisions of the Companies Act, 2013 and rules thereof.

• There has been no change in the nature of business of the Company.

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

• No case of fraud by any officer or employee of the Company has been reported by any auditor of the Company either to the Audit Committee or the Board pursuant to provisions of Section 143(12) of the Companies Act, 2013.

• Neither any application has been made nor any proceeding has been pending against the Company under the Insolvency and Bankruptcy Code, 2016.

• There was no incidence of settlement in respect of any loan availed from any bank or financial institution.

There is no material change or commitment occurring after the end of the financial year, which may affect the financial position of the Company.

Details of the remuneration received by the Managing Director from holding / subsidiary company

For the financial year 2021-2022, Mr. R. V. Gumaste, Managing Director has received the remuneration of H 60,000 as the sitting fees from ISMT Limited (subsidiary company). He has not received any remuneration from Kirloskar Industries Limited (holding company).

Subsidiary Company and Consolidated Financial Statements

Consolidated Financial Statements for the year ended 31 March 2022 have been presented in addition to the Standalone Financial Statements of the Company.

During the financial year under review, the Company has acquired sole control over ISMT Limited on 10 March 2022 by acquiring 154,000,000 equity shares of H 5 each of ISMT Limited (i.e. 51.25 percent) through preferential allotment pursuant to terms of the Share Subscription Agreement dated 25 November 2021 executed between the Company, ISMT Limited and certain promoters forming the promoter group of ISMT Limited. Consequent to the aforesaid allotment of equity shares, ISMT Limited has become a subsidiary of the Company with effect from 10 March 2022 pursuant to the provisions of Section 2(87)(ii) of Companies Act, 2013.

Further, the Company has also acquired 5,747 equity shares of H 5 each of ISMT Limited for an aggregate consideration of H 183,390 on 8 April 2022 through the Open Offer pursuant to provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

ISMT Limited (earlier known as The Indian Seamless Metal Tubes Limited) has been incorporated as a public limited company in the year 1977 and commenced production of seamless tubes in the year 1980. It has steel production facility at Jejuri in Maharashtra and seamless tube and pipes manufacturing units at Ahmednagar and Baramati in Maharashtra. It also has a captive power plant (presently not in operation) located at Chandrapur in Maharashtra.

The acquisition of ISMT has facilitated KFIL to enter the business segment of steel manufacturing and seamless tubes.

Performance Highlights for the financial year 2021-2022 :

Name and Registered Office of the Subsidiary

Percentage Holding

Particulars

Consolidated Financial Results ( H in Crores)

ISMT Limited

51.25

Total Income

2,182.03

Panama House,

Total Expenses

2,176.50

Viman Nagar, Pune 411014 Maharashtra India

Profit before Exceptional Items and Tax

5.53

Exceptional Items

2,511.38

Profit before Tax

2,516.91

Tax expenses

142.83

Profit after Tax

2,374.08

Other Comprehensive Income

(6.21)

Total Comprehensive Income

2,367.87


Risk Management Framework

The Company has a Risk Management Committee consisting of Mr. V. M. Varma as the Chairman and Mr. R. V. Gumaste, Mr. A. N. Alawani and Mr. M. V. Kotwal as Members of the Committee. Based on the recommendation of the Committee, the Risk Management Policy has been amended to include ESG related risks, information and cyber security risks. The Board reviews effectiveness of risk management activities on regular basis.

The process of risk management covers risk identification and classification of risks, risk rating, risk mitigation and risk monitoring and review. Risks have been classified as strategic, operational, financial, statutory / compliance and reputational.

Based on recommendation of the Risk Management Committee, the Risk Coordinator has been appointed to work with Risk Owners to identify risks and facilitate development of risk mitigation plans.

Internal Financial Controls

The Company has deployed controls including defined code of conduct, whistle blower policy, management review and MIS mechanisms, internal audit mechanism. The process level controls have been instituted through company policies and procedures and continuous monitoring of efficiency in operations.

There is regular management oversight of the internal controls environment at the Company. The Audit Committee alongwith the Management oversees reports of the internal audit and reviews implementation on a periodic basis.

Vigil Mechanism / Whistle Blower Policy

The Board of Directors has adopted the Vigil Mechanism / Whistle Blower Policy to deal with instances of fraud, unethical behaviour, mismanagement, leakage of Unpublished Price Sensitive Information (UPSI), etc. The policy has provided a mechanism for employees and other persons dealing with the Company to report to the Chairman of the Audit Committee any such instance. No case was filed during the year.

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

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place a Policy for Prevention of Sexual Harassment at workplace. This would, inter alia, provide a mechanism for the resolution, settlements or prosecution of acts or instances of sexual harassment at workplace and to ensure that all employees are treated with respect and dignity. There was no complaint / case filed / pending with the Company during the year under review.

The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Annual Returns filed with the Ministry of Corporate Affairs (MCA)

Pursuant to provisions of Section 134 read with Section 92(3) of the Companies Act, 2013, as amended; copies of annual returns filed with the MCA are available at the website of the Company viz. www.kirlnskarferrnus.cnm and the Annual Return for the financial year 2021-2022 will be uploaded on the website after filing with the MCA.

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

Details on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are annexed herewith as Annexure A.

Corporate Social Responsibility (CSR)

The Company has always believed in working for the betterment and upliftment of the society. Corporate Social Responsibility (CSR) has been practiced over the years in the Company. Focus areas under CSR include Education, Health and Hygiene, Environment and Rural Development. The Company has been carrying out various CSR activities directly or through implementing agencies.

The composition of CSR Committee and the Report on CSR activities during the financial year is annexed herewith as Annexure B.

Information pursuant to Rule 5 of the Companies (appointment and remuneration of managerial personnel) Rules, 2014

Information relating to remuneration and other details as required pursuant to Rule 5 of the Companies (appointment and remuneration of managerial personnel) Rules, 2014 is annexed herewith as Annexure C.

Employee Stock Options Schemes (ESOS)

The Company views employee stock options as an instrument that would enable the employees to share the value they create for the Company and align individual objectives of the employees with the objectives of the Company.

The Company has two employee stock option schemes, viz. KFIL Employee Stock Option Scheme 2017 (‘KFIL ESOS 2017’) and KFIL Employee Stock Option Scheme 2021 (‘KFIL ESOS 2021’) in order to motivate, incentivize and reward employees. The Board of Directors and the Nomination and Remuneration Committee of the Company are authorised to administer both schemes.

With a view to align with provisions of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 effective from 13 August 2021, both schemes have been amended with effect from 22 October 2021 upon the recommendation of the Nomination and Remuneration Committee and the approval of the Board of Directors of the Company.

During the financial year, the Nomination and Remuneration Committee at its meeting held on 22 October 2021 has granted 3,70,000 stock options under KFIL ESOS 2017. No stock option has been granted under KFIL ESOS 2021 as of 31 March 2022.

Pursuant to Regulation 13 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021; certificates from the secretarial auditor that the schemes have been implemented in accordance with these regulations and in accordance with the resolutions passed by the Members of the Company in the general meetings would be placed before the Members at the ensuing annual general meeting.

Disclosures on schemes, details of options granted, shares allotted upon exercise are enclosed herewith as Annexure D and are available on the website of the Company at www.kirloskarferrous.com

No employee has been granted stock options equal to or exceeding one percent of the issued capital of the Company.

In line with the Indian Accounting Standards (“Ind AS”) 102 on ''Share Based Payments'' issued by the Institute of Chartered Accountants of India (“ICAI”); the Company has computed the cost of equity-settled transactions by using the fair value of the options at the date of the grant and recognized the same as employee compensation cost over the vesting period.

Auditorsa) Statutory Auditor

The Members of the Company at their annual general meeting held on 27 July 2021 have reappointed M/s. Kirtane & Pandit LLP, Chartered Accountants as the Statutory Auditor of the Company to hold office for another term of five years from the conclusion of 30th Annual General Meeting until the conclusion of 35th Annual General Meeting of the Members of the Company.

The statutory auditor has provided a certificate confirming that requirements prescribed under provisions of Section 141 of the Companies Act, 2013 have been fulfilled.

The report given by the statutory auditor on the standalone and consolidated financial statements of the Company for the financial year 2021-2022 forms part of this Annual report. There is no qualification / reservation / adverse remark in the report given by the statutory auditor.

b) Secretarial Audit

Pursuant to provisions of Section 204 of the Companies Act, 2013 and rules thereof; Mr. Mahesh J. Risbud, Practicing Company Secretary has been appointed to conduct the Secretarial Audit of the Company for the financial year 2021-2022. The Secretarial Audit Report issued by him is annexed herewith as Annexure E. There is no qualification / reservation / adverse remark in the Secretarial Audit Report.

Pursuant to the SEBI Circular CIR/CFD/CMD1/27/2019 dated 8 February 2019; Mr. Mahesh J. Risbud, Practicing Company Secretary has also issued the Secretarial Compliance Report for the financial year 2021-2022.

c) Cost Auditor

Pursuant to provisions of Section 148 of the Companies Act, 2013 and rules thereof, the Board of Directors has appointed M/s. Parkhi Limaye and Co, Cost Accountants as the Cost Auditor to conduct the audit of cost records maintained by the Company for the financial year 2021-2022.

The Board of Directors at its meeting held on 17 May 2022 has appointed M/s. Dhananjay V. Joshi & Associates, Cost Accountants to conduct the audit of cost records to be maintained by the Company for the financial year 2022-2023.

Report on Management Discussion and Analysis

Pursuant to provisions of Regulation 34(3) of the SEBI (LODR) Regulations, 2015; the Report on Management Discussion and Analysis forms part of this Annual Report.

Report on Corporate Governance

The Company conforms to norms of the corporate governance as envisaged in the Listing Agreement executed with the stock exchange. Pursuant to provisions of Regulation 34(3) of the SEBI (LODR) Regulations, 2015; the Report on Corporate Governance forms part of this Annual Report.

A certificate from the statutory auditor, regarding compliance with conditions of corporate governance as required pursuant to provisions of the SEBI (LODR) Regulations, 2015 has been annexed to the Report on Corporate Governance.

Business Responsibility Report

Pursuant to provisions of Regulation 34(2)(f) of the SEBI (LODR) Regulations, 2015; the Business Responsibility Report forms part of this Annual Report.

Directors'' Responsibility Statement

Pursuant to provisions of Section 134 of the Companies Act, 2013 in respect of Directors’ Responsibility Statement; the Directors state that :

a) in the preparation of the annual accounts; the applicable accounting standards have been followed and there were no material departures;

b) accounting policies as mentioned in 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 31 March 2022 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 were in place to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

Cautionary Statement

Statements in this report, particularly those which relate to the 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.

Appreciation

The Directors wish to place on record their appreciation towards the contribution of all 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 of Kirloskar Ferrous Industries Limited

Atul Kirloskar

Date : 17 May 2022 Chairman

Place : Pune (DIN : 00007387)


Mar 31, 2019

DIRECTORS'' REPORT TO THE MEMBERS

The Directors have pleasure in presenting 28th Annual Report together with the Audited Annual Accounts for the year ended 31st March, 2019.

I. FINANCIAL PERFORMANCE

The financial results of the Company for the financial year 2018-2019 as compared with the previous year are as follows -

(Rupees in Lakhs)

2018-2019

2017-2018

Total Income

216,468

177,035

Profit before tax

14,671

5,442

Tax Expenses

4,860

1,642

Profit for the year

9,811

3,800

Other comprehensive income for the year

27

(61)

Total comprehensive income for the period

9,838

3,739

Profit brought forward from previous year

27,855

27,508

Dividend paid on equity shares

(1,717)

(2,403)

Tax on above Dividend

(353)

(489)

Interim Dividend paid on equity shares

(1,377)

-

Tax on above Dividend

(283)

-

Profit available for appropriation

33,963

28,355

Transfer to General Reserves

(500)

(500)

Balance carried to Surplus in Statement of Profit and Loss

33,463

27,855

DIVIDEND

Your Directors at their meeting held on 30th January, 2019 declared an interim dividend of 20 percent ('' 1 per equity share) amounting to '' 1,377 Lakhs.

Your Directors have recommended a final dividend of 20 percent (i.e. Re. 1/- per equity share of '' 5 each) for the Financial Year ended 31st March, 2019. Dividend will be recognized as liability when approved by the Members at the forthcoming annual general meeting. Accordingly, the total dividend (inclusive of Interim Dividend declared and paid) for the F.Y 2018-2019 is 40 percent.

II. MANAGEMENT DISCUSSION AND ANALYSIS

A. Economy and Industry Overview Global Economy and outlook:

The global expansion has weakened. Global growth for 2018 is estimated at 3.7 percent, as in the October 2018 World Economic Outlook (WEO) forecast, despite weaker performance in some economies, notably Europe and Asia. The global economy is projected to grow at 3.5 percent in 2019 and 3.6 percent in 2020.

The global growth forecast for 2019 and 2020 had already been revised downward in the last WEO, partly because of the negative effects of tariff increases enacted in the United States and China earlier that year. The further downward revision since October in part reflects carry over from softer momentum in the second half of 2018—including in Germany following the introduction of new automobile fuel emission standards and in Italy where concerns about sovereign and financial risks have weighed on domestic demand—but also weakening financial market sentiment as well as a contraction in Turkey now projected to be deeper than anticipated.

Indian Economy:

The India''s GDP growth for FY 2019 is estimated to be 7 percent and for FY 2020, India is projected to grow at 7.7 percent.

Cumulative value of exports for the period April-March 2018-2019 was US $ 331.02 Billion as against US $ 303.53 Billion during the period April-March 2017-2018, registering a positive growth of 9.06 percent. Cumulative value of imports for the period April-March 2018-2019 was US $ 507.44 Billion, as against US $ 465.58 Billion during the period April-March 2017-2018, registering a positive growth of 8.99 percent.

The overall trade deficit for FY 2018-2019 was estimated at US$ 95.85 billion as compared to US $ 86.05 Billion in the corresponding period last year.

Oil imports in April-March 2018-2019 were at US $ 140.47 Billion which was 29.27 per cent higher than the oil imports of US $ 108.6 Billion over the same period last year.

Rupee opened at a level of '' 65.1200 against US Dollar on 1st April, 2018 and closed at '' 69.0420 as on 29th March, 2019. Rupee experienced some volatility during the year touching high of '' 74.4900 intraday on 11.10.2018.

Sensex which was at 33,030.87 on 2nd April, 2018 closed at 38,672.91 on 29th March, 2019 registering a gain of 14.58 percent for FY 2018-2019.

During the year, Reserve Bank of India (RBI) increased repo rate by 25 basis points twice during the year and in February 2019 reduced rate by 25 basis points.

Steel Industry:

India was the world''s second largest steel producer, as of 2018.

In FY 2018, India produced 104.98 million tonnes (MT) and 103.13 MT of finished steel and crude steel, respectively. Crude steel production between April 2018 to January 2019 reached 87.98 million tonnes.

India was also a net exporter of steel in FY 2018. Exports and imports of finished steel stood at 5.15 MT and 6.55 MT respectively, during April 2018 to January 2019.

Steel consumption is expected to grow 7.5 percent year-on-year to 95.4 MT in 2018. India''s steel production is expected to increase from 103.13 MT in FY 2018 to 128.6 MT by 2021.

The Government has taken various steps to boost the sector including the introduction of National Steel Policy 2017 and allowing 100 per cent Foreign Direct Investment (FDI) in the steel sector under the automatic route.

Iron ore Mines:

The Supreme Court, in April 2013, had directed the Karnataka Government to cancel 51 C-category mining leases for illegal mining.

Out of 51 C category mines, so far 19 mines were put up for auction. Out of 19 mines, 14 mines were auctioned successfully and in respect of 5 mines, there were no bidders hence auction was annulled. Balance of 32 mines has not been put up for auction till end of March 2019.

Presently, the A and B category mines which are completing Mining Lease terms by 2020, the Government has put up 4 mines for e-auction. The C category mines had the restriction for participation for captive usage. However, A and B category mines will not have restrictions of captive use, hence may witness more participation by the bidders.

Iron Ore:

The prices of the iron ore lumps and fines remained range bound throughout the year. Considering the demand for iron ore, Supreme Court increased the mining capacity in Bellary and Chitradurga sector from 30 million ton to 35 million ton per annum.

India''s iron ore imports increased during the second half of the current fiscal owing to the suspension of operations from November 2018 by public sector mining giant NMDC at its Donimalai mines in Ballari district.

NMDC suspended mining at Donimalai after the Karnataka Government imposed an 80 percent premium on sales. With this, an estimated seven million tonnes of iron ore production will come down. This has affected the price of iron ore.

Coal and Coke:

The Coke prices at the beginning of the year was around USD360 per MT and peaked to USD 400 per MT by 3rd quarter and subsequently prices dropped and closed at USD 330 per MT by end of the year.

The Prime Hard Coking Coal prices at the beginning of the year was around USD 210 per MT and peaked to USD 240 per MT by 3rd quarter and subsequently prices dropped and closed at USD 215 per MT by end of the year.

During year the supply of coke and coal was normal except in the 3rd quarter where the coal supplies from Australia got affected due to natural calamities and transportation issues and the supplies got normalized in the 4th quarter.

Auto Industry:

The automobile sector accounts for 7 percent of India''s GDP and 45 percent of manufacturing GDP.

The industry produced a total 30,915,420 vehicles including passenger vehicles, commercial vehicles, three wheelers, two wheelers and quadricycle in April-February 2019 as against 29,094,447 in April-February 2018, registering a growth of 6.26 percent over the same period last year.

The overall Commercial Vehicles (CV) segment registered a growth of 17.55 percent in April-February 2019 as compared to the same period last year. Medium & Heavy Commercial Vehicles (M&HCVs) increased by 14.66 percent and Light Commercial Vehicles grew by 19.46 percent in April-February 2019 over the same period last year.

The CV sector registered a healthy growth till October 2018, due to pick up in construction and mining activities and increased inter-state movement of goods, with the streamlining of e-commerce and FMCG post GST implementation. After registering growth, the domestic CV sector has sharp contraction in sales of M&HCV (Truck) as well as slowdown in growth momentum in case of LCV (Trucks). The adverse impact of tightening financing environment arising from liquidity crisis at Non-Banking Financial Corporations (NBFCs), viability pressure because of higher fuel cost and weak freight rates and revision in axle load norms, and high insurance cost have collectively impacted CV demand.

Auto Industry outlook:

Ratings agency has maintained a stable outlook on the auto sector, anticipating improving sales in the sector during the next fiscal over expectations of better liquidity in non-bank financial companies. The ''stable'' outlook comes despite subdued sales numbers in the last couple of months.

Commercial vehicle companies are likely to post strong volume growth owing to prebuying happening due to a change in emission norms from BSIV to BSVI from April 2020. The implementation of the scrappage policy is also on the cards, which can spur additional demand for approximately 250,000 vehicles to the market. Additionally, an expected drop in fuel price should improve profitability of fleet operators, spurring demand for construction vehicles for road infrastructure activities. Considering these factors, it is expected that the CV industry to register a new peak of 11 percent over FY18-20.

Future of Indian Automotive Industry will remain in the robust growth horizon over the next decade with the volume growth in the region of around 15 percent a year, recording a CAGR of over 12 percent.

Tractor industry :

The growth for tractor industry for FY 2019 is expected to be 10-12 percent approximately 8 Lakhs unit compared to 7.11 lakh units in FY 2017-2018 continuing the growth momentum over the past two financial years.

Steps taken by the Government to enhance farmers'' income as the primary growth drivers. The Union Government''s initiatives towards enhancing farmers'' incomes, in addition to schemes aimed at improving irrigation and insurance coverage and the MSP (Minimum Support Price) hikes have been better than previous years. Loan waiver announced in three states is likely to boost sales.

Tractor industry Outlook:

Supplementation of tractor usage with non-agri operations like haulage for construction activities as infrastructure development picks up steam pan-India, coupled with easy financing options, and various Government support programmes will give a boost to the domestic tractor market.

The long term tractor industry CAGR from fiscal 2018 to fiscal 2023 is expected to be 7 to 9 percent. The forecast also takes into account possibility of 1-2 deficient rainfall years during this period.

Governments renewed thrust towards improving the rural economy, via measures such as doubling farm income by 2022, increasing spend towards irrigation, and improving crop productivity by distributing soil health cards is expected to drive growth in the long term. This will also be supported by other measures like the e-NAM (National Agriculture Market), expanding crop insurance, and gradual spread of Custom Hiring centres. With growth in rural wages also decelerating, and increasing mechanization on farm fields, this bodes well for structural tractor demand growth.

Cost of tractors in India is the cheapest in world. The cost of a finished tractor in India is as much as the cost of gear box in developed countries. Hence there exists tremendous scope for exports.

Crude oil prices:

Oil prices have been volatile due to swings in supply. On 10th May, 2018, prices rose to a record of $80 per barrel.

Crude oil prices have been volatile since August, reflecting supply influences, including US policy on Iranian oil exports and, more recently, fears of softening global demand. As of early January, crude oil prices stood at around $55 a barrel, and markets expected prices to remain broadly at that level over the next 4-5 years.

B. Company Performance

Your Company achieved net sales of Rs, 215,915 Lakhs (previous year Rs, 176,519 Lakhs).

The profit before tax for the year under review stood at Rs, 14,671 Lakhs as compared to Rs, 5,442 Lakhs of the previous year after providing for depreciation and amortization.

C. Operational Performance

Your Company sold 358,557 MT of pig iron valued at Rs, 117,572 Lakhs during FY 2018-2019 as compared to 306,303 MT of pig iron valued at Rs, 91,602 Lakhs in the previous year.

Pig iron business showed recovery in respect of margins with the improvement of pig iron selling price and a small reduction in raw material cost.

Your Company sold 97,268 MT castings aggregating to Rs, 92,311 Lakhs during FY 2018-2019 as compared to 82,922 MT castings aggregating to Rs, 72,126 Lakhs in the previous year.

There was a good demand for castings for both from tractor and automobile industry throughout the year except for the last quarter of the year, which witnessed marginal reduction for the demand for the casting. During the year under review, the casting gross sales crossed one lakh ton casting. The increase in demand for castings has come from new customers as well as from existing customers.

There was reduction in power consumption / cost during the year:

1) in Koppal plant arising out of generation of power using blast furnace gas and with the revamping of turbo generators.

2) owing to the commissioning of 10 MW AC (11 MW DC) Solar power plant at Solapur.

During the year under review, rupee has been generally operating in the range as high as '' 74.49 and low as '' 64.85 to a dollar, giving mixed results for the price paid on the import of coke and coal.

The Company has been able to strategically reduce financing cost of working capital by availing facility at very competitive rates during the year under review.

Your Company has completed the following projects during the year under review:

1) Railway siding at its plant at Koppal. However, clearance from Railway for commerical operations is awaited. This project will facilitate inward movement of raw materials and outward movement of pig iron resulting in reduction in cost of transportation and handling losses.

2) Installed and commissioned 10 MW AC (11 MW DC) solar power plant at Solapur in October

2018. This has resulted in reduction of power cost of the foundry at Solapur.

3) Acquired following two mines by participating in the mines auction in Karnataka

1. M/s. Bharath Mines & Minerals

2. Sri. M Channakesava Reddy (M/s. Sri Lakshmi Narasimha Mining Co)

This will facilitate in the reduction of Iron ore cost and having its own source of raw material.

4) 3D printing facility installed at Koppal Plant has resulted in the reduction of cycle time of development of castings. This will help to increase more orders for castings business.

5) Improvement in Turbo Generator capacity utilization with Mini blast furnace up gradation.

Your Company has undertaken the following projects during the year under review:

1) Company is working on more value added products to secure increased orders for machined castings from its customers by setting proper machining facilities with appropriate machines.

2) Installed mechanized fettling facilities for superior casting finish both at Koppal and Solapur Plant.

3) Commenced the project activity for 2 lakh ton Coke Oven plant and 20 MW Power Plant and the progress so far is satisfactory and project work is progressing as per time line and expected to be commissioned in the quarter IV of FY 2019-2020.

Details of significant changes, (i.e., change of 25 percent or more, as compared to the immediately previous Financial Year) in key financial ratio, along with detailed explanation therefor:

Sr.

No.

Particulars

Ratio as on 31st March, 2019

Ratio as on 31st March, 2018

% Change

Explanations, if any

i.

Debtors'' Turnover

6.42

7.03

(9%)

Not Applicable

ii.

Inventory Turnover

5.83

6.78

(14%)

Not Applicable

iii.

Interest Coverage Ratio

10.19

6.06

68%

Refer Note 1

iv.

Current Ratio

1.11

1.05

6%

Not Applicable

v.

Debt Equity Ratio

0.17

0.12

43%

Refer Note 2

vi.

Operating Profit Margin (%)

12.23

8.71

40%

Refer Note 1

vii.

Net Profit Margin (%)

4.53

2.15

111%

Refer Note 1

Details of change in Return on Net Worth as compared to the immediately previous Financial Year as follows:

Sr.

No.

Particulars

Ratio as on 31st March, 2019

Ratio as on 31st March, 2018

% Change

Explanations

1

Net worth

14.95

6.31

137%

Refer Note 1

Notes:

1. Pig Iron sales have increased by 28 percent and Castings sales by 28 percent as compared to previous year. The material consumption, including stores spares consumption has decreased to 72.3 percent in current year compared to 74.5 percent in previous year.

2. Debt Equity ratio has increased on account of Term Loan Borrowings for Solar and Coke oven plant obtained during the year.

D. Cost Control

Your Company adopted the following measures to reduce cost:

- Strategically sourced 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.

- Improved the quality of the castings to bring down the rejections in castings.

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.

Fluctuation in the price of raw material such as coke and coal and shortage of quality iron ore supply in domestic market will have impact on production and consequently on profit.

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.

Switch to Electronic Vehicles from Internal Combustion engines in long run.

F. Prospects for the Current Year

1. Company proposes to participate again in e-auction of further iron ore mines in Karnataka as and when the State Government invites the tender for participation in the same to further increase the availability of iron ore from its own source.

2. Supply more machined castings to increase value of sales. Machine shops will be commissioned progressively in a phased manner based on order positions.

3. Setting up pulvarised coal injection to one mini blast furnace to affect cost reduction in input cost of raw materials namely coke.

4. Installation and commissioning of 2 lakh ton capacity coke oven plant and 20 MW power plant. This will further help in reducing the cost of raw material as well as reducing the power cost.

5. More usage of concentrated iron ore in sinter plant to reduce input cost of materials.

6. To install two core centers at Koppal plant and Solapur plant to increase the production of water jacket blocks in cold box for higher productivity and cleaner castings.

7. Expansion of fettling shop both in Koppal and Solapur foundry for higher productivity and better quality, reliability using snag grinding machines and robotic grinding / fettling shop.

8. Exploring the possibility of installing additional 5 MW solar power plant at Solapur to further reduce the power cost of the foundry at Solapur and this will facilitate in meeting almost entire power requirement of the foundry.

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 by emphasizing safety culture in the organization. Employees are regularly trained to update their awareness and skills. New employees are being given intensive safety induction training and on job training. On completion, "Safety Passport" related to their work area is issued authorizing the person to enter the plant / department. All the statutory requirements related to safety, health and environment are being complied with. As a proactive approach, the periodical safety audit (internal), cross functional safety audit, external audits are conducted by safety experts to enhance safety performance.

National Safety Council and other agencies engaged to identify unsafe conditions / unsafe acts if any and to recommend remedial safety measures / actions. Safety Performance Management System developed through Hazard Identification and Risk assessment (HIRA); Safe Operating Procedures (SOP) were developed emphasizing on engineering controls. Reporting of "Near Miss cases" and "First Aid Injuries" are being practiced to take corrective and preventive action to achieve the goal of zero accidents.

Polices are developed and implemented viz., safety observation and hazard elimination policy, Safety cardinal rules, mission accident free quarter, safety violation penalty policy, Injury On Work (IOW) policy etc.,

Company is having well equipped "Occupational Health Centre" with a full-time Doctor and qualified paramedical staffs. The pre-employment health check-up of the employees are being conducted and also regular health checkups conducted on annual basis during the continuance of the employment. The Company has provided well equipped two ambulances which are available at all times to fulfill the requirement of emergencies of employees as well as for the neighboring community. Tractor mounted water tanker with capacity of 5.0 KL has been provided round the clock in the plant premises attached to security department to tackle unexpected fire incidents.

Company is certified for Quality Management Systems under IATF 16949:2016, Environmental Management System under ISO 14001:2015 and also certified for Occupational Health and Safety Assessment Series (OHSAS 18001:2007) by Indian Register Quality Systems (IRQS). OHSAS system is in the process of up-gradation.

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 wastewater with extended biological aeration system. Sludge generated from STP is being used as manure for garden and treated wastewater is used for plantation development.

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 FY2018-19 at its plant at Koppal.

1. Dust extraction system is being installed at DK6 casting unloading area.

2. As a part of environmental improvement project, the existing 376 meters of porous fence (mesh) of 12 meters height has been extended by another 80 meters in northern boundary to prevent the fugitive dust emission.

3. Construction of around 130 meters of concrete roads near cooling water tank to MBF1 to prevent dust emission due to vehicular movement; till date total of 1,951 meters concrete road has been completed.

4. Ambient Air Monitoring Quality System (AAMQS) has been connected to Central Pollution Control Board as per the KSPCB requirement.

5. Plantation of around 5,000 tree saplings during the year in and around the plant premises to increase the green belt area.

I. Social Responsibility

In order to align the Mission and Values of your organization viz. "To be a preferred Employer and responsible neighbour", your Company has taken following measures as a part of its Corporate Social Responsibility. The Company focuses on Rural Education, Health and Hygiene, Infrastructure, Environment, facilities in the local vicinity of the plant. Major activities undertaken during the year are as follows:

Rural Education

- 2,300 school bags and 2,500 note books were distributed among school children of neighboring Government Schools.

- Financial assistance was given to Government Higher Primary School of Bevinahalli for providing educational tour for children.

- Provided 50 writing desks and benches to Government Higher Primary School Koppal.

- Financial assistance given to Koppal District Administration, for awareness program on Child marriage prevention.

- Scholarship provided to the students of neighboring villages who scored 80 percent and above in SSLC and PUC examination.

- Financial assistance for an Educational Trust at Koppal for construction of ''Samudaya Bhavan''.

Health and Hygiene

- Implemented Kirloskar WaSH initiative at Koppal and Solapur (clean and Beautiful School). Koppal Plant covered 54 schools and 13,000 students were benefitted while Solapur Plant covered 8 schools and 4,800 students were benefitted.

- Organized ''Free Cancer Screening Camp'' in association with Indian Cancer Society, Bangalore at Koppal. 223 people were screened and one person was detected positive. Further, Company has supported for higher medical treatment and the patient is recovering.

- Engaged a General Physician doctor once in a week and Pediatrician every 1st Saturday of month to Bevinahalli village and also the Company Medical Officer visit twice a week. The Company is providing free medicines.

- Support towards pulse polio programme.

- Company Ambulance facility has been extended to the neighboring village in case of emergency.

- Conducted ''Blood Donation Camp'' in association with Indian Red Cross Society, Koppal. 150 employees donated blood.

- Financial support is given for higher medical treatment for deprived villagers. Infrastructure

- Constructed 300 meters long storm water drain at Bevinahalli village.

- Provided RO Water units at Government Higher Primary School, Hosahalli and Bevinahalli.

- Provided drinking water stations (RO water) at Gavisiddeshwara Car festival at Koppal for

10 days.

- Provided 100 Beds to Government Hospital, Hosapete.

Community Development

- Bevinahalli village is being developed as a Model Village in Koppal Taluk, by 2021.

The Company supports the following activities undertaken at Bevinahalli village:

- Primary Information Centre.

- Garment Tailoring Training.

- Beautician training for ladies.

- Food processing and marketing.

- Organic farming.

- Waste Management.

Environment

- Provided tree guards at schools and Gram Panchayat at Bhagyanagar, Koppal.

- Kirloskar - Vasundhara International Film Festival (KVIFF) was organized both at Koppal and Solapur in order to bring awareness among people to take care of the environment under the theme "Prevent Pollution, Protect Rivers". Screening of films at schools and colleges, conducted various competitions on environment, enacted Street Play''s, Cycle Jatha at Hosapete were organized.

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-

- To develop future leaders, Company organized Management Development Programmes (MDP) on various topics. The training program was also organized for Senior Leadership team.

- Training programmes on behavioral and technical skills were organized on a continuous basis by engaging internal and external faculties to enhance competencies and skills of employees.

- For developing leadership pipeline, an external agency was entrusted to identify competence of fast trackers through Development Center (DC), one to one feedback that led to Individual Development Plan (IDP) and subsequent interventions.

- To enhance safety culture "Behavioral Based Safety" training programmes were conducted.

- Training Programme on ''Structured Problem Solving Technique'' was organized.

- Performance of employees is monitored through an effective performance management system on quarterly basis.

- Communication meet by top management with managerial staff on the ''Business Scenario'' and Annual Operating Plan / Long Range Plan, as well as sharing knowledge with young professionals through staff dialogues was organized.

- The talented employees are continuously recognized and are motivated through rewards and recognitions.

- Conducted skill development programmes for apprentices / trainees as per their trade.

- Initiated monthly ''Swachh Abhiyan'' at Company premises to eliminate waste and to keep the area clean and aesthetic for better working atmosphere.

- Training Programme on ''Life Management'' and ''Stress Management'' was organized by external faculties.

- Training programme on ''5''S and TPM were organized on a regular basis.

- Engaged a human development consultant to conduct HR diagnostic and submit a detailed report, which are being implemented in a phased manner.

As on 31st March, 2019, the total number of salaried employees stood at 1,371.

The Employer - Employee relations was cordial throughout the year.

Recognition / Awards received by the Company during the year under review:

- Best Business Partner" Award from M&M Tractor Division, 2018.

- Best Delivery Performance" Award from TAFE, 2018.

- MSES "B" Level certification Award from M&M Ltd., 2018.

- Faster component Development" Award from SONALIKA, 2018.

- Our State, Our Organization" Award in large industry category, Second State Level HR Professional Kannada Conference 2018.

- "5S EXCELLENCE" Award from IIF - JAN"19.

- IIF - Jayaswal Neco Quality Award - 1st in India.

- M&M - "Sustainable Performance Award.

- Mahindra Supplier Excellence Award - Business Partner of 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. ANNUAL RETURN

The details forming part of the Extract of the Annual Return in form MGT-9 are annexed herewith as Annexure ''A''.

The Annual Return filed with the Registrar of Companies (ROC) for the financial year 2017-2018 is available at the website of the Company viz. www.kfil.com and the Annual Return for the financial year 2018-2019 will be made available on the website once it is filed with ROC.

2. NUMBER OF MEETINGS OF THE BOARD

During the financial year 2018-2019 five 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, 2019, 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, 2019 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 Regulation 16 (1) (b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and also confirmed that they have complied with the Code for Independent Directors prescribed in Schedule IV of the Companies Act, 2013.

The Company has laid down a Code for the Board of Directors and Senior Management of the Company. The said Code is available on the website of the Company viz., www.kfil.com

All the Board Members and Senior Management Personnel of the Company have affirmed compliance with the Code of Conduct.

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 available on the website of the Company, viz. www.kfil.com

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 '' 22,927,000 during the year ended 31st March,

2019. 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, 2019 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 "B".

13. RISK MANAGEMENT POLICY

The process of risk management at Company encompasses risk identification, classification and evaluation. The Company identifies strategic, operational and financial risks that the Company faces. The Company deploys mitigation activities and plans for current and future risks that the Company may face.

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 risk management framework in the Company.

The Directors have reviewed progress on the risk management activities in the current year.

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 "C".

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.

Upon recommendation of the Nomination and Remuneration Committee, the Board of Directors has recommended re-appointment of Mrs. Nalini Venkatesh, Mr. R. Sampathkumar and Mr. B. S. Govind as Independent Directors of the Company to hold office for second term as per details given below, pursuant to provisions of Section 149 of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 :

Name of the Director

Term of

Up to

Mrs. Nalini Venkatesh

5 consecutive years

12th August, 2024

Mr. R. Sampathkumar

3 consecutive years

12th August, 2022

Mr. B. S. Govind

1 year

12th August, 2020

The resolutions seeking approval of the Members by special resolution for re-appointment of Independent Directors have been incorporated in the Notice of Annual General Meeting.

Directors / Key Managerial Personnel (KMP) appointed during the FY 2018-2019

The Members at their Annual General Meeting held on 25th July, 2018 have re-appointed Mr. R. V. Gumaste as the Managing Director of the Company for a period of 5 years with effect from 1st July, 2018. He is also Key Managerial Person (KMP).

The Members at their Annual General Meeting held on 25th July, 2018 have also re-appointed Mr. A. R. Jamenis as Independent Director to hold office for a second term of two consecutive years up to 12th August, 2020.

There was no change in other Key Managerial Personnel during the FY 2018-2019.

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.

1 9. DEPOSI TS

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 deployed controls including defined code of conduct, whistle blower policy, management review and MIS mechanisms, internal audit mechanism. The process level controls have been instituted through Company policies and procedures and continuous monitoring of efficiency in operations.

There is regular management oversight of the internal controls environment at Company. The Audit Committee along with Management oversees results of the internal audit and reviews implementation on a periodic basis.

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

Sr.

No.

Information Required

Input

1

The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year

Please refer Annexure ''D-1''

2

The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year;

Please refer Annexure ''D-2''

3

The percentage increase in the median remuneration of employees in the financial year

12.18 percent

4

The number of permanent employees on the rolls of Company

1,371

5

Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration

Percentage increase in salaries of managerial personnel at 50th percentile: 25.71 percent

Percentage increase in salaries of Non-managerial personnel at 50th percentile: 5.57 percent

(Note: Percentage increase in salaries of Non-managerial personnel is in the range 1 percent to 71 percent).

The salary increases are a function of various factors like individual performance vis-a-vis individual Key Peformance Indicators (KPIs), industry trends, economic situation, future growth prospects, etc. besides Company performance. There are no exceptional circumstances for increase in the managerial remuneration.

6

Affirmation that the remuneration is as per the remuneration policy of the company.

The remuneration paid to the Directors is as per the Remuneration policy of the Company.

Sr.

No.

Information Required

Input

7

Statement showing the names of the top ten employees in terms of remuneration drawn and the name of every employee, who-

(i) if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than one crore and two 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 eight lakh and fifty thousand 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.

Please refer Annexure ''E''

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 behaviour, actual or suspected fraud or violation of the Code of Conduct of the Company or leakage of Unpublished Price Sensitive Information (UPSI), by any person, who is in possession of UPSI, to any other person in any manner whatsoever, except as otherwise permitted under the SEBI (Prohibition of Insider Trading) Regulations or any other instance.

The details of the policy have 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. EMPLOYEE STOCK OPTIONS SCHEME (ESOS):

Your Company has instituted a stock option plan in order to motivate, incentivize and reward employees. This plan is called KFIL Employee Stock Option Scheme 2017 (hereinafter referred as ''KFIL ESOS 2017'' or ''Scheme''). Your Company views employee stock options as an instrument that would enable the employees to share the value they create for the Company and align individual objectives of the employees with the objectives of the Company. The Board of Directors of your Company and the Nomination and Remuneration Committee of the Company are authorized to administer the said scheme pursuant to the provisions of the Scheme.

The Nomination and Remuneration Committee at its meeting held on 30th October, 2018, approved the grant of 120,000 stock options exercisable into 120,000 Equity Shares of the Company pursuant to the approval of the shareholders received at the Annual General Meeting held on 3rd August, 2017. KFIL ESOS 2017 is in compliance with the applicable provisions of the Companies Act, 2013 and its rules, Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 ("Employee Benefits Regulations") and other applicable regulations, if any.

The certificate from M/s. Kirtane & Pandit LLP, Chartered Accountants, Statutory Auditors of the Company, confirming that the scheme has been implemented in accordance with the aforesaid regulations and in accordance with the resolution passed by the Company at its Annual General Meeting held on 3rd August, 2017, would be placed before the shareholders at the ensuing Annual General Meeting. A copy of the same will also be available for inspection at the Company''s registered office.

There have been no material changes to the KFIL ESOS 2017 during the financial year. The Disclosures on the plan, details of options granted, shares allotted upon exercise etc. as required under Employee Benefits Regulations are enclosed herewith as Annexure No. ''G'' and the same is included in the annual report uploaded on the Company''s website at www.kfil.com.

No employee has been granted stock options equal to or exceeding 1% of the issued capital of your Company (excluding convertible shares and warrants).

In line with the Indian Accounting Standards ("Ind AS") 102 on ''Share Based Payments'' issued by the Institute of Chartered Accountants of India ("ICAI"), your Company has computed the cost of equity-settled transactions by using the fair value of the options at the date of the grant and recognized the same as employee compensation cost over the vesting period.

VII. AUDITORS

1. Statutory Auditors

At the 25th Annual General Meeting held on 28th July, 2016, M/s. Kirtane & Pandit LLP, Chartered Accountants [Firm Registration No.: 105215W/W100057], were appointed as Statutory Auditors of the Company to hold office till the conclusion of the 30th Annual General Meeting to be held in the year 2021.

The Company has received a certificate from the Auditors to the effect that they are fulfilling requirements prescribed under provisions of Section 141 of 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. Mahesh J. Risbud, Practicing Company Secretary to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as Annexure "F".

Mr. Mahesh J. Risbud, Practicing Company Secretary has also submitted Secretarial Compliance Report as laid down in SEBI Circular CIR/CFD/CMD1/27/2019 dated 8th February 2019 and has also confirmed that the Company has complied with of all applicable SEBI Regulations and circulars / guidelines issued thereunder, for the Financial Year 2018-2019.

3. Cost Auditor

The Board of Directors at its meeting held on 3rd May, 2019 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,2020.

The Central Government has specified maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013 and such accounts and records are maintained by the Company.

VIII. 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.

IX. SECRETARIAL STANDARDS

During the year under review, the Company has complied with Secretarial Standards issued by The Institute of Company Secretaries of India and approved by the Central Government under Section 118(10) of the Companies Act, 2013.

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

The Company has in place a Policy for Prevention of Sexual Harassment at workplace. This would, inter alia, provide a mechanism for the resolution, settlements or prosecution of acts or instances of sexual harassment at workplace and to ensure that all employees are treated with respect and dignity. There were no complaints / cases filed / pending with the Company during the year under review.

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

XI. 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 : 3rd May, 2019 DIN : 00007387


Mar 31, 2018

DIRECTORS'' REPORT TO THE MEMBERS

The Directors have pleasure in presenting 27th Annual Report together with the Audited Annual Accounts for the year ended 31st March, 2018.

I. FINANCIAL PERFORMANCE

The financial results of the Company for the financial year 2017-2018 as compared with the previous year are as follows -

(Rupees in Lakhs)

2017-2018

2016-2017

Total Income

172,903

128,210

Profit before tax

5,442

12,109

Tax Expenses

1,642

3,326

Profit for the year

3,800

8,783

Other comprehensive income for the year

(61)

25

Total comprehensive income for the period

3,739

8,808

Profit brought forward from previous year

27,508

19,200

Dividend paid on equity shares for the FY 2016-2017

(2,403)

-

Tax on above Dividend for the FY 2016-2017

(489)

-

Profit available for appropriation

28,355

28,008

Transfer to General Reserves

500

500

Balance carried to Surplus in Statement of Profit and Loss

27,855

27,508

DIVIDEND

For the year under review, your Directors have recommended a dividend of 25 percent (Rs,1.25 per equity share). Dividend will be recognized as liability when approved by the members at the forthcoming Annual General Meeting as per new accounting standard.

II. MANAGEMENT DISCUSSION AND ANALYSIS

A. Economy and Industry Overview

Global Economy and outlook:

The world economy has strengthened as lingering fragilities related to the global financial crisis subside. In 2017, global economic growth reached 3 percent, the highest growth rate since 2011. The improved global economic situation provides an opportunity for countries to focus policy towards longer-term issues such as low carbon economic growth, reducing inequalities, economic diversification and eliminating deep-rooted barriers that hinder development.

The World Bank has forecast a growth of 3.1 percent this year based on broad-based recovery was underway across the world. The forecast was 0.2 percentage point higher than its earlier projections.

Indian Economy:

During the first Quarter, April to June 2017, GDP growth of India fell to 5.7 percent - its lowest growth in three years. Two major decisions on economic policy had a severe impact on 2017. First was the demonetisation in November 2016 and second related to the implementation of Goods and Service Tax (GST). GST implementation resulted in many business entities slowing down their business in June 2017 to minimise the stocks and inventories as on 1st July, 2017.

However, in the second quarter, the GST growth made a sharp rebound to 6.3 percent, although the agricultural growth remained mute. Overall growth for financial year is expected to be around 6.60 percent per annum.

The trade deficit for FY 2017-2018 was estimated at US$ 87.17 billion as compared to US$47.70 billion in the corresponding period last year. Oil imports during FY 2017-2018 were valued at US$ 109.11 billion which was 25.47 percent higher than the oil imports of US$ 86.96 billion in the corresponding period last year.

Foreign exchange reserves in India stood at US$ 424.361 billion at the end of 30th March, 2018.

India is projected to grow at 7.5 percent in 2018-2019 largely on the back of strong domestic factors and policy initiatives.

Rupee opened at a level of Rs, 64.7483 against US Dollar on 3rd April, 2017 and closed at Rs,65.1700 as on 28th March, 2018. Rupee experienced some volatility in December 2017 and also after announcement of long term capital tax in the budget.

Sensex which was at 29,737.73 on 3rd April, 2017 closed at 32,968.68 on 28th March, 2018 registering a gain of 10.86 percent for FY 2017-2018. After opening on a strong footing on optimistic buying by participants, the Sensex gathered momentum to touch an all-time high of 36,443.98 during the year.

Steel Industry:

India was the world’s third-largest steel producer in 2017. The growth in the Indian steel sector has been driven by domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to India’s manufacturing output.

The Indian steel industry is very modern with state-of-the-art steel mills. It has always strived for continuous modernisation and up-gradation of older plants and higher energy efficiency levels.

India’s crude steel production for FY 2017-2018 grew to 102.243 million tonnes as compared to 97.385 million tonnes up by 5 percent on year to year basis.

Steel industry and its associated mining and metallurgy sectors have seen a number of major investments and developments in the recent past.

Iron ore Mines:

The Supreme Court, in April 2013, had directed the Karnataka Government to cancel 51 C-category mining leases for illegal mining.

On 13th September, 2017, the Supreme Court had allowed the Karnataka Government to organise an e-auction for the ''C'' category of mines that are economically viable. 7 of 51 ''C'' category mines have been auctioned so far.

The Supreme Court (SC), on 14th December, 2017 increased the cap on the production of iron ore from 30 million tonnes per annum to 35 million tonnes per annum for the ‘A’ and ‘B’ category mines in Karnataka.

As per the recommendations of CEC, overall cap in Karnataka for A and B category mines increased to 35 mmtpa. As far as C-category mines are concerned, the SC, after considering the submissions that C-category mines may become operational only after 18 months and many A and B mines will expire around 2020, has refused to grant any separate allocation for C-category mines at this stage.

Further, State Government has issued the Notification inviting Tender for 8 iron ore mines on 30th January, 2018. As per the Corrigendum issued by the Government of Karnataka, the auction for the iron ore mines has been postponed to a later date. Your Company will participate in the auction to secure a mine which have good quality iron ore and available at economically reasonable prices.

Coke :

Coke prices have been largely volatile during the year and have been hovering around CIF US$ 400 per MT during the greater part of the year. This has been due to closure of coke oven plants in China arising from pollution concerns and also due to disruption of supply of coal from Australia due to cyclone Debbie and congestion at port.

Auto Industry:

The Indian auto industry is one of the largest in the world. The industry accounts for 7.1 percent of the country''s Gross Domestic Product (GDP).

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) in the sector.

The Indian automotive industry produced a total of 29,075,605 vehicles including the passenger vehicles, commercial vehicles, three-wheeler, two-wheeler in FY 2017-2018 as against 25,330,967 in FY 2016-2017, registering a growth of 14.78 percent over the same period last year. The overall industry registered positive sales figures in the period.

The commercial vehicle segment grew by 19.94 percent in FY 2017-2018 as compared to the same period last year. The Medium and Heavy Commercial Vehicles (M&HCV) grew by 12.48 percent and light commercial vehicles grew by 25.42 percent in FY 2017-2018 over the same period last year. The commercial vehicles sector has bounced back strongly after setbacks from demonetization and the BS-IV transition in 2017.

Auto Industry outlook:

The automobile industry is supported by various factors such as availability of skilled labour at low cost, robust R and D centres and low cost steel production. The industry also provides great opportunities for investment and direct and indirect employment to skilled and unskilled labour.

The Indian automotive aftermarket is estimated to grow at around 10-15 percent to reach US$ 16.5 billion by 2021. It has the potential to generate revenue, create additional jobs and contribute over 12 percent to India’s Gross Domestic Product.

The Government of India encourages foreign investment in the automobile sector and allows 100 percent FDI under the automatic route. Some of the recent initiatives taken by the Government of India are -

- The Ministry of Heavy Industries, Government of India has shortlisted 11 cities in the country for introduction of electric vehicles (EVs) in their public transport systems under the FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India) scheme.

- The Government is planning to set up a committee to develop an institutional framework on large-scale adoption of electric vehicles in India as a viable clean energy mode, especially for shared mass transport, to help bring down pollution level in major cities.

A cyclical recovery in the global economy with the world growth projected over 3 percent in 2018, bank recapitalization, rural revival, will also give a fillip to the auto sector.

Overall, 2018-2019 is expected to bring positive sentiments back into the market and rev up overall vehicle sales.

The drivers for the replacement demand in the CV segment, especially in higher tonnage categories, are i) warehouse consolidation post the goods and service tax (GST) implementation, ii) the likelihood of an announcement of the vehicle scrappage policy and iii) the possibility of overloading bans in certain states. Moreover, the Government of India’s emphasis on infrastructure development would drive demand for higher tonnage vehicles.

The automobile and auto-ancillary industry is equipping itself to adopt the Bharat Stage (BS-VI) fuel emission norms, proposed to be implemented from 1st April, 2020.

Tractor industry :

Tractor sales in India reached a record high in 2017 as farmer sentiment improved with the return of generous rains. The withdrawal of large-denomination banknotes from circulation hit villages through the start of 2017. But after that shock, the demand for tractors continued steady growth and the tractor industry has recorded growth of 22 percent with total volumes sales of 7.11 lakh units tractors in FY 2017-2018 as compared to 5.83 lakh units in FY 2016-2017.

A good monsoon, reduction in bank interest cost, healthy farm production and increasing use of tractors for non-farm applications, farm loan waivers by several States have aided the growth in tractor sales.

Tractor industry Outlook:

The all-time high volumes, would be riding on improved farm sentiments on the back of two consecutive normal south-west monsoons. Long-term annual growth for the Industry estimated at 8 to 9 percent, with the long-term industry drivers for the industry continue to remain intact.

The Government remains committed towards rural development and agri-mechanisation, a critical component in improving the state of agriculture in the country. This coupled with other factors such as increasing rural wages and scarcity of farm labour is likely to aid growth in industry volumes over the long term.

However, the growth rate of tractor industry could moderate in FY 2019, primarily due to the strong base built over the last two years (FY 2017 and FY 2018), along with uncertainty over rainfall.

Demand for tractors from non-agricultural sectors, especially of higher tonnage in construction and infrastructure is likely to grow.

Crude oil prices:

Prices of Brent crude oil rose 18 percent in 2017 to $67.02 per barrel in December 2017, a 30-month high. Higher oil prices are likely to widen the fiscal and current account deficits.

B. Company Performance

Your Company achieved net sales of '' 172,387 Lakhs (previous year '' 127,676 Lakhs).

The profit before tax for the year under review stood at '' 5,442 Lakhs as compared to '' 12,109 Lakhs of the previous year after providing for depreciation and amortisation.

C. Operational Performance

Your Company sold 306,303 MT of pig iron valued at '' 87,687 Lakhs during FY 2017-2018 as compared to 253,495 MT of pig iron valued at '' 66,548 Lakhs in the previous year.

Your Company sold 82,922 MT castings aggregating to '' 71,909 Lakhs during FY 2017-2018 as compared to 65,892 MT castings aggregating to '' 58,295 Lakhs in the previous year.

The first quarter of the year under review was a challenging one on many fronts. Commodity prices namely pig iron decreased substantially and this created huge swing in profitability. Coke price were as low as US$ 117 Per MT during Quarter 1 of FY 2016-2017, whereas during quarter 1 of the financial year 2017-2018 price of coke had risen to a level of US$ 322 Per MT. Iron ore prices also went up by '' 1,000 Per MT. This resulted in an increase in input cost without much increase in selling price resulting in erosion of profit. In addition there was a delay in passing on the cost increases to certain OEMs resulting in pressure on the margin.

However from second quarter onwards situation changed with the Company importing coal and getting the same converted to coke by entering into arrangement with certain domestic coke manufacturers. With above arrangements your Company has been able to mitigate coke price variation challenge.

The prices of imported Coke from China reached a level of around $ 400 per MT and Iron ore fines rose to a level of '' 3,537 per MT during the year under review.

Even though there has been an increase in mining activity, output of iron ore has not been matching with demand. Shortfall in iron ore has resulted in increase in iron ore prices. However, Company has been able to reduce iron ore cost through procurement of iron ore from beneficiation plants and also procuring certain quantity of iron ore from Goa.

During the year under review, the operation of one mini blast furnace was suspended temporarily from 12th July, 2017 to 15th August, 2017 owing to market condition. This resulted in lower output of pig iron production and consequently affected the profit.

There has been an increase in demand for castings from OEMs in line with growth in automobile and tractor industries. Also Company has started the supply of machined castings in small way, which is expected to pick up on a larger scale with the installation of more machine shops. This will facilitate improvement in top line and is also a step towards becoming a preferred customer for the supply of castings to OEMs.

During the year under review, rupee has been generally operating in the range as high as Rs, 65.75 and low as Rs, 63.30 to a dollar, giving mix results for the price paid on the import of coke and coal.

The Company has been able to strategically reduce financing cost of working capital by availing facility at very competitive rates during the year under review.

Your Company has undertaken the following projects during the year under review:

1) Company is working on more value added products to secure increased orders for machined castings from its customers by setting proper machining facilities with appropriate machines. Machine shops will be commissioned progressively in a phased manner based on order positions.

2) Installed fettling facilities for superior casting finish at Solapur Plant.

3) Railway siding project is expected to be completed in FY 2018-2019. Completion of this project will facilitate inward movement of raw materials and outward movement of pig iron resulting in reduction in cost of transportation and handling losses.

4) 11 MW solar power plant at Solapur under installation is expected to reduce the power cost of the foundry at Solapur and will meet entire power requirement of the foundry.

5) Finalised the supplier for the equipment supply for coke oven project with a capacity of two lakh ton per annum. Company is in discussions with an equipment supplier for procurement and installation of 20 MW power plant. The project is expected to be completed in FY 2019-2020.

D. Cost Control

Your Company adopted the following measures to reduce cost:

- Strategically sourced 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.

- Improved the quality of the castings to bring down the rejections in castings.

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 utilisation and profitability.

Fluctuation in the price of raw material such as coke and coal and shortage of quality iron ore supply in domestic market will have impact on production and consequently on profit.

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

1. Company proposes to participate again in e-auction of iron ore mines in Karnataka as and when the State Government invites the tender for participation in e-auction for iron ore mines.

2. Supply more machined castings to increase value of sales.

3. Commissioning of the railway siding near to factory premises.

4. Setting up coal injection to one mini blast furnace to affect cost reduction in input cost of raw materials namely coke.

5. Setting up of 2 lakh ton capacity coke oven plant and 20 MW power plant. This will further help in reducing the cost of raw material as well as reducing the power cost.

6. More usage of concentrated iron ore in sinter plant to reduce input cost of materials.

7. Reduction in cycle time for development of casting and also introduce proto type machined castings within shortest period of time.

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 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 believes in “Safety First” and is committed to provide “Safe Workplace” by addressing safety, health and environment related issues by emphasizing safety culture in the organisation. Employees are regularly trained to update their awareness and skills. New employees are being given intensive safety induction training and on job training. On completion, “Safety Passport” related to their work area is issued authorizing the person to enter the plant / department. All the statutory requirements related to safety, health and environment are being complied with. As a proactive approach, the periodical internal safety audit and external audit are conducted by safety experts and National Safety Council and other agencies engaged to identify unsafe conditions / unsafe acts if any and to recommend remedial safety measures / actions. Safety Performance Management System developed through risk identification; Safety Operating Procedure were developed emphasizing on engineering controls through an External Safety Consultant. “Near Miss Reporting” and recording of “First Aid Injuries” has been practiced to take corrective action to achieve a goal of zero accidents.

Your Company is having well equipped “Occupational Health Centre” with a full-time Doctor and qualified paramedical staffs. The pre-employment health check-up of the employees is being conducted and also regular health check-ups conducted on annual basis during the continuance of the employment. The Company has provided well equipped two ambulances which are available at all times to fulfil the requirement of employees during emergencies as well as for neigh boring community.

Your Company is certified for Quality Management Systems under ISO TS 16949:2009, 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 (IRQS). All the three systems are in the process of up-gradation.

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 wastewater with extended biological aeration system. Sludge generated from STP is being used as manure for garden and treated wastewater 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 FY2017-2018 at its plant at Koppal.

1. Dust extraction system has been installed and commissioned in Foundry (Sand Plant, Sand cooler and Shake out Area).

2. As a part of environmental improvement project, the existing 250 meters of porous fence (mesh) of 12 meters height has been extended by another 126 meters in northern boundary to prevent the fugitive dust emission.

3. Construction of around 146 meters of concrete roads near Foundry service road and weigh bridge-1 to prevent dust emission due to vehicular movement; till date total of 1,821 meters concrete road has been completed.

4. Ambient Air Monitoring Quality System (AAMQS) has been connected to Central Pollution Control Board as per the KSPCB requirement.

5. Plantation of around 10,000 tree saplings in and around the plant premises to increase the green belt area which comes to a total of around 148,000.

6. Tractor mounted water tanker with capacity of 5,000 KL has been provided round the clock in the plant premises attached to security department to tackle unexpected fire incidents.

I. Social Responsibility

In order to align the Mission and Values of your organization viz. “To be a preferred Employer and responsible neighbour”, your Company has taken following measures as a part of its Corporate Social Responsibility. The Company focuses on Rural Education, Health and Hygiene, Infrastructure, Environment, facilities in the local vicinity of the plant. Major activities undertaken during the year are as follows:

Rural Education

- Coaching classes were arranged for 145 students of 10th standard of 2017-2018 batch of Bevinahalli, Lingadahalli, Shahapur and Hitnal Schools.

- Provided 2,000 school bags and note books to the students of Government Higher Primary Schools of neighboring villages.

- Financial assistance was given to Government Higher Primary School of Bevinahalli for providing educational tour for children.

- Provided 200 writing desks and benches to Government Higher Primary School and nearby schools.

- Constructed compound wall of 148 meters at Government Higher Primary School, Lingadahalli

- Scholarship provided to the students of neighbouring villages who scored 80 percent and above in SSLC and PUC examination.

- Sponsored for ‘Yog Camp’ in Hitnal village in association with Patanjali Yoga Samiti, Hospet. 268 people participated.

Health and Hygiene

- Implemented Kirloskar WaSH initiatives at Koppal and Solapur (clean and Beautiful School). Koppal Plant covered 13 schools and 7,800 students were benefitted while Solapur Plant covered 5 schools and 4,500 students were benefitted.

- Organised ‘Multispecialty Free Health Checkup Camp’ involving specialist doctors at Lingadahalli village. 5 cases were identified and referred for higher treatment with financial support

- 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.

- Provided motorized tricycles for physically challenged persons.

- Financial support was given for taking higher medical treatment in genuine cases.

Infrastructure

- Constructed storm water drain at Bevinahalli village.

- Provided RO Water to Gopinath Memorial high School, Hospet.

- Extended portable drinking water stations at Gavisiddeshwara Cart festival for 5 days. This facility was used by large number of persons.

- Provided dust bins to various schools in the villages for segregation of dry and wet waste.

- Extended support for construction of individual toilet blocks (200 Nos.) for each house in Lingadahalli, Bevinahalli and Shahapur Villages in coordination with Gram Panchyat under “Swatchh Bharat Mission”.

Environment

- Provided tree guards at schools in Kukanoor and Koppal.

- Vasundhara International Film Festival was organized at Hampi University for inauguration at Hospet and Valedictory Programme was organised at factory premises at Koppal and Solapur in order to bring awareness among people to take care of the environment under the theme “Save River - Save Life”. Awareness program was also organised at various schools and colleges.

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-

- To develop future leaders, Company has organized Management Development Programmes (MDP) on various topics. The training programme was also organized for Senior Leadership team

- In order to enhance competencies and skills of employees, training programmes on behavioural and technical skills were organized on a continuous basis by engaging internal expertise and external faculties.

- In order to enhance safety culture “Behavioural Based Safety” Training programmes were conducted.

- Training Programme on ‘Structured Problem Solving Technique’ was organized for employees.

- Performance of employees is monitored through an effective performance management system on quarterly basis.

- Communication meet by top management with managerial staff on the ‘Business Scenario’ and AOP / LRP, as well as sharing knowledge with young professionals was organised.

- The talented employees are continuously recognized and are motivated through rewards and recognition.

- Conducted skill development programmes for apprentices / trainees on fitter and electrical by inviting experts from industrial training institutes.

- Initiated monthly ‘Swachh Abhiyan’ at Company premises to eliminate waste and to keep the area clean and aesthetic for better working atmosphere by adopting 5S concepts.

- Training Programme on ‘Wellness’ and ‘Stress Management’ was organized by external faculty for employees as well as for family members.

- Training programme on ‘5’S was organized on an continuous basis for employees.

As on 31st March, 2018, the total number of salaried employees stood at 1,301.

The Employer - Employee relations was cordial throughout the year.

Wage negotiation and settlement for Koppal Plant was concluded during the year under review. Recognition / Awards received by the Company duri

during the year under review:

1. Global collaboration award by Daimler India.

2. Indy wood Built in India excellence award.

3. Mahindra Supplier Excellence award Vienna 2017.

4. Industrial Safety and health award given by National Safety Council, Karnataka chapter.

5. Commendation certificate for significant achievement issued by CII - Exim Bank.

6. CSR Award for ‘Health & Hygiene’ and ‘Community Development’ by ET CSR Leadership Awards.

II. 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 MANAGERIALPERSONNEL) 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 2017-2018 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, 2018, 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, 2018 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 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 '' 20,304,120 during the year ended 31st March, 2018. 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, 2018 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 process of risk management at Company encompasses risk identification, classification and evaluation. The Company identifies strategic, operational and financial risks that the Company faces. The Company deploys mitigation activities and plans for current and future risks that the Company may face.

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 risk management framework in the Company.

The Directors have reviewed progress on the risk management activities in the current year.

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

In compliance with Section 149 of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors has recommended the reappointment of Mr. A. R. Jamenis as an Independent Director of the Company to hold office for a second term of two consecutive years upto 12th August, 2020. The Company has received requisite notice in writing from a Member proposing his candidature for the office of Director. The resolution seeking approval of the Members by a special resolution for reappointment of Mr. A. R. Jamenis for a second term of two consecutive years upto 12th August, 2020 has been incorporated in the Notice of ensuing Annual General Meeting.

Directors appointed during the FY 2017-2018

Mr. Mahesh R. Chhabria was appointed as an Additional Director of the Company with effect from 3rd November, 2017.

Key Managerial Personnel (KMP) appointed during the FY 2017-2018

There was no change in the Key Managerial Personnel during the FY 2017-2018.

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.

1 9. 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 deployed controls including defined code of conduct, whistle blower policy, management review and MIS mechanisms, internal audit mechanism. The process level controls have been instituted through Company policies and procedures and continuous monitoring of efficiency in operations.

There is regular management oversight of the internal controls environment at Company. The Audit Committee along with Management oversees results of the internal audit and reviews implementation on a periodic basis.

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

Sr.

No.

Information Required

Input

1

The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year

Please refer Annexure ''E-1''

2

The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year;

Please refer Annexure ''E-2''

3

The percentage increase in the median remuneration of employees in the financial year

27 percent

4

The number of permanent employees on the rolls of Company

1,301

5

Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration

Percentage increase in salaries of managerial personnel at 50th percentile: 7.5 percent Percentage increase in salaries of Non-managerial personnel at 50th percentile: 8 percent

(Note: Percentage increase in salaries of Non-managerial personnel is in the range 1 percent to 60.33 percent)

The salary increases are a function of various factors like individual performance vis-a-vis individual Key Performance Indicators (KPIs), industry trends, economic situation, future growth prospects, etc. besides Company performance. There are no exceptional circumstances for increase in the managerial remuneration.

6

Affirmation that the remuneration is as per the remuneration policy of the Company.

The remuneration paid to the Directors is as per the Remuneration policy of the Company.

7

Statement showing the names of the top ten employees in terms of remuneration drawn and the name of every employee, who-

(i) if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than one Crore and Two 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 Eight Lakh and Fifty Thousand Rupees per month;

Please refer Annexure ‘F’

Sr.

No.

Information Required

Input

(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 behaviour, 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. EMPLOYEE STOCK OPTIONS SCHEME (ESOS):

Your Company has instituted a stock option scheme in order to motivate, incentivize and reward employees. This plan is called KFIL Employee Stock Option Scheme 2017 (hereinafter referred as ‘KFIL ESOS 2017’ or ‘Scheme’). Your Company views employee stock options as an instrument that would enable the employees to share the value they create for the Company and align individual objectives of the employees with the objectives of the Company. The Board of Directors of your Company and the Nomination and Remuneration Committee of the Company are authorised to administer the said scheme pursuant to the provisions of the Scheme.

The Nomination and Remuneration Committee at its meeting held on 3rd November, 2017, approved the grant of 1,765,000 stock options exercisable into 1,765,000 Equity Shares of the Company pursuant to the approval of the shareholders received at the Annual General Meeting held on 3rd August, 2017. KFIL ESOS 2017 is in compliance with the applicable provisions of the Companies Act, 2013 and its rules, Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (“Employee Benefits Regulations”) and other applicable regulations, if any.

The certificate from M/s. Kirtane & Pandit LLP, Chartered Accountants, Statutory Auditors of the Company, confirming that the scheme has been implemented in accordance with the aforesaid regulations and in accordance with the resolution passed by the Members of the Company at their Annual General Meeting held on 3rd August, 2017, would be placed before the Members at the ensuing Annual General Meeting. A copy of the same will also be available for inspection at the Company’s registered office.

There have been no material changes to the KFIL ESOS 2017 during the financial year. The Disclosures on the scheme, details of options granted, shares allotted upon exercise etc. as required under Employee Benefits Regulations are enclosed herewith as Annexure No. H and are available on the Company’s website at www.kfil.com.

No employee has been granted stock options equal to or exceeding 1% of the issued capital of your Company (excluding convertible shares and warrants).

In line with the Indian Accounting Standards (“Ind AS”) 102 on ''Share Based Payments'' issued by the Institute of Chartered Accountants of India (“ICAI”), your Company has computed the cost of equity-settled transactions by using the fair value of the options at the date of the grant and recognized the same as employee compensation cost over the vesting period.

VII. AUDITORS

1. Statutory Auditors

At the 25th Annual General Meeting held on 28th July, 2016, M/s. Kirtane & Pandit LLP, Chartered Accountants [Firm Registration No.: 105215W/W100057], were appointed as Statutory Auditors of the Company to hold office till the conclusion of the 30th Annual General Meeting to be held in the year 2021. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the Statutory Auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. Kirtane & Pandit LLP, Chartered Accountants as Statutory Auditors of the Company, will be placed for ratification by the Members in the ensuing Annual General Meeting. In this regard, the Company has received a certificate from the Auditors to the effect that if their appointment is ratified, it would be in accordance with the provisions of Section 141 of 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”.

3. Cost Auditor

The Board of Directors at its meeting held on 3rd May, 2018 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, 2019.

VIII. 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.

IX. 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.

X. 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 : 3rd May, 2018 DIN : 00007387


Mar 31, 2017

The Directors have pleasure in presenting 26th Annual Report together with the Audited Annual Accounts for the year ended 31st March, 2017.

I. FINANCIAL PERFORMANCE

The financial results of the Company for the financial year 2016-2017 as compared with the previous year are as follows -

(Amount in Rs.)

2016-2017

2015-2016

Total Revenue

11,392,617,056

11,161,782,223

Profit before tax

1,214,584,270

852,256,486

Tax Expenses

308,911,886

274,912,535

Profit for the year

905,672,384

577,343,951

Balance of Profit brought forward from previous year

1,895,419,064

1,575,423,721

Profit available for appropriation

2,801,091,448

2,152,767,672

APPROPRIATIONS

Your Directors propose to appropriate the Profit as under :

Interim Dividend

-

171,635,102

Tax on above Dividend

-

35,713,506

Transfer to General Reserves

50,000,000

50,000,000

Balance carried to Surplus in Statement of Profit and Loss

2,751,091,448

1,895,419,064

DIVIDEND

Your Directors have recommended a dividend of 35 percent (Rs. 1.75 per equity share). Dividend will be recognized as liability when approved by the members at the forthcoming Annual General Meeting as per new accounting standard.

II. MANAGEMENT DISCUSSION AND ANALYSIS

A. Economy and Industry Overview Global Economy:

The global economy accelerated in the fourth quarter of calendar year 2016 due to the combination of improved conditions in emerging market countries and stronger growth in developed economies. Despite the deceleration in 2016, the global economy managed to navigate its way through troubled waters and perform at a decent growth rate of 2.6 percent owing to the good performance in the last quarter.

Global Economy Outlook:

Global growth is projected to pick up modestly in 2017. However, uncertainty surrounds the direction of US macroeconomic policies with potential global spillovers. Growth prospects for emerging market economies (EMEs) are also expected to improve moderately. Inflation is edging up on the back of rising energy prices and a mild firming up of demand. However, global trade remains subdued due to an increasing tendency towards protectionist policies and heightened political tensions. Furthermore, financial conditions are likely to tighten as central banks in Advanced Economies normalize exceptional accommodation in monetary policy.

Indian Economy:

India''s economic growth is estimated at 7.1 percent for the fiscal year ending 31st March, 2017 as compared to 7.6 percent last year. The lower growth is due to the impact of the demonetization drive. The growth estimates have been reduced in all the sectors, except for agriculture (which grew at 4.1 percent due to the positive monsoon season).

The trade deficit for FY 2016-2017 was estimated at US$ 105.72 billion which was 10.95 percent lower than the deficit of US$ 118.72 billion in the corresponding period last year. Oil imports during FY 2016-2017 were valued at US$ 86.46 billion which was 4.24 percent higher than the oil imports of US$ 82.94 billion in the corresponding period last year.

Foreign exchange reserves in India stood at US$ 369.95 at the end of 31st March, 2017.

India''s growth for FY 2017-2018 is expected to rebound to 7.6 percent.

Rupee opened at a level of Rs.66.2430 against US Dollar on 1st April, 2016. Rupee started depreciating against US Dollar and reached a peak level of Rs.68.72. During February and March 2017 rupee started appreciating against US Dollar and closed at a level of Rs.66.8386 as on 31st March, 2017. Rupee appreciation has been due to large inflow of overseas funds into equity and debt market.

Sensex which was at 25,341.86 on 31st March, 2016 closed at 29,620.50 on 31st March, 2017 registering a gain of 16.88 percent for FY 2016-2017.

Steel Industry:

India is the world''s third-largest producer of crude steel. The Industry posted a 11 percent growth in production in FY 2017 at 101.2 million tonnes but domestic consumption remained anaemic mainly due to poor off take from end use segments. The growth in the Indian steel sector has been driven by domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to India''s manufacturing output.

Iron ore Mines:

The Supreme Court, in April 2013, had directed the Government to cancel 51 C-category mining leases for illegal mining.

Department of Mines and Geology listed 14 C-category mining leases for e-auctioning in Ballari, Chitradurga and Tumakuru districts. The end-users had expressed their interest in getting the leases of only seven mines and all seven mines of the 14 C-category iron ore mine leases, have been e-auctioned by the Department of Mines and Geology. Your Company participated in the auction of mines but the mines have been won by other companies at a price which was not economical to your Company.

Government has informed that 2017-2018 would be an important year for the mining industry as there are around 300 mineral blocks to be leased (of which, Karnataka alone has about 100 odd leases). These mines would be auctioned in different states during the fiscal. Your Company will pursue in its efforts to acquire iron ore mines from the e-auction.

Iron ore mining is slowly opening up and presently 29 mines have been allowed for mining 33 Million tonnes per annum. As demand is higher than the actual mining, iron ore prices in Hospet sector are still higher.

Coke :

Availability of metallurgical coke from China, improved after removal of some restrictions by Chinese Government and helped the Indian manufacturers of iron and steel to import coke for their manufacturing operations at competitive prices.

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

In response thereto Government has imposed an anti dumping duty of US$ 25 per MT for the imports from China with effect from 25th November, 2016. This resulted in higher landed cost of metallurgical coke.

Coke prices which were at a level of US$ 117 per MT at the beginning of the year rose to a level of US$ 350 per MT and closed at US$ 285 per MT by the end of the year, along with applicable anti-dumping duty of US$ 25 per MT.

Auto Industry:

The Indian auto industry is one of the largest in the world. The industry accounts for 7.1 percent of the country''s Gross Domestic Product (GDP).

Indian automotive market faced many challenges in 2016. Ordeal for auto industry started with ban on diesel cars and SUVs with big engines of 2,000 cc and above in Delhi-NCR for eight long months on environmental concerns.

Automakers are already running against time to implement the BS-VI emission norm from April 2020 after the Government in January 2016 decided to advance implementation of BS-VI by a year to April 2020 from the earlier plan of April 2021. It also decided to completely skip BS-V and go straight to BS-VI from BS-IV.

The Supreme Court in its order issued in March 2017 imposed a ban on sales and registration of vehicles not confirming BS-IV norms from 1st April, 2017. This decision left auto industry saddled with large inventory of BS-III vehicles at the end of the March 2017.

Indian automotive industry saw signs of a sustainable revival in demand for the first time in five years in 2016 but sudden announcement of demonetization brought a steep decline in auto sales in November 2016.

The auto industry sold 21.86 Million vehicles in domestic market in FY 2016-2017. The industries growth improved to 6.81 percent stronger than 3.78 percent reported in FY 2015-2016.

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. Further, Government made it mandatory to blend 5 percent ethanol in petrol.

- has formulated a scheme to encourage the progressive induction of reliable, affordable and efficient electric and hybrid vehicles in the country.

- The Government of India plans to introduce a new Green Urban Transport Scheme, aimed at boosting the growth of urban transport along a low carbon path for substantial reduction in pollution.

Further, Government has also undertaken two large initiatives viz. putting more money into the rural economy especially after demonetization and putting a renewed focus on infrastructure development. Government has also estimated specific outlay for the development of coastal roads for better connectivity to ports and coastal villages. Farm friendly policies announced by Government will benefit the auto sector.

Tractor industry:

India''s tractor industry sold 582,000 units registering a growth of 18 percent in the fiscal year 2016-2017, riding a monsoon-led surge in demand that was enough to offset the impact of demonetization in the latter half. After two deficient monsoons, the country recorded a normal south west monsoon performance in the fiscal year 2017. This helped unleash pent up demand resulting in

October sales seeing a record 44 percent spurt, lifting sales for the April to October 2016 by a whopping 26 percent due to various incentives.

The fervour could have continued, but for the demonetization move. Transactions in the rural areas, which account for the bulk of domestic tractor sales, are largely cash based. With cash drying up, sales registered a de-growth of 13 percent in the month of November 2016.

Tractor industry Outlook:

Tractor sales can benefit from favourable budget announcements such as record farm credit disbursal of '' 10 Lakh Crore and other rural development initiatives.

The rating forecast for growth is about 6-7 percent for the tractor industry in FY 2018. In the long run, tractor industry would grow at a CAGR of 5 to 6 percent. The Government of India remains committed towards rural development and agri-mechanization, a critical component in improving the state of agriculture in the country. Also, continued support towards enhancing additional irrigation penetration would reduce rainfall dependence over long term. This coupled with other factors such as increasing rural wages and scarcity of farm labour is likely to aid growth in industry volumes over the long term.

Crude oil prices:

Average crude oil spot price at the end of financial year 2017 was at a level of US$ 50.90 up from US$ 37.34 one year ago. This is a change of 36.32 percent from one year ago.

The Opec has started reducing production of oil from the beginning of 2017. This can lead to a higher crude oil price regime. Rising oil prices present a challenge to India''s growth.

B. Company Performance

Your Company achieved net sales of Rs.11,337 Million (previous year Rs.11,139 Million).

The profit before tax for the year under review stood at Rs.1,214.58 Million as compared to Rs.852.26 Million of the previous year after providing for depreciation and amortization.

C. Operational Performance

Your Company sold 253,495 MT of pig iron valued at Rs.5,889.06 Million during FY 2016-2017 as compared to 289,485 MT of pig iron valued at Rs.6,231.19 Million in the previous year.

Your Company sold 65,892 MT castings aggregating to Rs.5,191.38 Million during FY 2016-2017 as compared to 56,661 MT castings aggregating to Rs.4,606.68 Million in the previous year.

The Company performance in the first quarter of the year under review was good with Company enjoying the advantage of low coke prices and favourable selling price for pig iron. The demand for castings from both the tractor industry and auto industry was good, which benefitted the Company.

During the second quarter the Company was able to increase the sale of castings, with sustained demand for castings arising from the continued growth in auto and tractor sectors. The market demand for pig iron was stable. There was a spurt in international price of coal and coke, which resulted in an increase in price of domestic coke. There was also an increase in iron ore prices. Increase in raw material cost resulted in increase of manufacturing costs for pig iron. The demand for the pig iron was stable throughout the quarter.

One furnace was shut down from 19th September, 2016 for upgradation to increase its annual capacity from 180,000 tons to 211,400 tons. Upgradation was aimed to increase the life of lining to around 8 years. In consequence to the shut down, the pig iron production during the second and third quarter was reduced.

During the third quarter, there was a lot of volatility in the market with coal and coke prices going to high levels of around Us$ 300 and US$ 350 respectively. Subsequently, the coal prices started coming down and reached a level of US$ 190 per MT but the coke prices did not decrease as compared to coal prices. Thereafter, coke price came to a level of US$ 300 per MT. Further, the anti-dumping duty of US$ 25 per MT levied by the Government for imports from China (with effect from 25th November, 2016) increased the landed price of coke. During this quarter, the iron ore prices also started showing an upward trend and there was an increase in the cost by Rs.500 per MT. Inspite of all these raw material price volatility, there was not much upward movement in steel and scrap prices and also for pig iron prices. This put the margin / profitability under pressure. However, due to procurement strategies and continuous cost reduction drives, your Company was able to manage and maintain reasonable profitability even in volatile market condition. Further, Company also witnessed a drop in the schedule for supply of pig iron and castings during the third quarter owing to the lower demand arising due to the effect of demonetization.

During the fourth quarter, upgradation of MBF-1 was completed and production of pig iron resumed from this furnace on 17th January, 2017. Your Company could stabilize the furnace quickly without much disturbances to the production. The fourth quarter witnessed further increase in iron ore prices. However, prices of coke softened on account of decrease in coal prices. The pig iron prices dropped putting pressure on the bottom line. The demand for castings improved due to good market conditions.

Rupee depreciation for a large part of the year resulted in higher input cost.

During the year under review, the Company repaid entire outstanding amount of long term loans. Also the Company has been able to reduce considerably the financing cost of working capital facilities by availing facilities at a very competitive rate.

Your Company has undertaken the following projects during the year under review:

1) Commenced the civil work for machine shop at Koppal Plant and is expected to be completed in first half of financial year 2017-2018. Simultaneously, Company is working on getting the orders for machined castings from its customers and also on procuring machines for machining of castings. Machine shop will be commissioned progressively in a phased manner based on the order position. The completion of machine shop will facilitate an increase in business by bringing more value added items for the Company.

2) Installation of fettling facilities for superior casting finish at Solapur Plant.

3) Upgradation of Mini Blast Furnace I resulting in lower coke consumption and increasing the production capacity of pig iron.

4) Commenced Railway siding project and the civil work has been completed. The project is expected to be completed in FY 2017-18. Completion of this project will facilitate inward movement of raw materials and outward movement of pig iron resulting in reduction in cost of transportation and handling losses.

D. Cost Control

Your Company adopted following measures to reduce cost:

- strategically sourced 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.

- Improved the quality of the castings to bring down the rejections in castings.

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

1. Company proposes to participate again in future e-auction of iron ore mines in Karnataka.

2. Supply more machined castings to increase value of sales.

3. Commissioning of the railway siding near to factory premises.

4. Explore the possibility of pulverized coal injection to reduce raw material cost.

5. Explore the possibility of setting up of coke oven plant and power plant. This will further help in reducing the cost of raw material as well as the power cost.

6. Explore the possibility of reducing power consumption at Solapur plant by installing solar power plant.

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 by emphasizing safety culture organization. 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 internal safety audit by Safety experts and external audit by Regional Labour Institute, Chennai is conducted to identify unsafe conditions and take proper safety measures. “Near Miss Report” and “First Aid Injuries” track has been introduced to report and to take corrective action for ensuring zero accidents.

Your Company is having well equipped “Occupational Health Centre” with a full-time Doctor and qualified paramedical staffs. The pre-employment health check-up of the employees is being conducted and also regular health checkups conducted on annual basis during the continuance of the employment. The Company has provided well equipped two ambulances which are available at all times to fulfill the requirement of employees during emergencies as well as neighbouring community

Your Company is certified for Quality Management Systems under ISO TS 16949:2009, 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 (IRQS).

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 wastewater with extended biological aeration system. Sludge generated from STP is being used as manure for garden and treated wastewater 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 FY2016-17 at its plant at Koppal.

1. Dust extraction system has been installed in Foundry (Sand Plant, DK4 and Shake Out Area).

2. As a part of environmental improvement project, the existing 250 meters of porous fence (mesh) of 12 meters height has been extended by another 50 meters in north east boundary to prevent the fugitive dust emission.

3. Construction of around 170 meters of concrete roads near truck tippler to prevent dust emission due to vehicular movement; till date total of 1,675 meters concrete road has been provided

4. Ambient Air Monitoring Quality System (AAMQS) connected to Central Pollution Control Board as per the KSPCB requirement.

5. Plantation of around 10,000 tree saplings in and around the plant premises to increase the green belt area which comes to a total of around 148,000.

6. Truck mounted water tanker (5,000 KL) capacity of water tank has been provided round the clock in the plant premises attached to safety department to tackle unexpected fire incidents.

I. Social Responsibility

In order to align the Mission and Values of your organization viz. “To be a preferred Employer and responsible neighbor”, your Company has taken following measures as a part of its Corporate Social Responsibility. The Company focuses on Rural Education, Health and Hygiene, Infrastructure, Environment, facilities in the local vicinity of the plant. Major activities undertaken during the year are as follows:

Rural Education

- Coaching classes were arranged for 64 students of 10th standard of 2016-2017 batch of Bevinahalli, Lingadahalli, Shahapur villages.

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

- Financial assistance was given to Government Higher Primary School of Bevinahalli for providing educational tour for children.

- 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.

- Organized ''Personality Development Programme'' at 50 schools from Koppal and Hospet area.

Health and Hygiene

- Implementing Kirloskar WaSH initiatives at Koppal and Solapur (clean and Beautiful School).

- Organized ''Multispecialty Free Health Checkup Camp'' involving Pediatrician, Dentist, Gynecologist and General Physician at Shahapur village.

- 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.

- Provided motorized tricycles for some physically challenged persons.

- Providing nutritional support to Multi Drug Resistant Tuberculosis Patients from Koppal Taluk (Supported 20 patients for six months).

- Financial support was given for taking higher medical treatment in genuine cases.

Infrastructure

- Constructed storm water drain at Bevinahalli village.

- Provided financial assistance to Shahapur Village for the purchase of additional land for Government Higher Primary School.

- Provided RO Water to Guddadahalli Government Higher Primary School and National School, Koppal.

- Provided financial assistance to Anadaneshwara Education Trust, Mundaragi for construction of College Building.

- Provided RO system to provide portable drinking water to the Sports Authority of India students at Koppal.

- Extended portable drinking water stations at Gavisiddeshwara Cart festival for 5 days. This facility was used by large number of persons.

- Provided 1,000 green and 1,000 red dustbins to dispose wet and dry waste from the respective residences to dispose the village garbage at designated places.

Environment

- Provided tree guards and planted saplings at Ginigera railway station and at various areas in Koppal.

- Vasundhara International Film Festival was organized at Hospet, Koppal and Solapur in order to bring awareness among people to take care of the environment on the theme “Smart and Sustainable - It''s my City”. As a part of the programme, awareness program was organized at various schools and for general public.

- Villagers of Bevinahalli and Lingadahalli were educated on the method to conserve water and utilize for the plantations.

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-

- To develop future leaders, Company has organized Management Development Programmes (MDP) on various topics.

- In order to enhance competencies and skills of employees, training programmes on behavioral and technical skills were organized on a continuous basis by engaging internal expertise and external faculties.

- In order to enhance safety culture “Behavioural Based Safety” Training programmes were conducted.

- Conducted ''Defensive Driving - Road Safety'' training programmes.

- Conducted awareness programme on ''Prevention of Sexual Harassment of Women at Workplace''.

- Organized ''Energy Conservation'' competitions for the team to participate and showcase their energy conservation models / benchmarks. The best team were awarded and motivated.

- Performance of employees is monitored through an effective performance management system on quarterly basis.

- Communication meet by top management with managerial staff on the ''Business Scenario'' as well as sharing knowledge with young professionals.

- The talented employees are continuously recognized and are motivated through rewards and recognition.

- Conducted skill development programmes for apprentices / trainees on fitter and electrical by inviting experts from industrial training institutes.

- Initiated monthly ''Swachh Abhiyan'' at Company premises to eliminate waste and to keep the area clean and aesthetic for better working atmosphere by adopting 5S concepts.

As on 31st March, 2017, the total number of salaried employees stood at 1,290.

The Employer - Employee relations is cordial throughout the year.

Recognition / Awards received by the Company during the year under review:

- Recognition from Mahindra and Mahindra Limited for ''Quick Stabilization and Ramp-up of Dhruv Housing''.

- Mahindra and Mahindra awarded trophies for ''Supplier Business Capacity Building'' (SBCB) “ and for ''Sustainable Performance'' .

- Best Supplier Award for Joint Product Development'' from TAFE.

- Green Foundry Award from MMR Events.

- Commendation Certificate for Significant Achievement in CII-EXIM Bank Award for Business Excellence.

Further, your Company has received the recognition for Koppal plant for in-house research and development for the period 21st March, 2017 to 31st March, 2019 from the Department of Scientific and Industrial Research.

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 MANAGERIALPERSONNEL) 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 2016-2017 five 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, 2017, 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, 2017 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 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 '' 21,155,000 during the year ended 31st March, 2017. 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, 2017 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 process of risk management at Company encompasses risk identification, classification and evaluation. The Company identifies strategic, operational and financial risks that the Company faces. The Company deploys mitigation activities and plans for current and future risks that the Company may face.

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 risk management framework in the Company.

The Directors have reviewed progress on the risk management activities in the current year.

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

Directors appointed during the FY 2016-2017

Mr. Yashwant S. Bhave was appointed as an Additional Director of the Company with effect from 23rd January, 2017.

Key Managerial Personnel (KMP) appointed during the FY 2016-2017

There was no change in the Key Managerial Personnel during the FY 2016-2017.

Directors and KMP''s ceased / resigned during FY 2016-2017

Mr. S. G. Chitnis, Independent Director ceased to be a Director of the Company with effect from 13th August, 2016 on completion of his tenure.

Mr. S. N. Inamdar, Independent Director has resigned as a Director of the Company with effect from 24th October, 2016.

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 deployed controls including defined code of conduct, whistle blower policy, management review and MIS mechanisms, internal audit mechanism. The process level controls have been instituted through Company policies and procedures and continuous monitoring of efficiency in operations.

There is regular management oversight of the internal controls environment at Company. The Audit Committee along with Management oversees results of the internal audit and reviews implementation on a periodic basis.

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

Sr.

No.

Information Required

Input

1

The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year.

Please refer Annexure ''E-1''

2

The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year.

Please refer Annexure ''E-2''

3

The percentage increase in the median remuneration of employees in the financial year.

1.54 percent

4

The number of permanent employees on the rolls of the Company.

1,290

5

Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out, if there are any exceptional circumstances for increase in the managerial remuneration.

Percentage increase in salaries of managerial personnel at 50th percentile: 42 percent.

Percentage increase in salaries of Non-managerial personnel at 50th percentile: 4 percent .

(Note: Percentage increase in salaries of Non-managerial personnel is in the range 1 percent to 23 percent).

The salary increases are 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.

6

Affirmation that the remuneration is as per the remuneration policy of the Company.

The remuneration paid to the Directors is as per the Remuneration policy of the Company.

7

Statement showing the names of the top ten employees in terms of remuneration drawn and the name of every employee, who-(I) if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than one crore and two lakh rupees;

Please refer Annexure ''F''

Sr.

No.

Information Required

Input

(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 eight lakh and fifty thousand 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.

Please refer Annexure ''F''

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 behaviour, 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

At the 25th Annual General Meeting held on 28th July, 2016 M/s. Kirtane & Pandit LLP, Chartered Accountants [Firm Registration No.: 105215W/W100057], were appointed as Statutory Auditors of the Company to hold office till the conclusion of the 30th Annual General Meeting to be held in the year 2021. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the Statutory Auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. Kirtane & Pandit LLP, Chartered Accountants as Statutory Auditors of the Company, will be placed for ratification by the Members in the ensuing Annual General Meeting. In this regard, the Company has received a certificate from the Auditors to the effect that if their appointment is ratified, it would be in accordance with the provisions of Section 141 of 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 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 28th April, 2017 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, 2018.

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

The Board of Directors places on record its sincere appreciation for contribution by Mr. S. G. Chitnis. He was associated with the Company since January 2005. He had been an advisor to the Kirloskar Group on techno-commercial projects and on world class manufacturing practices.

The Board of Directors also places on record its sincere appreciation for contribution by Mr. S. N. Inamdar. He was associated with the Company for more than two decades. His knowledge and experience in legal and taxation matters have helped the Company immensely.

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, 2017 DIN: 00007387


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, 2012

The Directors have pleasure in presenting 21st Annual Report together with the Audited Annual Accounts for the year ended 31st March, 2012.

FINANCIAL PERFORMANCE

The financial results of the Company for the financial year 2011-2012 as compared with the previous year are as follows -

(Amount in Rupees)

2011-2012 2010-2011 Sales and Other Income 10,917,352,422 10,937,387,964 Profit before tax 556,612,492 718,631,991

Provision for tax (including Deferred Tax) 185,815,296 235,337,741

Profit after tax 370,797,196 483,294,250

Balance of Profit brought forward from previous year 815,650,438 540,908,853 Excess provision for previous years written back

a) Dividend (64,479,849) (64,481,359)

b) Tax on Dividend (10,460,244) (11,488,953) Profit available for appropriation 1,261,387,727 1,100,173,415 APPROPRIATIONS

Your Directors propose to appropriate the Profit as under:

Proposed Dividend 201,787,930 201,787,930

Tax on Dividend 32,735,047 32,735,047 Transferto General Reserve 50,000,000 50,000,000

Balance carried to Surplus Account 976,864,750 815,650,438

DIVIDEND

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

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, 2010 till 13th March, 2013.

During the financial year 2011-2012, the Company has not received application/s from warrantholders for conversion of warrants into equity shares.

DIRECTORS

Mr. Sanjay C. Kirloskar, Mr. S. G. Chitnis and Mr. A. R. Jamenis retire by rotation and being eligible, offer themselves for re-appointment.

DIRECTORS RESPONSIBILITYSTATEMENT

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, 2012 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 31 st March, 2012 and of the profit of the Company for the year ended 31 st March, 2012;

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, 2012 on a 'going concern' basis.

CASH FLOW STATEMENT

A Cash Flow Statement for the year ended 31st March, 2012 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(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 – 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 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 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

ATULC. KIRLOSKAR

Pune: 27th April, 2012 Chairman


Mar 31, 2011

The Directors have pleasure in presenting 20th Annual Report together with the Audited Annual Accounts for the year ended 31st March, 2011.

FINANCIAL PERFORMANCE

The financial results of the Company for the financial year 2010-2011 as compared with the previous year are as follows -

(Amount in Rupees)

2010 - 2011 2009 - 2010

Sales and other Income 10,937,387,964 8,172,140,511

Profit before tax 718,858,863 702,633,800

Provision for tax (including Deferred Tax) 235,564,613 211,954,791

Profit after tax 483,294,250 490,679,009

Balance of Profit brought forward from previous year 540,908,853 298,584,683

Profit available for appropriation 1,024,203,103 789,263,692

APPROPRIATIONS

Your Directors propose to appropriate the Profit as under :

Excess provision for previous years written back

a) Dividend (64,481,359) (32,246,635)

b) Tax on Dividend (11,488,953) (5,480,315)

Proposed Dividend 201,787,930 201,787,930

Tax on Dividend 32,735,047 34,293,859

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

Balance carried to Balance Sheet 815,650,438 540,908,853

DIVIDEND

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

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 is certified for Quality Management Systems under ISO TS 16949:2009, Environmental Management System under ISO 14001:2004 and also certified for Occupational Health & Safety Assessment Series (OHSAS 18001:2007) by Indian Register Quality Systems (IRQS). Quality Management Systems, Environmental Management System and Occupational Health & Safety Assessment Series have been integrated and came into effect from 14th January, 2011.

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.

Effluent treatment of waste products and suppression of fugitive emissions through sprinklers is also carried out effectively. Plantation of about 30,000 trees was undertaken during the year 2010-11, to improve the greenery all around the plant. To reduce dust emission during operation of Raw Material Handling Section, water sprinkling arrangement has been made.

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

Moreover, under ISO: 14001 and OHSAS: 18001, Management System, the following programs have been taken up and completed during 2010-2011 —

1. Magnetic separator provided at the shake out section of the Foundry, to bring down dust level.

2. To reduce stress to eye, 180 Cathode Ray Tube monitors were replaced with TFT monitors.

3. To eliminate electrocution in wet areas, portable torches are provided instead of 230 Volt hand lamps.

4. To eliminate fatigue at Core Shop Foundry Unit during trolley handling, polyurethane flooring has been provided.

5. Installation of Power Plant- 3 of capacity of 4.5 MW has helped in fully utilizing Blast Furnace gas for Power Generation, instead of flaring. Also this would result in bringing down contribution to GHG (Green House Gas) emissions into the atmosphere.

6. Environment concern has been reduced by achieving reduction of ungranulated slag generation from 20 percent to 4 percent through modification of launder inclination.

I. Social Responsibility

As a part of its corporate responsibility to the society, your Company has taken following measures :

(i) Under World Bank Scheme “Jala Nirmala Yojana” contribution given for drinking water facility to nearby village – Kampasagar.

(ii) Contributed to educational institutions at Koppal, Hitnal and Mundargi.

(iii) Provided writing desks for school at Bevinahalli.

(iv) Organised energy conservation training programmes for school children.

(v) Scholarship awards to meritorious students of employees children studying in professional and diploma courses.

(vi) Conducted spoken English training programmes for college students at Bevinahalli village.

(vii) Visit by specialist doctors to Bevinahalli village once a week.

(viii) Conducted blood donation programmes and check up camp for critical illness at Bevinahalli village.

(ix) Construction of toilets to improve health and hygiene of people in neighbouring villages.

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 following initiatives –

(i) Necessary steps to upgrade the skills of present employees by conducting various in-house training programs and courses.

(ii) Working on Gallop survey feedback and implementing suggestions at all levels.

(iii) Review of HR policy based on Company plans and people feedback.

(iv) Monitoring effectiveness of training module / programme.

(v) Offering career growth at all levels.

(vi) Conducting programs on safety and mock drills.

As on 31st March, 2011 the total number of salaried employees stood at 1,207. 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, 2010 till 13th March, 2013.

During the financial year 2010 - 2011, the Company received applications from warrantholders for conversion of 2,225 warrants into equity shares for an amount aggregating to Rs. 77,875 (inclusive of securities premium). 2,225 warrants amounting to Rs. 77,875 have been converted into 2,225 equity shares of Rs. 5 each (Equity share capital Rs. 11,125 and securities premium Rs. 66,750).

DIRECTORS

Mr. Atul C. Kirloskar, 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, 2011 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, 2011 and of the profit of the Company for the year ended 31st March, 2011;

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, 2011 on a "going concern" basis.

CASH FLOW STATEMENT

A Cash Flow Statement for the year ended 31st March, 2011 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(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 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 Chairman

Pune : 26th April, 2011


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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