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Directors Report of Kirloskar Industries Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting this Report with the Audited Annual Accounts of the Company for the year ending 31 March 2015.

FINANCIAL PERFORMANCE:

Particulars 2014-15 2013-14 Rs. (in Lakhs) Rs. (in Lakhs)

Total Income 6,247.79 6,377.90

Total Expenditure 818.98 970.40

Profit before exceptional items and taxation 5,428.81 5,407.50

Profit before taxation 5,428.81 5,407.50

Provision for tax (including Deferred Tax) 915.77 740.35

Net Profit 4,513.04 4,667.15

Balance of Profit / (Loss) from previous year 30,674.33 27,732.68

Less: Depreciation 35.22 Nil

Add: Reversal of Dividend Distribution Tax Nil 63.00

Add: Transfer from Reserve Fund created under Section 45-IC of the Reserve Bank of India Act, 1934 3,004.73 Nil

Surplus available for appropriation 38,156.88 32,462.83

APPROPRIATIONS:

Your Directors propose to appropriate the available surplus as follows:

2014-15 2013-14 Particulars Rs. (in Lakhs) Rs. (in Lakhs)

Transfer to Reserve Fund in terms of Section 45-IC of the Reserve Bank of India Act, 1934 Nil 933.43

Proposed Dividend 1,941.73 388.35

Tax on proposed dividend 214.56 -

Transfer to General Reserve - 466.72

Balance carried to Balance Sheet 36,000.59 30,674.33

DIVIDEND:

Your Directors recommend 200% dividend i.e. Rs. 20/- per equity share of Rs. 10/- each (previous year dividend 40% i.e. Rs. 4/- per equity share of Rs. 10/- each) for the Financial Year ended 31 March 2015.

CLASSIFICATION OF THE COMPANY AS A CORE INVESTMENT COMPANY - NON-BANKING FINANCIAL COMPANY (CIC NBFC):

During the year, the Reserve Bank of India vide its letter dated 3 February 2015, clarified that since the Company is an exempted CIC, none of the Bank''s Regulation are applicable to the Company. Accordingly. Reserve of Rs. 3,004.73 Lakhs created under Section 45-IC of the Reserve Bank of India, Act, 1934, has been transferred to surplus in the Statement of Profit and Loss.

The Company has not created Reserve under Section 45-IC of the Reserve Bank of India Act, 1934, for the year under review and income from bank deposits has been disclosed as ''Other Income'' during the year 2014-15.

SEBI REGULATIONS AND LISTING FEES:

The annual listing fees for the year under review have been paid to BSE Limited and National Stock Exchange of India Limited, where your Company''s shares are listed.

SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS:

As on 31 March 2015, the Company has one subsidiary i.e., Kirloskar Ferrous Industries Limited (KFIL).

The Board presents Audited Consolidated Financial Statements incorporating the duly Audited Financial Statements of KFIL and as prepared in compliance with the Accounting Standards and the Listing Agreement.

Pursuant to Rule 5 of Companies (Accounts) Rules, 2014, the Statement containing the salient features of the Financial Statement of a Company''s subsidiary and associate companies under the first proviso to Sub-Section (3) of Section 129 of the Companies Act, 2013, (''the Act''), in Form AOC - 1 is required to be enclosed to the Financial Statements.

The Consolidated Financial Statements prepared as per applicable provisions and duly audited by the Statutory Auditors, are presented elsewhere in this Annual Report along with Form AOC - 1.

Further, the Company undertakes that the Annual Accounts of the Subsidiary Company and the related detailed information shall be made available to the shareholders on demand, at any point of time. The Annual Accounts of the Subsidiary Company shall also be kept open for inspection by any shareholder at the Registered Office of the Company.

BRIEF HIGHLIGHTS OF BUSINESSES OF SUBSIDIARY COMPANY:

KIRLOSKAR FERROUS INDUSTRIES LIMITED (KFIL)

KFIL is in the business of manufacturing of iron castings and has its manufacturing facilities at Bevinahalli Village in Karnataka and Solapur in Maharashtra.

The Board of Directors of KFIL has recommended a dividend of Rs. 1.25 (25%) per equity share, which is the same as that of the last Financial Year.

KFIL achieved net sales of Rs. 1,36,509 Lakhs (previous year Rs. 1,23,216 Lakhs). Sales value has shown a growth of 10.78 percent in spite of stoppage of one of the mini blast furnace for refractory relining.

In terms of volume growth in sales, Pig Iron sales has increased by 15.35 percent, while castings sales increased by 5.19 percent compared to previous year.

The profit before tax for the year under review stood at Rs. 7,184 Lakhs as compared to Rs. 5,799 Lakhs of the previous year after providing for depreciation and amortisation.

During the year under review, KFIL availed term loan of Rs. 1.49 crores.

KFIL sold 3,18,023 MT of Pig Iron valued at Rs. 84,366 Lakhs during the Financial Year 2014-15 as compared to 2,75,692 MT of Pig Iron valued at Rs. 71,739 Lakhs in the previous year.

The slowdown in tractor industry has impacted the demand for castings. However, KFIL managed to maintain sale.

KFIL sold 57,257 MT castings aggregating to Rs. 47,446 Lakhs during the Financial Year 2014-15, as compared to 60,396 MT castings aggregating to Rs.46,004 Lakhs in the previous year.

PARTICULARS OF INFORMATION FORMING PART OF THE BOARDS'' 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

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT - 9 is annexed herewith as ''Annexure I'' to this Report.

NUMBER OF MEETINGS OF THE BOARD:

During the year under review, four Board Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

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 Financial Statements for the year ended 31 March 2015, the applicable accounting standards have been followed and there were no material departures;

b) accounting policies as mentioned in Note 2 of the Notes to the Financial Statements have been selected and applied consistently. Further, judgments and estimates have been made that 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 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 in place and that the 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 were adequate and operating effectively.

A STATEMENT ON DECLARATION GIVEN 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.

COMPANY''S POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION:

The Company constituted a Nomination and Remuneration Committee. 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 as ''Annexure II'' to this Report.

AUDITORS:

1. Statutory Auditors:

G. D. Apte & Co., Chartered Accountants, (Firm Registration Number 100515W), Pune, Statutory Auditors of the Company are appointed as Auditors of the Company from the conclusion of the Annual General Meeting (AGM) held on 2 September 2014 till the conclusion of the Annual General Meeting of the Company to be held for the Financial Year ended 2015-16, subject to the ratification of the appointment by the members at every AGM held after the ensuing AGM. The requisite certificate as per Section 139 of the Companies Act, 2013, has been received by the Company from the Statutory Auditor about their eligibility to continue as Auditors.

2. Cost Auditors:

Pursuant to the provisions of Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014, dated 30 June 2014, Joshi Apte & Associates, Cost Auditors, Pune was appointed as the Cost Auditors of the Company for the Financial Year 2014-15.

Further, the Ministry of Corporate Affairs has Amended the Companies (Cost Records and Audit) Rules, 2014, vide its Notification dated 31 December 2014. As per the Amended Rules, the Company is neither requited to maintain cost records relating to Electricity Industry (Windmills) for the Financial Year 2014-15 in Form (CRA-1) nor is required to get the records audited.

3. Secretarial Auditors:

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 (FCS 810 CP 185) to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as ''Annexure III'' to this Report.

EXPLANATION OR COMMENTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS:

There are no qualifications, reservations or adverse remarks or disclaimers made by G. D. Apte & Co., Statutory Auditors, in their Audit Report and by Mr. M. J. Risbud, Practicing Company Secretary, in his Secretarial Audit Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENT UNDER SECTION 186 OF THE COMPANIES ACT, 2013:

Your Company has not given any loan or guarantee or security or made any investment during the year.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SUB-SECTION (1) OF SECTION 188 OF THE COMPANIES ACT, 2013:

Pursuant to the provisions of 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. Related Party disclosures as per AS -18 have been provided in Note 31 to the Financial Statements.

STATE OF COMPANY''S AFFAIRS:

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

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.

MATERIAL CHANGES AND COMMITMENTS BETWEEN THE DATE OF THE BALANCE SHEET AND THE DATE OF REPORT:

There have been no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the Financial Year of the Company to which the Financial Statements relate and the date of this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

A. Conservation of Energy and Technology Absorption:

The Company has no particulars to report regarding conservation of energy and technology absorption as required under Section 134 (3) (m) of the Companies Act, 2013, read with Rules thereunder.

B. Foreign exchange earnings and outgo:

Sr. No. Particulars Amount in Rs.

i) Foreign Exchange earned in terms of actual inflows during the year 6,54,249

ii) Foreign Exchange outgo during the year in terms of actual outflows Nil

RISK MANAGEMENT POLICY:

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013. The details about CSR Policy and initiatives taken by the Company during the year is annexed as ''Annexure IV'' to this Report.

BOARD EVALUATION:

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out performance evaluation of its own performance and that of its committees and individual Directors.

PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES:

Name and % Holding Particulars Amount Registered Office of the Subsidiary (Rs. in Company Lakhs)

Kirloskar Ferrous Industries Limited, 51.43 Total Income 1,36,820.20 13, Laxmanrao Road, Khadki, Pune 411 003 Total Expenditure 1,29,635.75

Profit before exceptional items and taxation 7,184.45

Profit before taxation 7,184.45

Provision for tax (including Deferred Tax) 2,256.81

Net Profit 4,927.64

Balance of Profit / (Loss) from previous year 13,394.37

Less: Proposed Dividend 1,716.35

Less : Dividend Distribution Tax 351.42

Less : Transfer to General Reserve 500.00

Balance carried to Balance Sheet 15,754.24

Name and Registered % Holding Particulars Amount Office of the Associate Company (Rs. in Lakhs)

Kirloskar Brothers Limited 23.92 Total Income 1,63,697.66 Udyog Bhavan, Tilak Road,

Total Expenditure 1,59,013.01

Profit before exceptional items, finance cost 4,684.65 and taxation Finance Cost 4,131.76

Profit before taxation 552.89

Provision for tax (including Deferred Tax) (295.80)

NetProfit 848.69

Balance of Profit / (Loss) from previous year Not available Less: Proposed Dividend Not available

Less : Dividend Distribution Tax Not available

Balance carried to Balance Sheet Not available

Note: The Company does not have significant influence on Kirloskar Brothers Limited (KBL) as it does not participate in the management and / or financial decisions of KBL. As such KBL is not an Associate Company of the Company under Accounting Standard 18, and as such, its financials are not included in the Consolidated Financial Statements of the Company. Hence, the aforesaid information is obtained from the quarter and year ended financial results of KBL approved by its Board on 26 April 2015 and published on 27 April 2015.

Name and Registered Office of the Associate Kothrud Power Equipment Limited Company 13/A, Karve Road, Kothrud, Pune 411 038

%Holding 50%

Note: The Consolidated Financial Statement does not include the financials of Kothrud Power Equipment Limited. Refer Note No. 33 of the Consolidated Financial Statements of the Company for the Financial Year 2014-15. In view of this, the financial information as required herein above is not given.

CHANGE IN THE NATURE OF BUSINESS, IF ANY:

During the Financial Year under review, there has been no change in the nature of business.

DETAILS OF DIRECTORS, OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTMENT OR HAVE RESIGNED DURING THE YEAR:

Directors appointed during the year

Name of Director Designation Terms of appointment

Mr. Vijay B. Shirke * Independent Director Five consecutive years commencing from 2 September 2014 up to 1 September 2019

Mrs. Priyamvada A. Ranade* Independent Director Five consecutive years commencing from 2 September 2014 up to 1 September 2019

Mr. Atul C. Kirloskar ** Director Re-appointed with effect from 2 September 2014, subject to retirement by rotation

Mr. Vijay K. Bajhal *** Independent Director Two consecutive years commencing from 2 September

2014 upto 1 September 2016

Mr. Shrikrishna N. Inamdar *** Independent Director Five consecutive years commencing from 2 September

2014 up to 1 September 2019

* Mr. Vijay B. Shirke and Mrs. Priyamvada A. Ranade co-opted as Additional Directors on 18 July 2014 and were appointed in the Annual General Meeting held on 2 September 2014.

** Mr. Atul C. Kirloskar retired by rotation and was re-appointed in the Annual General Meeting held on 2 September 2014.

*** Mr. Vijay K. Bajhal and Mr. Shrikrishna N. Inamdar were on the Board of Directors of the Company in the previous year and were reappointed as Independent Directors to comply with the provisions relating to tenure of Independent Directors as per Section 149 of the Companies Act, 2013.

Employees designated as Key Managerial Personnel (KMP) during the year.

Name of KMP Designation

Ms. Aditi V. Chirmule Executive Director

Mrs. Jasvandi M. Deosthale Chief Financial Officer

Mrs. Ashwini V. Mali Company Secretary

Directors and KMP''s resigned during the year

Mr. Anant R. Sathe, Ms. Gauri A. Kirloskar and Mr. Vijay B. Shirke (Independent Director) resigned as Directors with effect from 17 July 2014, 29 September 2014 and 26 March 2015, respectively. The Board places on record its sincere appreciation for the valuable services rendered by them.

Directors proposed to be appointed / re-appointed at the ensuing Annual General Meeting

The Board of Directors, in its meeting held on 19 May 2014, co-opted Mr. Tejas P. Deshpande as an Additional Independent Director, as recommended by the Nomination and Remuneration Committee of the Company. He holds office of Director up to the date of ensuing Annual General Meeting of the Company.

Mr. Nihal G. Kulkarni, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re- appointment.

The brief resumes and other details relating to the Directors who are proposed to be appointed / re-appointed, as required to be disclosed under Clause 49 of the Listing Agreement, forms part of the Explanatory Statement to the Notice of the Annual General Meeting.

NAMES OF THE COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR:

None.

DETAILS RELATING TO DEPOSITS, COVERED UNDER CHAPTER V OF THE COMPANIES ACT, 2013:

None.

DETAILS OF SIGNIFICIANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE:

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.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THE FINANCIAL STATEMENTS:

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 along with the Management oversees results of the internal audit and reviews implementation on a regular basis.

COMPOSITION OF AUDIT COMMITTEE:

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

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

The relevant information pursuant to Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as ''Annexure V'' to this Report.

VIGIL MECHANISM:

The Company has formulated and implemented the Whistle Blower Policy / Vigil Mechanism (''the Policy'') during the year under review. This has provided a mechanism for directors and employees of the Company 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 Company''s code of conduct. The Policy has also been uploaded on the Company''s website.

PREVENTIONS OF SEXUAL HARASSMENTS POLICY:

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

CASH FLOW:

A Cash Flow Statement for the year ended 31 March 2015, is attached to the Balance Sheet.

CORPORATE GOVERNANCE:

A report on the Corporate Governance, along with the certificate of compliance from the Auditors, forms part of the Annual Report.

ACKNOWLEDGEMENTS:

Your Directors would like to place on record their appreciation of the contribution made and support provided to the Company by the shareholders, employees and bankers, during the year under Report.

For and on behalf of the Board of Directors

ATULC. KIRLOSKAR Date : 19 May 2015 CHAIRMAN Place : Pune DIN : 00007387


Mar 31, 2014

The Directors have pleasure in presenting this Report with Audited Annual Accounts of the Company for the year ending 31 March 2014.

Financial Performance:

Particulars 2013-14 2012-13

(in lakhs) (in lakhs)

Total Income 6,377.90 5,179.84

Total Expenditure 970.40 883.94

Profit before exceptional items and taxation 5,407.50 4,295.90

Profit before taxation 5,407.50 4,295.90

Provision for tax (including Deferred Tax) 740.35 685.00

Net Profit 4,667.15 3,610.90

Balance of Profit / (Loss) from previous year 27,732.68 25,656.40

Reversal of Dividend Distribution Tax for 2012-13 63.00

Surplus available for appropriation 32,462.83 25,656.40

Appropriations:

Your Directors propose to appropriate the available surplus as follows:

Particulars 2013-14 2012-13

(in lakhs) (in lakhs)

Transfer to Reserve Fund in terms of Section 45-IC of the Reserve Bank of India Act, 1934 933.43 722.18

Proposed Dividend 388.35 388.35

Tax on proposed dividend - 63.00

Transfer to General Reserve 466.72 361.09

Balance carried to Balance Sheet 30,674.33 27,732.68

Dividend:

Your Directors recommend a dividend of 40% (Rs.4/- per equity share ofRs. 10/- each) (previous year dividend was 40% i.e. X4/- per equity share ofRs.10/- each) for the Financial Year ended 31 March 2014.

Classification of the Company as a Core Investment Company - Non-Banking Financial Company (CIC NBFC):

In the year under review, the Board has taken a view that based on the Audited Financial Statements for the year ending 31 March 2013, the Company is no more a Non-Banking Financial Company (NBFC). This status remains unchanged based on the Audited Financial Statements for the year ending 31 March 2014.

The Company had intimated the same to the Reserve Bank of India (RBI) vide its letter dated 8 October 2013. The Company has not received any communication in this regards from the RBI till date.

Due to non-receipt of communication from the RBI, the Company has created reserves under Section 45 IC of the Reserve Bank of India Act, 1934, for the year under review and continues to show income from the bank fixed deposits as Operating Income.

SEBI Regulations and Listing Fees:

The annual listing fees for the year under review have been paid to BSE Limited and National Stock Exchange of India Limited, where your Company''s shares are listed.

Subsidiary Company and Consolidated Financial Statements

As on 31 March 2014, the Company has one subsidiary i.e., Kirloskar Ferrous Industries Limited (KFIL).

The Board presents Audited Consolidated Financial Statements incorporating the duly Audited Financial Statements of KFIL and as prepared in compliance with the Accounting Standards and the Listing Agreement.

The Central Government vide its Circular dated 8 February 2011 issued directions under Section 212 of the Companies Act, 1956, granting general permission to all the companies for not attaching the Annual Accounts of Subsidiary Companies under certain conditions.

Accordingly, the Board of Directors of the Company at its meeting held on 15 May 2014 decided not to attach the Annual Accounts of its subsidiary company. The Company has attached to the Annual Accounts, the Audited Consolidated Financial Statements as required by the said circular.

Further, the Company undertakes that the Annual Accounts of the Subsidiary Company and the related detailed information shall be made available to the shareholders on demand, at any point of time. The Annual Accounts of the Subsidiary Company shall also be kept open for inspection by any shareholder at the Registered Office of the Company.

Brief highlights of businesses of subsidiary company:

Kirloskar Ferrous Industries Limited (KFIL)

KFIL is in the business of manufacturing of iron castings and has its manufacturing facilities at Bevinahalli Village in Karnataka and Solapur in Maharashtra.

The Board of Directors of KFIL has recommended a dividend of Rs. 1.25 (25%) per equity share, which is the same as that of the last financial year.

KFIL achieved net sales of Rs. 12,321 million (previous year Rs. 11,981 million). Sales value has shown a growth of 2.83 percent in spite of stoppage of one of the mini blast furnace for refractory relining.

In terms of volume growth in sales, Pig Iron sales has increased by 16.50 percent, while castings sales increased by 2.76 percent compared to previous year.

The profit before tax for the year under review stood at Rs. 579.86 million as compared to Rs. 624.19 million of the previous year after providing for depreciation and amortisation.

During the year under review, the Company availed term loan of Rs. 15 Crores.

The slowdown in automobile industry has impacted the production of castings with consequent effect on sales. KFIL sold 60,396 MT castings aggregating to Rs. 4,600.37 million during financial year 2013-14 as compared to 58,773 MT castings aggregating to Rs. 4,420 million in the previous year.

KFIL sold 275,692 MT of pig iron valued at Rs. 7,173.87 million during financial year 2013-14 as compared to 236,633 MT of pig iron valued at Rs. 6,771.08 million in the previous year.

The Consolidated Financial Statements prepared as per applicable provisions and duly audited by the Statutory Auditors, are presented elsewhere in this Annual Report.

Directors:

Mr. A. R. Sathe resigned as Director with effect from 17 July 2014. The Board places on record its sincere appreciation for the valuable services rendered by Mr. A. R. Sathe.

In compliance with the provisions of Section 203 of the Companies Act, 2013, Ms. Aditi Chirmule, Executive Director & Company Secretary, has been re-designated as the Executive Director of the Company with effect from 18 July 2014, resulting into her cessation as Company Secretary of the Company. She continues to be Executive Director of the Company.

In accordance with the provisions of Section 149 of the Companies Act, 2013, your Board of Directors seek the appointment of Mr. Vijay K. Bajhal and Mr. S. N. Inamdar, as Independent Directors for a period of two (2) consecutive years and five (5) consecutive years, respectively.

Pursuant to Section 161 of the Companies Act, 2013, read with the Articles of Association of the Company, the Board of Directors, in its meeting held on 18 July 2014, co-opted Mrs. Priyamvada Ranade and Mr. Vijay Shirke as Additional Independent Directors, as recommended by the Nomination and Remuneration Committee of the Company. They hold office of Director up to the date of ensuing the Annual General Meeting of the Company.

In terms of Sections 149, 152, Schedule IV and other applicable provisions, if any, of the Companies Act, 2013, read with Companies (Appointment and Qualification of Directors) Rules, 2014, the Independent Directors can hold office for a term of up to 5 (five) consecutive years on the Board of Directors of your Company and are not liable to retire by rotation.

The Company has received notices under Section 160 of the Companies Act, 2013, from a member signifying their intention to propose Mrs. Priyamvada Ranade, Mr. Vijay Shirke, Mr. V. K. Bajhal and Mr. S. N. Inamdar as candidates for the office of Independent Directors at the ensuing Annual General Meeting. All of them are eligible for appointment.

The Company has also received the requisite disclosure / declarations from Mrs. Priyamvada Ranade, Mr. Vijay Shirke, Mr. V. K. Bajhal and Mr. S. N. Inamdar as required under Section 149 and other applicable provisions of the Companies Act, 2013.

Mr. Atul C. Kirloskar, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re- appointment.

The brief resumes and other details relating to the Directors who are proposed to be appointed/re-appointed, as required to be disclosed under Clause 49 of the Listing Agreement, form part of the Explanatory Statement to the Notice of the Annual General Meeting.

Directors'' Responsibility Statement:

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

- That in the preparation of the annual accounts, the applicable accounting standards have been followed along with the proper explanation relating to material departures;

- That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

- 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; and

- That the Directors have prepared the annual accounts on a going concern basis.

Cash Flow:

A Cash Flow Statement for the year ended 31 March 2014 is attached to the Balance Sheet.

Corporate Governance:

A report on the Corporate Governance, along with the certificate of compliance from the Auditors, forms part of the Annual Report.

Auditors:

G.D. Apte & Co., Chartered Accountants, (Firm Registration Number 100515W), Pune, Statutory Auditors of the Company are proposed to be appointed as Auditors of the Company from the conclusion of the ensuing Annual General Meeting (AGM) till the conclusion of the 2nd Annual General Meeting of the Company (after the commencement of the Companies Act, 2013) for the financial year ended 2015-16 subject to the ratification of the appointment by the members at every AGM held after the ensuing AGM. The requisite certificates as per Section 224(1B) of the Companies Act, 1956 and Section 139 of the Companies Act, 2013, have been received by the Company.

Fixed / Public Deposit:

Your Company has not accepted any public deposits during the year.

Statutory Disclosures:

(A) Conservation of Energy and Technology Absorption

The Company has no particulars to report regarding conservation of energy, technology absorption as required under Section 217 (1) (e) of the Companies Act, 1956, read with the Rules thereunder.

(B) Foreign Exchange Earnings and Outgo

i. Total Foreign exchange used Nil

ii.Total Foreign exchange earned 6.86 Lakhs

Particulars of Employees:

The Company has no particulars to report as required under the provisions of Sub-Section (2A) of Section 217 of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 and Notification dated 31 March 2011 issued by Central Government.

Companies Act, 2013:

According to the notification issued by the Ministry of Corporate Affairs dated 26 March 2014, 283 Sections out of a total of 470 Sections of the Companies Act, 2013, along with Rules relating thereto under the Companies Act, 2013, have come into effect from 1 April 2014.

Your Company is in the process of implementing the various provisions of this new Act.

Acknowledgments:

Your Directors would like to place on record their appreciation of the contribution made and support provided to the Company by the shareholders, employees and bankers, during the year under report.

For and on behalf of the Board of Directors

Place: Pune ATUL C. KIRLOSKAR

Date : 18 July 2014 CHAIRMAN


Mar 31, 2013

To the Members,

The Directors have pleasure in presenting this Report with Audited Annual Accounts of the Company for the year ending 31 March 2013.

Financial Performance:

Particulars 2012-2013 2011-2012 Rs.(in lakhs) Rs.(in lakhs)

Total Income 5,179.84 7,863.45

Total Expenditure 883.94 941.35

Profit before exceptional items and taxation 4,295.90 6,922.10

Profit before taxation 4,295.90 6,922.10

Provision for tax ( including Deferred Tax) 685.00 176.50

Net Profit 3,610.90 6,745.60

Balance of Profit/(Loss) from previous year 25,656.40 21,385.83

Surplus available for appropriation 29,267.30 28,131.43

Appropriations:

Your Directors propose to appropriate the available surplus as follows:

Particulars 2012-2013 2011-2012 Rs.(in lakhs) Rs.(in lakhs)

Transfer to Reserve Fund in terms of Section 45-IC of the

Reserve Bank of India Act, 1934 722.18 1,349.12

Proposed Dividend 388.35 388.35

Tax on proposed dividend 63.00 63.00

Transfer to General Reserve 361.09 674.56

Balance carried to Balance Sheet 27,732.68 25,656.40

Dividend:

Your Directors recommend a dividend of 40% (Rs. 4/- per equity share of Rs. 10/- each) (previous year dividend was 40% i.e. Rs. 4/- per equity share of Rs. 10/- each) for the Financial Year ended 31 March 2013.

Classification of the Company as a Core Investment Company - Non Banking Financial Company (CIC NBFC):

For the year under consideration, the Company was classified as Non Banking Financial Company (NBFC) - Core Investment Company (CIC) based on its financial assets and investment income for the previous year and is exempt from registration with the Reserve Bank of India (RBI).

Accordingly, the RBI has granted the Company exemption from the requirement of Registration under Section 45-IA (4) of the Reserve Bank of India Act, 1934, for carrying on the business of a Core Investment Company vide its letter dated 15 October 2012.

As per Audited Financial Statements for the Financial Year 2012-13, the financial assets of your Company are more than 50% of its total assets but its investment income is less than 50% of its total income. Hence, the Company will be declassified as NBFC-CIC with effect from 1 April 2013.

SEBI Regulations & Listing Fees:

The annual listing fees for the year under review have been paid to BSE Limited and National Stock Exchange of India Limited, where your Company''s shares are listed.

Directors:

Mr. Shrikrishna N. Inamdar and Mr. Vijay K. Bajhal retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

The brief resumes and other details relating to the Directors who are proposed to be re-appointed, as required to be disclosed under Clause 49 of the Listing Agreement, form part of the Report on Corporate Governance.

Directors'' Responsibility Statement:

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

- That in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with the proper explanation relating to material departures;

- That the Directors have selected such Accounting Policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit of the Company for that period;

- 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; and

- That the Directors have prepared the Annual Accounts on a going concern basis.

Cash Flow:

A Cash Flow Statement for the year ended 31 March 2013 is attached to the Balance Sheet.

Corporate Governance:

A report on the Corporate Governance, along with the certificate of compliance from the Auditors, forms part of the Annual Report.

Auditors:

M/s G. D. Apte & Co., Chartered Accountants, (Firm Registration Number 100515W), Pune, Statutory Auditors of the Company, retire at the ensuing Annual General Meeting, and are eligible for re-appointment. The requisite certificate as per Section 224(1B) of the Companies Act, 1956, has been received by the Company. The Audit Committee has recommended their re-appointment.

Fixed / Public Deposit:

Your Company has not accepted any public deposits during the year.

Statutory Disclosures: (A) Conservation of Energy and Technology Absorption

The Company has no particulars to report regarding conservation of energy, technology absorption as required under Section 217 (1) (e) of the Companies Act, 1956, read with the Rules thereunder.

(B) Foreign Exchange Earnings and Outgo

i. Total foreign exchange used Rs. Nil

ii. Total foreign exchange earned Rs. 5, 38,935.77

Particulars of Employees:

The Company has no particulars to report as required under the provisions of Sub-Section (2A) of Section 217 of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, and Notification dated 31 March 2011 issued by the Central Government.

Acknowledgments:

Your Directors would like to place on record their appreciation of the contribution made and support provided to the Company by the shareholders, employees and bankers during the year under report.

For and on behalf of the Board of Directors

Place: Pune ATUL C. KIRLOSKAR

Date: 29 April 2013 CHAIRMAN


Mar 31, 2012

The Directors have pleasure in presenting this Report with audited Annual accounts of the Company for the year ending 31 March 2012.

Financial Performance:

Particulars 2011-2012 2010-2011

Rs.(in lakhs) Rs.(in lakhs)

Total Income 7,863.45 6,888.65

Total Expenditure 941.35 868.20

Profit before exceptional items & taxation 6,922.10 6,020.45

Profit before taxation 6,922.10 6,020.45

Provision for tax (including Deferred Tax) 176.50 486.88

Net Profit 6,745.60 5,533.57

Balance of Profit/(Loss) from previous year 21,385.83 16,687.71

Surplus available for appropriation 28,131.43 22,221.28

Appropriations:

Your Directors propose to appropriate the available surplus as follows:

Particulars Rs.(in lakhs) Rs. (in lakhs)

Transfer to Reserve Fund in terms of section 45-IC of the 1,349.12 - Reserve Bank of India Act, 1934

Proposed Dividend 388.35 242.72

Tax on proposed dividend 63.00 39.37

Transfer to General Reserve 674.56 553.36

Balance carried to Balance Sheet 25,656.40 21,385.83

Dividend:

Your Directors recommend a dividend of 40% (Rs 4/- per equity share ofRs 10/- each) (previous year dividend was 25% i.e. Rs. 2.50 per equity share ofRs 10/- each) for the financial year ended 31 March 2012.

Classification of the Company as a Core Investment Company - Non Banking Financial Company (CIC NBFC):

Your Company is having financial assets which amount to more than 50% of its total assets and its financial income is also more than 50% of its gross income. In view of this, the Company becomes a Non Banking Financial Company (NBFC) as per the guidelines issued by the Reserve Bank of India (RBI) in this regard.

In terms of the Guidelines issued by the RBI for Core Investment Companies (CIC) your Company meets the parameters for being classified as a CIC NBFC and is exempt from registration with the RBI.

The Company has informed the RBI that based on Notification dated 5 January 2011, the Company fulfills the requirement of being classified as a CIC NBFC. The RBI instructed the Company to divest investments held by it outside the group companies (as defined by the Notification Number RBI/2010-11/354 DNBS (PD) CC. No. 206/03.10.001/2010-11 dated 05 January 2011). Accordingly, the Company has disposed off its investments held outside the group. The Company has intimated the same to the RBI.

SEBI Regulations & Listing Fees:

The annual listing fees for the year under review have been paid to BSE Limited and National Stock Exchange of India Limited, where your Company's shares are listed.

Directors:

Mr. Nihal Kulkarni resigned as Managing Director of the Company with effect from the close of business hours of 25 January 2012. However, he continues to be Non-Executive Director of the Company.

Pursuant to Section 260 of the Companies Act, 1956, read with Article 160 of the Articles of Association of the Company, the Board of Directors, in its meeting held on 25 January 2012, co-opted Ms. Aditi Chirmule as an Additional Director on the Board of the Company. She holds office of Director up to date of ensuing the Annual General Meeting of the Company. She is eligible for appointment.

The Board of Directors in its meeting held on 25 January 2012 has also appointed Ms. Aditi Chirmule as the Executive Director & Company Secretary of the Company, for a period of 5 years with effect from 25 January 2012. A proposal for her appointment as the Executive Director & Company Secretary and remuneration payable to her is being placed before the members for their approval at the ensuing Annual General Meeting.

Pursuant to Section 260 of the Companies Act, 1956, read with Article 160 of the Articles of Association of the Company, the Board of Directors, in its meeting held on 26 April 2012, co-opted Ms. Gauri Kirloskar as an Additional Director on the Board of the Company. She holds office of Director up to date of ensuing the Annual General Meeting of the Company. She is eligible for appointment.

Mr. Nihal Kulkarni and Mr. A. N. Alawani retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

The brief resumes and other details relating to the Directors who are proposed to be appointed/re-appointed, as required to be disclosed under Clause 49 of the Listing Agreement, form part of the Report on Corporate Governance.

Directors' Responsibility Statement:

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

- That in the preparation of the annual accounts, the applicable accounting standards have been followed along with the proper explanation relating to material departures;

- That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

- 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; and

- That the Directors have prepared the annual accounts on a going concern basis.

Corporate Governance:

A report of the Corporate Governance, along with the certificate of compliance from the Auditors, forms part of the Annual Report.

Auditors:

M/s. G. D. Apte & Co., Chartered Accountants, (Firm Registration Number 100515W), Pune, Statutory Auditors of the Company, retire at the ensuing Annual General Meeting, and are eligible for re-appointment. The requisite certificate as per Section 224(1 B) of the Companies Act, 1956 has been received by the Company. The Audit Committee has recommended their re-appointment.

Fixed I Public Deposit:

Your Company has not accepted any public deposits during the year. Statutory Disclosures: (A) Conservation of Energy and Technology Absorption

The Company has no particulars to report regarding conservation of energy, technology absorption as required under Section 217 (1) (e) of the Companies Act, 1956, read with the Rules there under.

(B) Foreign Exchange Earnings and Outgo

i. Total Foreign exchange used Rs Nil

ii. Total Foreign exchange earned Rs 23,50,854.73

Particulars of Employees:

Pursuant to the Central Government Notification dated 31 March 2011, the Company has no particulars as required under the provisions of sub-section (2A) of section 217 of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975.

Acknowledgments:

Your Directors would like to place on record their appreciation of the contribution made and support provided to the Company by the shareholders, employees and bankers during the year under report.

For and on behalf of the Board of Directors

Place: Pune ATULC. KIRLOSKAR

Date: 26 April 2012 Chairman


Mar 31, 2010

The Directors have pleasure in presenting this Report with audited annual accounts of the Company for the year ending 31 March 2010.

Scheme of Arrangement, Change of Name and Issue of Shares:

During the year under review, the Honble High Court of Judicature at Bombay approved the Scheme of Arrangement between the Company and Kirloskar Engines India Ltd. (KEIL) vide its order dated 31 July 2009 read with its order dated 19 March 2010 (the "Scheme"). The Appointed Date of the Scheme of Arrangement is 1 April 2009. The Balance Sheet and Profit and Loss Account and related financial statements have been made, accordingly, pursuant to the provisions of the said Scheme.

In terms of the Scheme, the Engines and Auto-components business of the Company was transferred to KEIL with effect from 31 March 2010, and vested in KEIL from the Appointed Date, i.e. 1 April 2009. The Company carried on the business that was transferred to KEIL in trust for it from the period 1 April 2009 to 31 March 2010. In view of this, previous years figures have not been given in respect of the financials given in this Report, as these figures are not comparable.

Also, pursuant to the Scheme, the name of the Company has been changed from "Kirloskar Oil Engines Limited" to "Kirloskar Industries Limited" with effect from 31 March 2010.

97,08,650 equity shares of Rs. 10 each were issued to the members of the Company as on 22 April 2010, the Record Date for the purpose of issue of shares, on 30 April 2010. The equity shares were issued to every member of the Company holding for example 20 equity shares of Rs. 21- each in the Company as on Record Date i.e. 22 April 2010,15 Equity shares of Rs. 21- in KEILand 1 Equity share of Rs. 10/-credited as fully paid up in the Company.

Relisting on Stock Exchanges:

Further to the issue of shares to the shareholders pursuant to the Scheme, the Company is in the process of making an application for relisting of the new shares, to the Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE), on which its equity shares were already listed. Financial Performance:

(Rupees in 000s) 2009-2010

Total Income 507,365

Total Expenditure 85,649

Profit before exceptional items & taxation 421,716

Profit before taxation 421,716

Provision for tax (including Deferred Tax) 34,789

Net Profit 386,927

Balance of Profit / (Loss) from previous year 1,661,297

Surplus available for appropriation 2,048,224

Appropriations:

Your Directors propose to appropriate the available surplus as follows:

(Rupees in 000s) Proposed Dividend

Interim Dividend 291,260

Corporate Tax on Dividend 49,500

Transferto Contingency Reserve

Transfer to General Reserve 38,693

Balance carried to Balance Sheet 1,668,771

Dividend:

Interim Dividend of 75% (Rs. 1.50 per share) was paid in the month of February 2010. Your Directors do not recommend final dividend for the year. (Total dividend paid in the previous year was 50%).

Directors:

Consequent to the approval of the Scheme, in terms of Clauses 6.1, 6.2, 8.1 and 8.2 of the Scheme, the services of Mr. Gautam A. Kulkarni, Mr. Rahul C. Kirloskar and Mr. R. R. Deshpande, Whole-time Directors of the Company were transferred to KEIL with effect from 31 March 2010. Accordingly, the said Mr. Gautam A. Kulkarni, Mr. Rahul C. Kirloskar and Mr. R. R. Deshpande, resigned as directors of the Company with effect from the close of working hours of 30 March 2010.

Mr. Sanjay Kirloskar, Vice Chairman and Director, Mr. U. V. Rao, Mr. R. Srinivasan, Mr. P. G. Pawar, Dr. Naushad Forbes, Mr. H. M. Kothari and Mr. M. Laxminarayan, directors of the Company, resigned as directors of the Company with effect from the close of the meeting of the Board of Directors held on 30 March 2010.

The Board of Directors would like to place on record its appreciation of the contribution made and guidance given by these directors to the development of the Company.

Pursuant to Section 260 of the Companies Act, 1956, read with Article 160 of the Articles of Association of the Company, the Board of Directors, in its meeting held on 30 March 2010, co-opted Mr. S. N. Inamdar and Mr A. R. Sathe, as Additional Directors on the Board of the Company. They hold office of Director up to the date of ensuing Annual General Meeting of the Company. Your Company has received a notice under Section 257 of the Companies Act, 1956, along with deposit, from a member proposing the candidature of Mr. S. N. Inamdar and Mr. A. R. Sathe for the office of Director. The brief resumes and other details relating to these Directors form part of the Explanatory Statement to the Notice of the Annua! General Meeting.

Mr. V. K. Bajhal and Mr. A. N. Alawani retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

The brief resumes and other details relating to the Directors who are proposed to be appointed/re-appointed, as required to be disclosed under Clause 49 of the Listing Agreement, form part of the Report on Corporate Governance.

Mr. Atul C. Kirloskar, Chairman and Managing Director of the Company, has also been appointed as the Managing Director of KEILwith effect from 31 March 2010. Mr. Kirloskar will not be drawing any remuneration from the Company with effect from 31 March 2010.

Directors Responsibility Statement:

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

That in the preparation of the annual accounts, the applicable accounting standards have been followed along with the proper explanation relating to material departures;

That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

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; and

That the Directors have prepared the annual accounts on a going concern basis.

Corporate Governance:

A report of the Corporate Governance, along with the certificate of compliance from the Auditors, forms part of this Report.

Auditors:

You are requested to appoint auditors for the current year. The retiring auditors M/s. Dalai & Shah, Chartered Accountants, (Registered Firm No. 102021 W), are eligible for re-appointment.

Statutory Disclosures:

The Company has no particulars to report regarding conservation of energy, technology absorption, and foreign exchange earnings and outgo as required under Section 217(1) (e) of the Companies Act, 1956 read with the Rules thereunder.

There is no employee of the Company drawing such remuneration, which requires disclosure under Section 217(2A) of the Companies Act, 1956.

Acknowledgements:

Your Directors would like to place on record their appreciation of the contribution made and support provided to the Company by the shareholders, employees and bankers, during the period under report.

For and on behalf of the Board of Directors

ATUL C. KIRLOSKAR Chairman and Managing Director Date: 14 May 2010 Place :Pune

 
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