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Directors Report of Yuken India Ltd.

Mar 31, 2014

Dear Members,

The Directors are pleased to present the 38th annual report and the audited accounts for the financial year ended 31st March 2014.

FINANCIAL RESULTS

The Financial performance of the Company, for the year ended 31st March 2014 is summarized below.

(Rs in Lakhs)

Particulars 2013-14 2012-13

Total income 16,512 15,523

Total expenditure 15,591 14,305

Profit before interest, depreciation and tax 921 1,218

Finance cost 376 474

Depreciation 431 413

Profit before Exceptional items and tax 114 331

Exceptional Item 201 -

Profit after Exceptional item & before tax 315 331

Provision for taxation(Net of deferred tax) 61 130

Profit after tax 254 201

Balance in Statement of profit and loss 4,434 4,297

Amount available for appropriation 4,688 4,498

Appropriations:

General reserve 13 11

Proposed dividend 45 45

Tax on proposed dividend 7 7

Balance carried to Balance Sheet 4,623 4,435

Total 4,688 4,498

REVIEW OF PERFORMANCE

During the year under review, the Company achieved a turnover of Rs. 16,449/- lakhs compared to Rs. 15,404/- lakhs in 2013. The operations of the Company for the year under review have resulted in a net profit of Rs.254/- lakhs.

DIVIDEND

Your Directors are pleased to recommend a dividend of 15% on the equity shares of the company for the year ended 31st March 2014, subject to the approval of the members at the ensuing annual general meeting.

INDUSTRIAL RELATIONS

Employee relations continue to be cordial. Your Directors would like to place on record their appreciation of the valuable contribution to the operations of the Company during the year.

CORPORATE GOVERNANCE

Your Company is committed to maintaining high standards of Corporate Governance. A Report on Corporate Gover- nance along with a certificate from the statutory auditors on compliance of Corporate Governance norms is part of this Annual Report.

COMPLIANCE CERTIFICATE

A Report on Compliances along with the certificate from the Practicing Company Secretaries on compliances is part of this Annual Report.

Information required under section 217(2A) of the Companies Act 1956 read with Companies (Particulars of Employment) Rules, 1975

In terms of the provisions of section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors'' Report.

Information required under section 217(2A) of the Companies Act 1956 read with Companies (Particulars of Employ- ment) Rules 1975

I

Sl Name Desig- GrossLast Qualif- Age Date of Exper- Last No nation Remune- ication commme- ience employ- ration ncement (inclu- ment held/ (Rs.) of empl- ding designa- oyment previous tion/orga- years nization if any

- Nil -

1. Employment throughout the year under review and were in receipt of remuneration for that year in the aggregate of not less than Rs 60,00,000 or more - Nil

2. Annual remuneration as above includes salary, allowances and perquisites.

3. The above appointment is contractual.

II. Employees of the Company who were employed for part of the financial year and in receipt of remuneration at a rate, which in aggregate was not less than Rs 500,000/- pm - Nil

DIRECTORS

During the year, the Ministry of Corporate Affairs (MCA) has notified majority of the provisions inter alia provisions relating to selection, manner of appointment,roles,functions, duties, re-appointment of independent directors (IDs) and the relevant rules under the Companies Act, 2013 (the Act 2013) and made them effective 1st April, 2014.

In terms of the provisions of Section 149(10) read with Section 149(5) of the Act, 2013, IDs are eligible to hold office for a term upto five consecutive years on the board and eligible for re-appointment for the second term on passing special resolutions by the Company. During the period, they will not be liable to ''retire by rotation'' as per the provisions of Sections 150(2), 152(2) read with schedule 1V to the Act 2013.

It is, therefore proposed to appoint them as IDs for a consecutive period of five years at the AGM. Necessary declara- tions have been obtained from them, as envisaged under the Act 2013. In terms of the provisions of sub-section(6) read with explanation to Section 152 of the Act 2013, two-third of the total number of directors (excluding IDs) are liable to retire by rotation and out of which, one third is liable to retire by rotation at every annual general meeting. Mr.Osamu Tanaka, director of the Company, is.therefore, liable to retire by rotation, at the ensuring AGM, and being eligible, offers himself for re-appointment.

Mr. Y Mukaide has been serving on the board since 2005. During his tenure of office,he has made distinct and immense contribution to the deliberations of the meetings of the board in general and for the growth of the company in particular. Yuken Kogyo Company Limited (YKC) withdrawn his directorship owing to his retirement. The Board does hereby record its deep sense of appreciation for the valuable services rendered by him during his tenure.

As per the direction of YKC Mr.Shiro Hattori has to be appointed as a director in his place.

Mr. V Balaji Bhat,Independent director of the Company resigned from the Board effective from 8th February,2014. The Board does hereby record its deep sense of appreciation for the valuable services rendered by him during his tenure.

The brief resume of the directors proposed to be appointed and re-appointed and other relevant information have been furnished in the Notice convening the AGM. Appropriate resolutions for their appointment/re-appointment are being placed for approval of the members at the AGM.

The Board, therefore, recommends their appointment/re-appointment as directors of the Company.

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

1. In the preparation of the accounts for the year ended 31st March 2014 the applicable accounting standards have been followed and there are no material departures from the same;

2. The accounting policies which have been selected are applied consistently, judgments and estimates that are reasonable and prudently is made so as to give a true and fair view of the state of affairs of the Company at the financial year ended 31st March 2014 and of the profit of the Company for that year;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

4. The accounts for the year ended 31st March 2014 have been prepared on a going concern basis.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis (MDA), which forms part of this Directors'' Report, sets out an analysis of business including the industry scenario, performance, financial analysis and risk mitigation.

FIXED DEPOSITS

The Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on "Consolidated Financial statements" read with Accounting Standard AS-23 on "Accounting for Investments in Associates", the audited Consolidated Financial Statements are pro- vided in the Annual Report.

SUBSIDIARY COMPANIES

In Accordance with the general Circular issued by the Ministry of Corporate Affairs, Government of India, the Balance sheet, the statement of Profit and Loss and other documents of the Subsidiary Companies are not being attached with the Balance Sheet of the Company.

The Company will make available the Annual Accounts of the Subsidiary Companies and the related detailed informa- tion to any member of the Company who may be interested in obtaining the same. The Annual Accounts of the Subsidiary Companies will also be kept open for inspection by any investor at the Registered Office of the Company and that of the respective Subsidiary Companies. The consolidated Financial Statements presented by the Company include financial results of its Subsidiary Companies.

During the year under review, Your Company has the following subsidiary Companies viz (i) Coretec Engineering India Pvt Ltd, Bangalore (ii) Yuflow Engineering Pvt. Ltd, Chennai.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company recognizes the community as an important stakeholder in the business and believes in sustainability as a core parameter of its business strategy.

The Company provides opportunities to Engineering and Management Institute students to undergo in-plant training/ projects as part of their academic curriculum, thus enabling them to appreciate application of theoretical knowledge and get an exposure to the industrial practices.

The Company''s employees participate in blood donation camps every year and donate blood.

Employees are trained in ''First -Aid'' regularly. The Company has rain water harvesting system in place in all the factory plants.

The Company''s products and services have very little or marginal impact on the environment and it adheres to all related legal and statutory requirements.

HEALTH, SAFETY & ENVIRONMENT (HSE)

Health, Safety and environment are high priority issues in your Company.

Your Company conducts annual medical check up for its employees and assists the employees who need medical attention or counseling. The employees and their dependents are covered under Health Insurance Scheme.

Awareness workshops on safety in industries are being conducted for the employees in collaboration with the Direc- torate of Factories and Boilers, Government of Karnataka.

With no reportable injuries during the year, we are committed to enhance occupational health and safety. Apart from personnel safety, process safety is the top priority of the Management. Well documented standards, emphasis on line management responsibility, an improved and standardized process for safety observations are helping the manufacturing sites achieve higher employee participation in the safety management.

All manufacturing locations remained fully compliant with Environmental Regulations. High emphasis was placed on the productive use of raw materials, natural resources, energy and on reducing wastes. We believe that a sustainable Organization can be built only with the highest standards of performance on economic, social and environmental param- eters.

DISCLOSURE OF PARTICULARS UNDERSECTION 217(1) (E) OF THE COMPANIES ACT, 1956

Energy conservation is a consistent focus area for the Company both from a cost control and a social responsibility perspective. Energy conservation is a consistent endeavor of your Company. The power factor is regularly monitored and maintained between 0.99 and 1.00. Solar lights have been installed at Malur Plant.

INFORMATION UNDER SECTION 217 (1) (e) OF THE COMPANIES ACT 1956 READ WITH COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988:

1. Conservation of Energy:

The Company has taken several steps and also in the process of implementing several projects to conserve energy by various measures.

2. Research and Development (R&D)

The Company continues to invest in R&D activities towards development of new products and applications, improvement in operating efficiencies and reduction in manufacturing costs.

(a) Specific areas in which R&D carried out by the Company

Development of larger size valves for process and steel industries, rugged vane pumps for special applications and development of high efficiency gear pumps are some of the areas where R&D was carried out by the Company.

(b) Benefits derived as a result of above R&D efforts

Special products developed to meet specific requirements of customers which enable your Company to develop niche markets for growth.

(c) Future plan of action:

* Development of additional range of products.

* Focus on process improvements to enable the Company to penetrate the export market.

* Strong focus on employee involvement to eliminate waste in Operations through focused initiatives.

(d) Expenditure on R & D

There is a continuous increase in R & D expenditure as the scope of activities carried out keeps on increasing. The exact amount spent has not been apportioned this year.

4. Technology Absorption, Adaptation and Innovation:

(a) Efforts in brief, made towards technology absorption, adaptation and innovation:

* Special models of pumps and valves have been designed to meet specific needs of customers and these have enabled us to extend our customer base to include a wider range of industries.

* Indigenization is a continuous ongoing effort.

(b) Benefits derived as a result of the above efforts:

* Reduction of material cost.

* Quality improvement and improvement in product performance characteristics.

* Ability to innovate and produce new products.

(c) Information regarding technology imported during the last five years reckoned from the beginning of the financial year.

i Technology imported - For manufacture of Chip compacting machine

ii Year of Import: 2011

iii Has technology been fully absorbed? Yes

iv If not fully absorbed, areas where this has not taken place, reasons there off and future plans of action: N/A

COST AUDITORS

The Company has appointed M/S. K.S.Kamalakara & Co. Cost Accountants as cost auditors for conducting Cost Audit for the financial year 2013-14.

The Cost Audit Reports in XBRL mode for the financial year ended 31st March 2013, was filed on 27th December 2013. The Cost Audit Reports for the financial year ended 31st March 2014 will be filed before the due date.

STATUTORY AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, who are the statutory auditors of the Company, hold office, in accor- dance with the provisions of the Act till the conclusion of the ensuing annual general meeting and are eligible for re-appointment.

SECRETARIAL AUDITORS

The Company has appointed M/s.BG & Associates, Company Secretaries for the Secretarial Audit for the financial year 2014-15.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve risks and uncertainties. When used in this Report, the words "anticipate'', "believe", "estimate", "expect", "intend", "will" and other similar expressions as they relate to your Company and / or its business are intended to identify such forward-looking statements. Your Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances or achievements could differ materially from those expressed or implied in such forward-looking statements. This report should be read in conjunction with the financial statements included herein and notes thereto.

ACKNOWLEDGEMENTS

Your Directors thank the customers, auditors, vendors, banks, government, collaborators, investors and all other business associates for their continued support. Your Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company for their performance in the year under review.



For and on behalf of the Board

Place: Bangalore C P Rangachar CAPT. N S Mohanram R Srinivasan Date: 29th May 2014 Managing Director Director Director


Mar 31, 2012

The Board of Directors are pleased to present the 36th Annual Report and the Audited Accounts for the Financial Year ended 31st March 2012.

FINANCIAL RESULTS

The Financial performance of the Company, for the year ended 31st March 2012 is summarized below.

(Rs in Lakhs)

Particulars 2011-12 2010-11

Total Income 17,198 15,072

Total Expenditure 14,958 13,088

Profit before Interest, Depreciation & Tax 2,240 1,984

Finance cost 413 266

Depreciation 288 252

Profit Before Tax 1,539 1,466

Provision for Taxation(Net of deferred tax) 502 486

Profit After Tax 1,037 980

Balance in profit and Loss Account 3,451 2,658

Amount available for appropriation 4,488 3,638

Appropriations:

General Reserve 104 100

Proposed Dividend 75 75

Tax on Proposed Dividend 12 12

Balance Carried to Balance Sheet 4,297 3,451

Total 4,488 3,638

REVIEW OF PERFORMANCE

During the year under review, the Company achieved a turnover of Rs17,198 Lakhs compared to Rs 15,072 Lakhs in 2011. The operations of the Company for the year under review have resulted in a net profit of Rs1,037 Lakhs.

DIVIDEND

Your Directors are pleased to recommend a dividend of 25% on the equity shares of the Company for the year ended 31st March 2012, subject to the approval of the members at the ensuing Annual General Meeting.

INDUSTRIAL RELATIONS

Employee relations continue to be cordial. Your Directors would like to place on record their appreciation of the valuable contribution by the workmen representatives in arriving at an amicable wage settlement.

CORPORATE GOVERNANCE

Your Company is committed to maintaining high standards of Corporate Governance. A Report on Corporate Governance along with a certificate from the statutory auditors on compliance of Corporate Governance norms is part of this Annual Report.

Information required under section 217(2A) of the Companies Act 1956 Read with Companies (Particulars of Employment) Rules 1975

In terms of the provisions of section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors' Report. Having regard to the provisions of Section 219(1) (b)(iv) of the said act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particular may write to the Compliance Officer at the registered office of the Company.

Information required under section 217(2A) of the Companies Act 1956 Read with Companies (Particulars of Employment) Rules 1975

SI Name Designation Gross Qualification Age No Remuneration (Rs.)

1 CP Managing Rs.85.78 BE.MIE 69 Rangachar Director lakhs

Name Date of Experience Last commence (including employment ment of previous held/ employment years if any) designation

C P Rangachar 1978.05.01 47 Director-

PGI(P)

Ltd,

Chennai

1. Employment throughout the year under review and were in receipt of remuneration for that year in the aggregate of not less than Rs 60,00,000 or more.

2. Annual remuneration as above includes salary, allowances and perquisites.

3. The above appointment is contractual.

II. Employees of the Company who were employed for part of the financial year and in receipt of remuneration at a rate, which in aggregate was not less than Rs 500,000/- pm -

NIL

DIRECTORS

Under section 256(1) of the Companies Act, 1956, and article 116 of the Articles of the Company, Mr. R Srinivasan and Mr. V Balaji Bhat, Director is liable to retire by rotation at this Annual General Meeting. They are eligible and offer themselves for re-appointment. Brief Resume of Directors proposed to be re-appointed, nature of their expertise in specific functional areas, names of Companies in which they hold directorships and membership, their share holding in the Company are provided in the notice of AGM.

DIRECTOR'S RESPONSIBILITY STATEMENT

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

1. In the preparation of the accounts for the year ended 31st March 2012, the applicable accounting standards have been followed.

2. Such accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent made so as to give a true and fair view of the state of affairs of the Company at the financial year ended 31st March 2012 and of the profit of the Company for that year.

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. The accounts for the year ended 31st March 2012 have been prepared on a going concern basis.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis (MDA), which forms part of this Directors Report, sets out an analysis of business including the industry scenario,1 performance, financial analysis and risk mitigation.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on Consolidated Financial statements read with Accounting Standard AS-23 on Accounting for Investments in Associates, the Audited Consolidated Financial Statements are provided in the Annual Report.

SUBSIDIARY COMPANIES

In Accordance with the general Circular issued by the Ministry of Corporate Affairs, Government of India, the Balance sheet, Profit and Loss Account and other documents of the Subsidiary Companies are not being attached with the Balance Sheet of the Company.

The Company will make available the Annual Accounts of the subsidiary Companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The Annual Accounts of the subsidiary Companies will also be kept open for inspection by any investor at the Registered Office of the Company and that of the respective subsidiary Companies. The consolidated Financial Statements presented by the Company include financial results of its subsidiary Companies.

During the year under review, your Company has the following subsidiary Companies viz (i) Courted Engineering India Pvt Ltd, Bangalore (ii) Yalow Engineering Pvt. Ltd, Chennai and (iii) Prism Hydraulics Pvt Ltd, Belgaum.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company recognizes the community as an important stakeholder in our business and believes in 'sustainability' as a core parameter of its business strategy.

The Company provides opportunities to Engineering and Management Institute students to undergo in-plant training/ projects as part of their academic curriculum, thus enabling to appreciate application of theoretical knowledge and get an exposure to the industrial practices.

The Company's employees participate in blood donation camps every year and donate blood.

Employees are trained in 'First -Aid' regularly. The Company has rain water harvesting systems in place covering the entire Factory premises.

During the year, your Company donated Computers to a Government School at Malur, Kolar District, Karnataka.

The Company's products and services have very little or marginal impact on the environment and it adheres to all related legal and statutory requirements.

Health, Safety & Environment. (HSE)

Health, Safety and Environment are high priority issues in your Company.

Your Company conducts annual medical checkup for its employees and assists the employees who need medical attention or counseling. The employees and their dependents are covered under Health Insurance Scheme.

Awareness workshops on Safety in Industries are being conducted to the employees in collaboration with the Directorate of Factories and Boilers, Government of Karnataka.

With no reportable injuries during the year, we are committed to enhance occupational health and safety. Apart from personnel safety, process safety is in the top priority of the Management. Well documented standards, emphasis on line management responsibility, an improved and standardized process for safety observations are helping the manufacturing sites achieve higher employee participation in the safety management.

All manufacturing locations remained fully compliant with Environmental Regulations. High emphasis was placed on the productive use of raw materials, natural resources, energy and on reducing wastes. We believe that a sustainable Organization can be built only with the highest standards of performance on economic, social and environmental parameters.

Disclosure of particulars under section 217(1)(e) of the Companies Act, 1956

Energy conservation is a consistent focus area for the Company both from a cost control and a social responsibility perspective. Energy conservation is a consistent endeavor of your Company. The power factor is regularly monitored and maintained between 0.99 and 1.00. Solar lights have been installed in Malur Plant.

INFORMATION UNDER SECTION 217 (1) (e) OF THE COMPANIES ACT 1956 READ WITH COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES 1988:

1. Conservation of Energy:

The Operations of Your Company are not energy intensive. However, necessary care is being taken to conserve energy by various measures.

2. Foreign Exchange Earnings and outgo

Foreign Exchange Earnings:-

Export sales Rs.340.75 lakhs

Others Rs. 15.70 lakhs

Expenditure in Foreign Currency on account of (on payment basis)

Interest Rs.2.18 lakhs

Others Rs.44.61 lakhs

Brand Fee Rs.70.45 lakhs

Remittance in Foreign currency on account of:

Dividends Rs.30.00 lakhs

3. Research and Development (R&D)

The Company continues to invest in R&D activities towards development of new products and applications, improvement in operating efficiencies, and reduction in manufacturing costs.

(a) Specific areas in which R&D carried out by the Company.

Development of larger size valves for process & steel industries, rugged vane pumps for special applications and development of high efficiency gear pumps are some of the areas where R&D was carried out by the Company.

(b) Benefits derived as a result of above R&D efforts.

Special Products developed to meet specific requirements of customers, which enable your Company to develop niche markets for growth.

(c) Future Plan of action

- Development of additional range of products.

- Focus on process improvements to enable the Company to penetrate the Export market.

- Strong focus on employee involvement to eliminate waste in Operations through focused initiatives.

(d) Expenditure on R&D.

There is a continuous increase on R&D expenditure as the scope of activities carried out goes on increasing. The exact amount spent has not been apportioned this year.

4. Technology Absorption, Adaptation and Innovation:

(a) Efforts in brief, made towards technology absorption, adaptation and innovation.

- Special models of pumps and valves have been designed to meet specific needs of customers and these have enabled us to extend our customer base to include a wider range of industries.

- Indigenization is continuous, ongoing effort.

(b) Benefits derived as a result of the above efforts.

- Reduction of material cost.

- Quality improvement and improvement in product performance characteristics.

- Ability to innovate and produce new products.

(c) Information regarding technology imported during the last five years reckoned from the beginning of the financial year.

i Technology imported - For manufacture of Chip compacting machine

ii Year of Import: 2011

iii Has technology been fully absorbed? Yes

iv If not fully absorbed, areas where this has not taken place, reasons there off and future plans of action: N/A

AUDITORS

M/s Deloitte Haskins & Sells, Chartered Accountants, retiring at the ensuing Annual General Meeting, pursuant to the provisions of Section 224 and other applicable provisions, if any, of the Companies Act, 1956, be and are hereby re-appointed as Auditors of the Company, to hold office from the conclusion of this meeting until the conclusion of next Annual General Meeting of the Company on such remuneration as shall be fixed by the Board of Directors."

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve risks and uncertainties. When used in this Report, the words "anticipate", "believe", "estimate", "expect", "intend", "will" and other similar expressions as they relate to your Company and / or its business are intended to identify such forward-looking statements. Your Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances or achievements could differ materially from those expressed or implied in such forward-looking statements. This report should be read in conjunction with the financial statements included herein and notes thereto.

ACKNOWLEDGEMENTS

Your Directors thank the Customers, Vendors, Financial Institutions, Banks, Collaborators, and Investors for their continued support. Your Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company for their performance in the year under review.

For and on behalf of the Board

Place : Bangalore V. Balaji Bhat R. Srinivasan C P Rangachar

Date: 21st May,2012 Director Director Managing Director


Mar 31, 2011

Dear Members,

The Board of Directors are pleased to present the 35th Annual Report and the Audited Accounts for the Financial Year ended 31st March 2011.

FINANCIAL RESULTS

The Financial performance of the Company, for the year ended 31st March 2011 is summarized below.

(Rs in Lakhs)

Particulars 2010-11 2009-10

Total Income 15,084 11,632

Total Expenditure 13,115 10,064

Profit before Interest, Depreciation & Tax 1,969 1,568

Interest 251 279

Depreciation 252 252

Profit Before Tax 1,466 1,036

Provision for Taxation (Net of deferred tax) 486 343

Profit After Tax 980 693

Balance in profit and Loss Account 2,658 2,122

Amount available for appropriation 3,638 2,815

Appropriations:

General Reserve 100 70

Proposed Dividend 75 75

Tax on Proposed Dividend 12 12

Balance Carried to Balance Sheet 3,451 2,658

Total 3,638 2,815

REVIEW OF PERFORMANCE

During the year under review, the Company achieved a turn over of Rs 15,084 Lakhs compared to Rs 11,632 Lakhs in 2010. The operations of the Company for the year under review have resulted in a net profit of Rs.980 Lakhs.

DIVIDEND

Your Directors are pleased to recommend a dividend of 25% on the equity shares of the Company for the year ended 31st March 2011, subject to the approval of the members at the ensuing Annual General Meeting.

INDUSTRIAL RELATIONS

Employee relations continue to be cordial. Your Directors would like to express their appreciation to all the employees for their contribution to the operations of the Company during the year.

CORPORATE GOVERNANCE

Your Company is committed to maintaining high standards of Corporate Governance. A Report on Corporate Governance along with a certificate from the statutory auditors on compliance of Corporate Governance norms, is part of this Annual Report.

Information required under section 217(2A) of the Companies Act 1956 Read with Companies (Particulars of Employment) Rules 1975

In terms of the provisions of section 217(2A) of the Companies Act, 1956, read with the Companies (Particu- lars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors' Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particular may write to the Compliance Officer at the registered office of the Company.

I. Information required under section 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employment) Rules 1975

Sl. Name Desig Gross Qualification Age No. -nation Remuneration (Rs.)

1. C.P. Rangachar MD Rs. 8,053,653 BEMIE 68

Sl. Name Date of Experience Last No. commencement (including employment of employ previous held/designation/ -ment years if organiztion any)

1. C.P. Rangachar 1978.05.01 46 Director-PGI(P) Ltd, Chennai

1. Employment throughout the year under review and were in receipt of remuneration for that year in the aggregate of not less than Rs 60,00,000 or more.

2. Annual remuneration as above includes salary, allowances and perquisites.

3. The above appointment is contractual.

II. Employees of the Company who were employed for part of the financial year and in receipt of remunera- tion at a rate, which in aggregate was not less than Rs 500,000/- pm - NIL

DIRECTORS

Under section 256(1) of the Companies Act, 1956, and article 116 of the Articles of the Company, Dr. Premchander, Director is liable to retire by rotation at this Annual General Meeting. He is eligible and offers himself for re-appointment. Brief Resume of Directors proposed to be re-appointed, nature of their expertise in specific functional areas, names of Companies in which they hold directorships and membership, their share holding in the Company are provided in the notice of AGM.

DIRECTOR'S RESPONSIBILITY STATEMENT

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

1. In the preparation of the accounts for the year ended 31st March 2011, the applicable accounting stan- dards have been followed.

2. Such accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent made so as to give a true and fair view of the state of affairs of the Company at the financial year ended 31st March 2011 and of the profit of the Company for that year.

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accor- dance with the provisions of the Companies Act 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. The accounts for the year ended 31st March 2011 have been prepared on a going concern basis.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis (MDA), which forms part of this Directors' Report, sets out an analysis of business including the industry scenario, performance, financial analysis and risk mitigation.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on Consolidated Financial statements read with Accounting Standard AS-23 on Accounting for Investments in Associates, the Audited Consolidated Finan- cial Statements are provided in the Annual Report.

SUBSIDIARY COMPANIES

In Accordance with the general Circular issued by the Ministry of Corporate Affairs, Government of India, the Balance sheet, Profit and Loss Account and other documents of the Subsidiary Companies are not being attached with the Balance sheet of the Company.

The Company will make available the Annual Accounts of the subsidiary Companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The Annual Accounts of the subsidiary Companies will also be kept open for inspection by any investor at the Registered Office of the Company and that of the respective subsidiary Companies. The consolidated Financial Statements presented by the Company include financial results of its subsidiary Companies.

During the year under review, Your Company has the following subsidiary Companies viz (i) Coretec Engineering India Pvt Ltd, Bangalore (ii) Yuflow Engineering Pvt. Ltd, Chennai and (iii) Prism Hydraulics Pvt Ltd, Belgaum.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company recognizes the community as an important stakeholder in our business and believes in 'sustainability' as a core parameter of its business strategy.

The Company provides opportunities to Engineering and Management Institute students to undergo in- plant training/projects as part of their academic curriculum, thus enabling to appreciate application of theoretical knowledge and get an exposure to the industrial practices.

The Company's employees participate in blood donation camps every year and donate blood.

Employees are trained in 'First -Aid' regularly. The Company has rain water harvesting systems in place covering the entire Factory premises.

During the year Your Company sponsored Toilet complex to a Government High School at Bagalur.

The Company's products and services have very little or marginal impact on the environment and it adheres to all related legal and statutory requirements.

Health, Safety & Environment. (HSE)

Health, Safety and environment are high priority issues in your Company.

Your Company conducts annual medical check up for its employees and assists the employees who need medical attention or counseling. The employees and their dependents are covered under Health Insurance Scheme.

Awareness workshops on Safety in Industries are being conducted to the employees in collaboration with the Directorate of Factories and Boilers, Government of Karnataka.

With no reportable injuries during the year, we are committed to enhance occupational health and safety. Apart from personnel safety, process safety is in the top priority of the Management. Well documented standards, emphasis on line management responsibility, an improved and standardized process for safety observations are helping the manufacturing sites achieve higher employee participation in the safety management.

All manufacturing locations remained fully compliant with Environmental Regulations. High emphasis was placed on the productive use of raw materials, natural resources, energy and on reducing wastes. We believe that a sustainable Organization can be built only with the highest standards of performance on economic, social and environmental parameters.

Disclosure of particulars under section 217(1)(e) of the Companies Act, 1956

Energy conservation is a consistent focus area for the Company both from a cost control and a social respon- sibility perspective. Energy conservation is a consistent endeavor of your Company. The power factor is regularly monitored and maintained between 0.99 and 1.00.

INFORMATION UNDER SECTION 217 (1 )(e) OF THE COMPANIES ACT 1956 READ WITH COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES 1988:

1. Conservation of Energy:

The Operations of Your Company are not energy intensive. However, necessary care is being taken to conserve energy by various measures.

2. Foreign Exchange Earnings and outgo

3. Research and Development (R&D)

The Company continues to invest in R&D activities towards development of new products and applica- tions, improvement in operating efficiencies, and reduction in manufacturing costs.

(a) Specific areas in which R&D carried out by the Company.

Development of larger size valves for process & steel industries, rugged vane pumps for special applica- tions and development of high efficiency gear pumps are some of the areas where R&D was carried out by the Company.

(b) Benefits derived as a result of above R&D efforts.

Special Products developed to meet specific requirements of customers, which enable your Company to develop niche markets for growth.

(c) Future Plan of action:

- Development of additional range of products.

- Focus on process improvements to enable the Company to penetrate the Export market.

- Strong focus on employee involvement to eliminate waste in Operations through focused initiatives.

(d) Expenditure on R & D.

There is a continuous increase on R & D expenditure as the scope of activities carried out goes on increasing. The exact amount spent has not been apportioned this year.

4. Technology Absorption, Adaptation and Innovation:

(a) Efforts in brief, made towards technology absorption, adaptation and innovation.

- Special models of pumps and valves have been designed to meet specific needs of customers and these have enabled us to extend our customer base to include a wider range of industries.

- Indigenization is continuous, on going effort.

(b) Benefits derived as a result of the above efforts.

- Reduction of material cost.

- Quality improvement and improvement in product performance characteristics.

- Ability to innovate and produce new products.

(c) Information regarding technology imported during the last five years reckoned from the beginning of the financial year.

i Technology imported - NIL

ii Year of Import: N/A

iii Has technology been fully absorbed? N/A

iv If not fully absorbed, areas where this has not taken place, reasons there off and future plans of action: N/A

AUDITORS

M/s Deloitte Haskins & Sells, Chartered Accountants, retiring at the ensuing Annual General Meeting, pursuant to the provisions of Section 224 and other applicable provisions, if any, of the Companies Act, 1956, be and are hereby re-appointed as Auditors of the Company, to hold office from the conclusion of this meeting until the conclusion of next Annual General Meeting of the Company on such remuneration as shall be fixed by the Board of Directors."

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve risks and uncertainties. When used in this Report, the words "anticipate'," believe", "estimate", "expect", "intend", "will" and other similar expressions as they relate to your Company and / or its business are intended to identify such forward-looking statements. Your Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances or achievements could differ materially from those expressed or implied in such forward-looking statements. This report should be read in conjunction with the financial statements included herein and notes thereto.

ACKNOWLEDGEMENTS

Your Directors thank the customers, vendors, financial institutions, banks, Collaborators, and investors for their continued support. Your Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company for their performance in the year under review.

For and on behalf of the Board

V.BalajiBhat R. Srinivasan C. P. Rangachar Director Director Managing Director

Place: Bangalore Date: 14th May 2011.

 
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