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Directors Report of Yuken India Ltd.

Mar 31, 2016

To the Members,

The Directors have pleasure in presenting their 40th Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March, 2016.

1. FINANCIAL RESULTS

The Company is carrying on the business of manufacturing of hydraulic valves, pumps, systems and cast iron castings. During the year, the Company has registered a total income of Rs. 19,869 lakhs compared to Rs. 18,610 lakhs of previous year. The Company’s financial performance for the year under review along with previous year’s figures is given hereunder:

Financial highlights:

(Rs. In Lakhs)

Particulars

2015-16

2014-15

Total Income

19,869

18,610

Total expenditure

18,874

17,677

Profit before interest, depreciation and tax

995

933

Finance cost

503

418

Depreciation

461

458

Profit before Exceptional items and tax

31

57

Exceptional items

-

-

Profit after Exceptional items & before tax

31

57

Provision for taxation (Net of deferred tax)

28

(16)

Profit after tax

03

73

Balance in Statement of profit and loss

4,623

4,623

Amount available for appropriation

4,626

4,696

Appropriations:

Depreciation on transition to Schedule II of the Companies Act, 2013

15

General reserve

-

4

Proposed dividend

30

45

Tax on proposed dividend

6

9

Balance carried to Balance Sheet

4,590

4,623

Total

4,626

4,696

2. THE EXTRACT OF ANNUAL RETURN (FORM MGT-9)

The extract of Annual Return for the financial year 2015

16 pursuant to the provisions of Section 92(3) and Section 134(3)(a) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is furnished in Annexure-1 and is attached to this report.

3. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR

Five Board Meetings had been held during the financial year, 2015-16 viz., on 09th May 2015, 24th July 2015, 15th September 2015, 04th November 2015 and 05th February 2016.

4. DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act, 2013, the Board hereby submits its Responsibility Statement:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) The directors had 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 as at the end of the financial year and of the profit and loss of the Company for that period;

(c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) The Directors had prepared the annual accounts on a going concern basis;

(e) The Directors had laid down internal financial controls to be followed by the Company as applicable to listed companies and such internal financial controls are adequate and were operating effectively; and

(f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

5. COMPANY’S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES

The Nomination and Remuneration Policy of the Company pertaining to appointment of Directors, payment of managerial remuneration, Directors’ qualifications, positive attributes, independence of Directors and other relevant matters as provided under section 178(3) of the Companies Act, 2013 may be accessed on the Company’s website, web link of which is as under:

http://www.yukenindia.com/wp-content/uploads/2016/05/ Nomination-Remuneration-Policy.p df

6. EVALUATION OF DIRECTORS

Nomination and Remuneration Committee of the Company has formulated a criteria for evaluation of the Board Members. Accordingly performance evaluation of the Board and its members has been carried out.

7. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLOSURES MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR RESPECTIVE REPORTS

There were no qualifications, reservations or adverse remarks made by the Auditors or by the Practicing Company Secretary in their respective reports.

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

Particulars of Loans, guarantees or investments made under section 186 are furnished as under:

No loans have been given during the year.

An investment of Rs. 100 lakhs has been made in Yuflow Engineering Pvt. Ltd., by subscribing to 10 lakh shares of Rs. 10/- each.

9. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, the Statement of Profit & Loss and other documents of the Subsidiary Companies are not being attached to 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.

Particulars

Bank

Amount

(Rs.)

Corporate Guarantee to Yuflow Engineering Private Limited (Subsidiary)

HDFC Bank Ltd.

220 lakhs

Corporate Guarantee to Coretec Engineering India Private Limited (Subsidiary)

State Bank of India

120 lakhs

The above guarantees are within the limits prescribed under section 186 of the Companies Act, 2013.

The details of financial performance of Subsidiaries and Associate Companies are furnished as under:

(Rs. in lakhs)

Particulars

Coretec Engineering India Pvt.

Ltd.

(Subsidiary)

Yuflow Engineering Pvt. Ltd. (Subsidiary)

* Sai India Ltd (Associate)

Kolben

Hydraulics

Ltd.

(Associate)

Bourton Consulting (India) Pvt.

Ltd.

(Associate)

Total Income

FY 2015-16

778.17

1011.66

1859.86

227.78

70.89

FY 2014-15

718.23

1121.24

1583.15

221.77

64.76

Total expenditure FY 2015-16

697.17

1109.61

1699.53

219.65

60.37

FY 2014-15

631.10

1098.44

1438.85

210.64

54.13

Profit before interest, depreciation and tax FY 2015-16

81.00

(97.95)

160.33

8.13

10.52

FY 2014-15

87.13

22.80

144.31

11.12

10.63

Finance cost FY 2015-16

11.13

28.93

90.66

1.24

0.09

FY 2014-15

11.69

28.57

96.80

1.28

0.60

Depreciation FY 2015-16

22.41

27.36

110.45

6.48

3.25

FY 2014-15

27.92

37.34

126.24

8.17

6.19

Profit before Exceptional items, Prior year items and tax FY 2015-16

47.46

(154.24)

(40.78)

0.41

7.16

FY 2014-15

47.52

(43.11)

(78.73)

1.68

3.84

Exceptional items FY 2015-16

(53.00)

FY 2014-15

-

-

-

-

-

Profit after Exceptional items but before prior year items and tax FY 2015-16

47.46

(207.24)

(40.78)

0.41

7.16

FY 2014-15

47.52

(43.11)

(78.73)

1.68

3.84

Prior year items FY 2015-16

FY 2014-15

-

-

-

3.00

-

Profit after Exceptional items and prior year items but before tax FY 2015-16

47.46

(207.24)

(40.78)

0.41

7.16

FY 2014-15

47.52

(43.11)

(78.73)

(1.33)

3.84

Provision for taxation (Net of deferred tax) FY 2015-16

18.70

2.49

0.10

2.23

FY 2014-15

6.97

-

(2.86)

(7.56)

1.33

Profit/ (Loss) after tax FY 2015-16

28.76

(207.24)

(38.29)

0.51

4.93

FY 2014-15

40.55

(43.11)

(75.87)

6.23

2.51

Earnings per share (in Rs.) FY 2015-16

4.64

(19.85)

(4.25)

0.05

3.91

FY 2014-15

6.54

(4.31)

(8.43)

0.64

1.99

Statement containing salient features of financial statements of subsidiaries and associate companies in Form AOC-1 is enclosed herewith as Annexure-2 to this report.

Note: * Consolidated financials include un-audited financials of Sai India Ltd., one of the Associates.

10. CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm’s length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

The details of related party transactions as required under Accounting Standard-18 are set out in Note-30 to the standalone financial statements of the Company.

The Form AOC-2 pursuant to section 134(3)(h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as Annexure-3 to this report.

The Policy on Related Party Transactions as approved by the Board may be accessed on the Company’s website, web link of which is as under:

http://www.yukenindia.com/wp-content/uploads/2016/02/ Related-Party-Transactions-Policy.pdf

11. DETAILS OF AMOUNTS TRANSFERRED TO RESERVES

Your Company has not transferred any amount to General Reserves.

12. DIVIDEND

The Board of Directors is pleased to recommend a dividend of 10% on equity shares of the Company for the year ended 31st March, 2016, subject to the approval of the members at the ensuing Annual General Meeting.

13. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Since the Company has not declared / distributed any dividend for the financial year 2009-10, there is no unclaimed and unpaid dividend pertaining to that financial year and hence it is not required to remit any amount to the Investors Education and Protection Fund in accordance with section 125 of the Companies Act, 2013, during the year 2016-17.

14. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN 31st MARCH, 2016 AND 28th MAY, 2016

There were no material changes and commitments affecting the financial position of the Company occurred between the end of the financial year (31st March, 2016) and the date of the Report (28th May, 2016).

15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO UNDER SECTION 134(3)(m) OF THE COMPANIES ACT, 2013 READ WITH RULE 8(3) OF THE COMPANIES (ACCOUNTS) RULES, 2014

1. Conservation of Energy:

The Company has taken various steps for conservation of energy in the process of implementing several projects. Energy conservation is a consistent focus area for the Company both from cost control as well as social responsibility perspective. The power factor is regularly monitored and maintained between 0.99 and 1.00. LED lights are being used in the Company’s premises so that the power consumption comes down. Solar power is being used at foundry division of the Company at Malur.

2. Foreign Exchange Earnings and Outgo:

Foreign Exchange Earnings: (Rs. in lakhs)

Export Sales

574.02

Other Income

22.46

Expenditure in Foreign Currency: (Rs. in lakhs)

Brand fee

75.03

Royalty

5.55

Interest

0.80

Others

42.75

Remittance in Foreign Currency on Account of:

(Rs. in lakhs)

Dividend

18

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.

2015-16 was an eventful year for Yuken India Limited’s R&D efforts. Apart from contributions to analyzing customer complaints and field failures on various products, the release of a new and revamped product catalog was a significant milestone. The core idea of the Company’s investments in R&D is to initiate product upgradations and to develop new products that would give an edge over competitors.

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

i. Design and release of a high speed metal chip compacting machine branded as ‘Kiriko’ which is based on Yuken Kogyo Co. Ltd.’s original design. It is a leap over the Japanese design and answers the need of the Indian customers.

ii. Several concepts of energy saving hydraulic power units have been designed and are in various stages of testing. These will cater to the machine tool industry, one of the most important industry segments of the Company.

iii. Development of larger valves for process and steel industries, rugged vane pumps for special applications and development of high efficiency gear pumps.

(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.

4. Technology Absorption, Adaptation and Innovation

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

• Special models of energy saving 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 thereof and future plans of action: NA

16. DETAILS OF CHANGE IN NATURE OF BUSINESS, IF ANY

There was no change in the nature of business of the Company, during the year 2015-16.

17. JOINT DEVELOPMENT OF COMPANY’S PROPERTY LOCATED AT WHITEFIELD, BANGALORE

During the year, the Company has entered into a Joint Development Agreement with Brigade Enterprises Ltd., Bangalore for developing its property located at Whitefield, Bangalore in order to maximize the returns. The Company is under process of shifting the entire plant from Whitefield to Malur, Kolar District.

18. DIRECTORS

There is no change in the composition of Board of Directors, during the year.

The Independent Directors have submitted their declarations to the Board stating that they meet the criteria of independence as stipulated in Section 149(6) of the Companies Act, 2013.

19. KEY MANAGERIAL PERSONNEL

Mr. C P Rangachar, Managing Director, Mr. H M Narasinga Rao, Chief Financial Officer, Mr. Subramanya Ullal, Chief Executive Officer and Ms. Sridevi Ch, Company Secretary are the Key Managerial Personnel in accordance with the provisions of section 203 of the Companies Act, 2013, during the period under report.

20. DEPOSITS

The Company has neither accepted nor renewed any deposits during the year.

21. MATERIAL ORDERS PASSED BY REGULATORY AUTHORITIES

There are no significant and material orders passed by the regulators or courts or tribunals during the year, impacting the going concern status and Company’s operations in future.

22. INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company’s management is responsible for establishing and maintaining an adequate system of internal controls over financial reporting. The Company has in place adequate systems of internal controls commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies. The observations arising out of audit are periodically reviewed and compliance ensured. The Internal Audit Reports, observations and status of the implementation is submitted to the Audit Committee of the Board of Directors. The status of implementation of the recommendations is reviewed by the Committee on a regular basis and concerns, if any, are reported to the Board.

23. RISK MANAGEMENT POLICY

In compliance with the provisions of Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Risk Management Committee has been constituted by the Board. The Company has in place, a Policy on Risk Management for the purpose of identification, assessment, handling, monitoring and dealing with various risks across the organization.

Risks are identified by the respective departmental heads. Each SBU & Corporate will carry out the Risk Assessment for each identified risk, as applicable to them and will document the results for each risk in the Risk Register. Action will be taken based on the possible impact of the identified risk.

The Company has adopted the following measures concerning the development and implementation of a Risk Management Policy during the year:

a. Measures taken by IT department of the Company to mitigate risk relating to security of data and systems of the Company;

b. Security measures in the manufacturing units of the Company to prevent accidents; and

c. Installation of CC TV cameras and siren at factory for safety of the employees.

d. Measures taken by the Company to mitigate foreign exchange transaction risks.

24. DETAILS OF POLICY DEVELOPED, IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The Company has constituted a Corporate Social Responsibility Committee and developed a CSR Policy, in compliance with the provisions of section 135 of the Companies Act, 2013, with the following objectives:

> To ensure an increased commitment at all levels in the Organization to operate its business in an economically, socially and environmentally sustainable manner, while recognizing the interests of the stakeholders.

> To directly or indirectly take up programs that benefit the communities over a period of time, in enhancing the quality of life and economic well being of the people around.

In accordance with the Company’s CSR Policy, following are the areas on which the Company would like to focus for the purpose of CSR:

1. Education and

2. Environmental sustainability

In compliance with the CSR Policy, your Company has undertaken the following activities:

1. Rain water harvesting in all the plants of the Company,

2. Presented a camera to traffic police in Whitefield,

3. The Company has appointed a Teacher to teach English and Computers in the Government Elementary School in Hedagenabele village of Kolar District,

4. Supplied uniforms, shoe and bags to school children at Hedagenabele, Kolar District and

5. Donation towards pendal, furniture and food for meditation programme organized by the villages of Hedagenabele.

However, since the CSR provisions are not applicable to the Company for the year 2015-16, it was not required to allocate / spend any funds towards CSR activities under the provisions of section 135 of the Companies Act, 2013.

25. COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM

In compliance with the provisions of Section 177 of the Companies Act, 2013 read with Rules 6 and 7 of the Companies (Meetings of Board and its Powers) Rules, 2013, and Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company’s Board has constituted an Audit Committee with the following Directors:

1. Capt. N S Mohanram - Chairman

2. Mr. R Srinivasan - Member

3. Mr. CP Rangachar - Member

4. Dr. Premchander - Member

The above composition of the Audit Committee consists of three Independent Directors, who form the majority.

The Company has established a Vigil Mechanism to deal with the genuine concerns of the employees and Directors pertaining to the Company’s interests and also provided direct access to the Chairman of the Audit Committee and the Vigilance Officer of the Company on reporting issues concerning the interests of the Company. The Company also has provided adequate safeguards against victimization of employees and Directors who are the whistle blowers.

The Company has published the Whistle Blower Policy in its website, a web link of which is as under:

http://www.yukenindia.com/wp-content/uploads/2016/02/ Whistle-Blower-Policy.pdf

26. DETAILS OF REVISION OF FINANCIAL STATEMENTS

There was no revision of the financial statements of the Company, during the year 2015-16.

27. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

As part of the Familiarisation Programme, Independent Directors of the Company have been made aware of the following information:

a. Rules and regulations pertaining to their appointment as Independent Directors,

b. Duties and responsibilities of the Independent Directors towards the Company and its stakeholders,

c. Code of conduct to be followed by them and

d. Company’s policies and procedures.

28. DETAILS OF REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

a. Ratio of remuneration of each Director/KMP to the median employee’s remuneration and the Percentage increase in the median remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year 2015-16.

Name of the Director / KMP

Remuneration for financial year 2015-16 (in Rs.)

Remuneration for financial year 2014-15 (in Rs.)

% increase in remuneration in the financial year 2015-16

Ratio of remuneration of each Director/ KMP to that of Median remuneration of employees

Mr. C P Rangachar, Managing Director

5,543,841

5,284,401

4.91%

9.13:1

Mr. O Tanaka, Chairman & Non-Executive Director

10,000

10,000

Nil

0.02:1

Capt. N S Mohanram, Non-Executive Independent Director

100,000

90,000

Nil

0.16:1

Mr. R Srinivasan, Non-Executive Independent Director

70,000

90,000

Nil

0.12:1

Dr. Premchander, Non-Executive Independent Director

60,000

30,000

Nil

0.09:1

Mr. S Hattori, Nominee Director

10,000

10,000

Nil

0.02:1

Mrs. Vidya Rangachar, Non-Executive Director

50,000

-

*

0.08:1

Mr. H M Narasinga Rao, CFO

4,618,845

4,193,165

10.72%

7.60:1

Mr. Subramanya Ullal, CEO

4,260,268

3,318,267

28.39%

7.01:1

Ms. Sridevi Ch, Company Secretary

530,657

349,285

**

0.87:1

Notes:

The Net Profit after tax has declined in the financial year 2015-16 and the remuneration of the Managing Director has been increased by 4.91%.

* Percentage increase in remuneration not reported as she was holding Directorship for part of the financial year 2014-15 and remuneration is proportionately adjusted.

**Percentage increase in remuneration not reported as she was employed for part of the financial year 2014-15 and remuneration is proportionately adjusted.

b. The median remuneration of employees of the Company during the year and percentage increase/(decrease) in the median remuneration of employees compared to the previous financial year:

Particulars

2015-16

(Rs.)

2014-15

(Rs.)

Increase in %

Median

Remuneration of all employees per annum

607,405/-

527,856/-

13.49%

c. The number of permanent employees on the rolls of the Company as on 31st March, 2016 was 390.

d. Relationship between average increase in remuneration and company performance:

The Profit Before Tax for the financial year 2015-16 was Rs. 31 lakhs and the average increase in median employee remuneration was 13.49%. Remunerations of the employees are as per the industry standards.

e. Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company

Overall remuneration of Key Managerial Personnel for the year 2015-16 has been increased by 15.92% whereas the total revenue from the operations has increased by 7.36% when compared to the previous year. Remunerations of the KMP are as per the industry benchmarks.

f. Details of share price and market capitalization:

(i) The details of variation in the market capitalization and price earnings ratio as at the closing date of the current and previous financial years are as follows:

S.No.

Particulars

2015-16

2014-15

i.

Variations in the market capitalization of the Company

Rs. 92.10 crores

Rs. 68.22 crores

ii.

Price Earnings Ratio of the Company

2791:1

100.18:1

(ii) Percentage increase over/decrease in the market quotations of the shares of the Company as compared to the rate at which the company came out with the last public offer in the year:

The Company had come out with initial public offer in 1991. An amount of Rs. 10 invested in the said IPO would be worth Rs. 307.00 as on 31st March, 2016 indicating a Compounded Annual Growth Rate of 14.08%. This is excluding the dividend accrued thereon.

Name

Designation

Remuneration

Received

Contractual / otherwise

Qualification & Experience

Date of commencement of employment

Age

Last

employment

% of equity shares held in company

Whether relative of any director or manager of Company

- Nil -

(iii) Employed throughout the financial year or part thereof, was in receipt of remuneration in the year in excess of that drawn by the managing director and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company - Nil

(i) Employed throughout the financial year and were in receipt of remuneration for the year, in the aggregate of not less than Rs. 6,000,000/- - Nil

(ii) Employed for a part of the financial year and were in receipt of remuneration for any part of the year, at a rate which, in the aggregate, was not less than Rs. 500,000/- per month - Nil

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

• Average percentage increase of salaries of employees other than the managerial personnel in the financial year: 8.36%

• Percentage increase/decrease in the managerial remuneration: 4.91%

h. The key parameters for any variable component of remuneration availed by the directors

Directors are paid commission calculated on the basis of net profits of the Company under the provisions of section 197 of the Companies Act, 2013 and as approved by the shareholders and based on the Nomination and Remuneration Policy of the Company. The Directors were not paid any commission during the financial year 2015-16.

i. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year

Not Applicable.

It is hereby affirmed that the remuneration paid to the Directors is as per the Nomination and Remuneration Policy of the Company.

Information as per rule 5(2) and (3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules, 2014:

29. REVIEW OF BUSINESS OPERATIONS AND FUTURE PROSPECTS

During the year under review, the Company has registered a turnover of Rs. 19,767 lakhs compared to Rs. 18,412 lakhs in the previous year. Operations of the Company for the year under review have resulted in a net profit of Rs. 3.34 lakhs.

As predicted by the Meteorological Department, we expect a good monsoon during the current year. We anticipate that the GDP may grow above 7.50% during 2016-17 and the demand for our products will increase.

30. SHARES

a. BUY-BACK OF SHARES

The Company has not bought back any of its securities during the year.

b. SWEAT EQUITY

The Company has not issued any Sweat Equity Shares during the year.

c. BONUS SHARES

No Bonus Shares were issued during the year.

d. EMPLOYEES STOCK OPTION PLAN

The Company has not provided any Stock Option Scheme to its employees, during the year.

31. COST AUDITORS

Pursuant to the provisions of section 134 of the Companies Act, 2013, the Board had appointed M/s. Adarsh Sharma & Co, Cost Accountants, Bangalore, as Cost Auditors for conducting Cost Audit for the financial year 2015-16.

32. STATUTORY AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, Bangalore had been appointed as the Statutory Auditors for a period of 3 years in the 38th Annual General Meeting of the Company held on 09th September, 2014, whose appointment

33. SECRETARIAL AUDITORS

The Company has appointed M/s. BG & Associates, Practising Company Secretaries, Bangalore for conducting Secretarial Audit for the financial year 2015-16 in compliance with the provisions of section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

A report on Secretarial Audit in Form MR-3 is attached herewith as Annexure-4.

34. 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 is attached to this Report as Annexure -5.

35. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis (MDA) forms part of this report as Annexure-6 setting out an analysis of business including the industry scenario, performance, financial analysis and risk mitigation.

36. 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.

37. 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, performance 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.

38. ACKNOWLEDGEMENTS

Your Directors place on record their sincere thanks to the bankers, business associates, consultants and various Government Authorities for their continued support extended to your Company’s activities during the year. Your Directors also acknowledge their gratitude to the Shareholders of the Company, for their continuous support and confidence reposed on the Company.

For and on behalf of the Board of Directors

Place: Bangalore C P Rangachar Capt. N S Mohanram Dr. Premchander

Date: 28th May, 2016 Managing Director Director Director


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.


Mar 31, 2010

The Board of Directors is pleased to present the performance of your Company for the year ended 31st March 2010.

FINANCIAL HIGHUGHTS

( Rs in Lakhs )

Particulars 2009-10 2008-09

Total Income 11,632 9,916

Total Expenditure 10,064 9,142

Profit before Interest, Depreciation & Tax 1,568 775

Interest 279 380

Depreciation 252 243

Profit Before Tax 1,036 151

Provision for Taxation(Net of deferred tax) 343 86

Profit After Tax 693 65

Appropriations:

Proposed Dividend 75 -

Tax on Proposed Dividend 12 -

Transfer to General Reserve 70 -



REVIEW OF PERFORMANCE

During the year under review, the Company performed reasonably well, given the very difficult conditions prevailing in the domestic and world markets for the greater part of the year. The Company achieved a turn over of Rs 11,632 Lakhs compared to Rs 9,916 Lakhs in 2009. The operations of the Company for the year under review have resulted in a net profit of Rs.693 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 2010, subject to the approval of the members at the ensuing Annual General Meeting.

INDUSTRIAL RELATIONS

Employee relations continue to be cordial. Mutual trust, built over decades of fair-mindedness and justice, is the bedrock on whici the Company continues to build. This augurs well to take on various challenges in these difficult times.

CORPORATE GOVERNANCE

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

Gross SI. Name Desig Remuneration Qualifi Age No nation (Rs) cation

1 C P Rangachai IVD Rs.5,553,444 BEMIE 67

2 S Yamanoi Whole Time Rs.1,763,550 Gradu 60 Direcitor ate Engi neer

Name Last Date of com- Experience employment

mencement of (including previous held

employment years if any designation/

organization

C P Rangachai 1978.05.01 45 Director-

PGI(P) Ltd,

Chennai

S Yamanoi 2009.04.01 36 Manager-

International Dept, Yuken Kogyo, Japan

1. Employment throughout the year under review and were in receipt of remuneration for that year in the aggregate of not less than Rs 2,400,000 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 remu- neration at a rate, which in aggregate was not less than Rs 200,000/- pm - NIL

DIRECTORS

Under section 256(1) of the Companies Act, 1956, and article 116 of the Articles of the Company, Capt N S Mohan Ram, 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.

The Board of Directors have re-appointed Mr Shigeyoshi Yamanoi for a period of 3 years as a Whole-time Director with effect from 1st April 2010 on contractual basis, renewable at the end of third year subject to the approval of the shareholders at the Annual General Meeting. Mr S Yamanois brief resume is also provided in the notice of AGM.



DIRECTORS 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 2010, 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 2010 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 31s March 2010 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.

SUBSIDIARY COMPANIES

An application has been made under section 212(8) of the Companies Act 1956 to the Ministry of Corporate Affairs seeking exemption from publishing the Annual Accounts of the subsidiary Companies and the related detailed information for the year ended March 31, 2010. Your Directors have pleasure in attaching the Consoli- dated Financial Statements pursuant to clause 32 to the Listing Agreement entered into with Stock Exchanges. 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 (Hi) 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 theoreti- cal knowledge and get an exposure to the industrial practices.

The Companys employees participate in blood donation camps every year and donate Wood.

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

The Companys products and services have very little or marginal impact on the environment and it ad- heres 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 ip 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 stan- dards, emphasis on line management responsibility, an improved and standardized process for safety obser- vations 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 eco- nomic, 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.

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.20,936,227

Others Rs.23,778

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

Interest Rs.7,511,068

Others Rs.6,005,878

Brand Fee Rs.3,558,170



Remittance in Foreign currency on account of:

Dividends Nil

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 appli cations 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 therefor 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

R. Srinivasan V. Balaji Bhat C. P. Rangachar

Director Director Managing Director



H M Narasinga Rao

Chief Financial Officer

Place : Bangalore

Date: 22nd May2010

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