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Directors Report of Kirloskar Industries Ltd.

Mar 31, 2022

The Directors have pleasure in presenting this 28^th Annual Report with the Audited Annual Accounts of the Company for the year ended 31 March 2022.

I. FINANCIAL PERFORMANCE (STANDALONE):

		(H in Crores)
Particulars	2021-2022	2020-2021
Total Income	102.67	58.11
Total Expenditure	22.57	25.66
Profit before exceptional items and taxation	80.10	32.45
Profit before taxation	80.10	32.45
Provision for tax (including Deferred Tax)	19.25	5.26
Net Profit	60.85	27.19
Balance of Profit / (Loss) from previous year	541.66	514.30
Less: Re-measurement of defined benefit plans (net of Taxes)	0.02	0.17
Dividend paid on equity shares:
Final Dividend	9.71	--
Profit available for appropriation	592.82	541.66
Balance carried to Surplus in Statement of Profit and Loss	592.82	541.66

II. DIVIDEND:

Your Directors recommend 100 % dividend, i.e., H 10 per equity share of H 10 each (Previous year dividend 100%, i.e., H 10 per equity share of H 10 each) for the Financial Year ended 31 March 2022.

In terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, including amendments thereunder, the Company has adopted the Dividend Distribution Policy. Copy of the same is available at the website of the Company, viz., www.kirloskarindustries.com

III. CLASSIFICATION OF THE COMPANY AS AN UNREGISTERED CORE INVESTMENT COMPANY (CIC):

The Company is an âUnregistered CICâ regulated by the Reserve Bank of India (RBI), which cannot access the public funds and is complying with all the regulations required for an âUnregistered CICâ.

IV. ALTERATION OF MAIN OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION OF THE COMPANY

The members of the Company through a postal ballot on 14 October 2021, had approved the alteration of the Main Object Clause of the Memorandum of Association of the Company

to carry out the activities as a Registered Core Investment Company and accessing public funds.

V. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

A. OPERATIONS OF THE COMPANY:

WINDMILLS:

The Company has seven Wind Energy Generators (WEGs) in Maharashtra with a total installed capacity of 5.6 Megawatt (MW). The WEGs are located at Tirade Village, Tal. Akole, Dist. Ahmednagar.

The WEGs have generated net wind energy of around

0.82 Crores units of electricity in the period under review as against 0.68 Crores units of electricity in the previous year showing an increase of 20% over the previous year. During the previous year, the generation of units from windmills had gone down due to lower wind speed and motor winding issues related to one of the seven WEGs in operation. The management had taken corrective steps for improving the monitoring system of operation and maintenance of WEGs with the help of operation and maintenance service provider resulting in higher unit generation in the current year. During the year under review and till the date of this Report, all WEGs were operational at full capacity.

The Company has obtained Open Access Permission from Maharashtra State Electric Distribution Company Limited (MSEDCL) and is selling the wind power units generated to a leading electric power distribution company which has ensured the regular monthly revenue realisation. All windmills are registered with the National Load Despatch Centre (NLDC) and are eligible for the Renewable Energy Certificates (RECs).

During the year, the Company has also sold 8,778 RECs, which has resulted in revenue of H 0.88 Crores (previous year H 0.03 Crores). The Company is holding 7,676 unsold RECs as on 31 March 2022. The REC Trading Exchange was not in operation in quarters 1 and 2 and hence no sale transaction could be done during these quarters.

REAL ESTATE ACTIVITIES:

The Company transferred its âReal Estate Business Undertaking at Kothrudâ on a going concern basis by way of a âSlump Saleâ to the Company, for a lump sum consideration of H 75 Crores, by executing the Business Transfer Agreement (BTA) by and between the Company and Wellness Space Developers Private Limited (now known as Avante Spaces Limited (Avante)) dated 19 December 2020. The said purchase consideration was required to be paid by Avante, on or before 30 June 2021, or such other date as mutually agreed.

In terms of BTA, Avante allotted 6,00,00,000 Unsecured Optionally Convertible Debentures of H 10 each to the Company, for a consideration other than cash amounting to H 60 Crores. The balance consideration of H 15 Crores out of the total payable of H 75 Crores, was paid in cash by Avante on 24 June 2021.

Accordingly, the entire purchase consideration payable to the Company under the BTA was settled by Avante before 30 June 2021.

OTHERS:

The Company owns lands and buildings thereon and apartments and offices in Pune, New Delhi and Jaipur. The Company has given most of these lands and buildings and offices on leave and license basis to group and other companies which generated revenue of H 27.08 Crores (H 25.41 Crores as on 31 March 2021).

The Company is an âUnregistered CICâ that continues to invest surplus funds in fixed deposits and liquid funds. These investments stood at H 11.83 Crores (previous year H 81.60 Crores) as at 31 March 2022.

During the year under review, the Company has liquidated mutual funds and used the proceeds to give loans to Avante Spaces Limited (Avante), a Wholly-Owned Subsidiary of the Company, for the development of its real estate activities.

During the year under review, your Company made investments of H 15 Crores in the equity shares of Avante.

The Company also purchased one preference share of Kirloskar Proprietary Limited at the rate of H 100.

B. COMPANY PERFORMANCE:

During the period under review, your Company earned a total income of H 102.67 Crores (previous year H 58.11 Crores).

During the period under review, the Company received a final dividend of H 45.78 Crores (previous year H 9.41 Crores) declared by the investee companies for the Financial Year 2020-2021.

The Company also received an interim dividend of H 19.92 Crores (previous year H 15.36 Crores) declared by some of the investee companies during the year 20212022. Consequently, the total dividend inflow during the fiscal year under review was H 65.70 Crores (previous year H 24.77 Crores).

The Profit Before Tax (PBT) is at H 80.10 Crores (previous year H 32.45 Crores). The substantial increase in the PBT is mainly due to the receipt of the dividend on its investments at a higher rate.

C. HUMAN RESOURCES:

As on 31 March 2022, the Company had 13 employees (previous year 14 employees) on its roll, including the Managing Director and the Executive Director.

D. KIRLOSKAR INDUSTRIES LIMITED - EMPLOYEES STOCK APPRECIATION RIGHTS PLAN 2019:

The âKirloskar Industries Limited - Employees Stock Appreciation Rights Plan 2019â (KIL ESARP 2019) was introduced in accordance with the SEBI guidelines for the employees of the Company and its subsidiaries. The Company obtained in-principle approval for the KIL ESARP 2019 from BSE Limited and National Stock Exchange of India Limited on 3 December 2020 and 19 January 2021, respectively. KIL ESARP 2019 is administered by the Nomination and Remuneration Committee of the Board of Directors of the Company.

KIL ESARP 2019 is in compliance with the applicable provisions of the Companies Act, 2013, and its Rules, SEBI (Share Based Employees Benefits Regulations, 2014), read with SEBI (Share Based Employees Benefits and Sweat Equity Regulations, 2021) (Employee Benefits Regulations) and other applicable Regulations. A certificate from Mr. Mahesh J. Risbud, Practicing Company Secretary, (FCS 810 CP 185), Pune, Secretarial Auditors of the Company, confirming that the KIL ESARP 2019, has been implemented in accordance with Employees Benefits Regulations and in accordance with the Special Resolution passed by the Company through Postal Ballot on 29 December 2019, and further amended by the Board of Directors in its meeting held on 3 February 2022. A copy of the same will also be available for inspection at the Companyâs Registered Office.

Pursuant to the KIL ESARP 2019, the Company had granted an aggregate of 4,70,898 Equity Settled Stock Appreciation Rights (ESARs) at an exercise price of H 500 per ESAR to eligible employees of the Company on 30 January 2020.

Consequent to the Business Transfer Agreement (BTA) dated 19 December 2020, executed by and between the Company and Avante Spaces Limited (Avante), a Wholly-Owned Subsidiary of the Company, certain employees of the Company were transferred to Avante with effect from 1 January 2021.

Pursuant to KIL ESARP 2019, ESARs granted shall vest after a minimum period of 1 year but not later than a maximum period of 4 years from the grant date of such ESARs.

During the year under review, the Company had vested 1,14,160 ESARs, in the employees of the Company; employees of Avante who were transferred from the Company under the BTA; and in the Non-Executive Director of the Company, who is the Managing Director of Avante to whom ESARs were granted under the KIL ESARP 2019.

Details of KIL ESARP 2019, as required under Rule 12 (9) of the Companies (Share Capital and Debentures) Rules, 2014, read with Regulation 14 of Employees Benefits Regulations, as on 31 March 2022, are set out in âAnnexure Iâ to this Report and are available on the Companyâs website at www.kirloskarindustries.com.

E. CONCERNS AND THREATS:

The Board of Directors has constituted a Risk Management Committee (the Committee) to identify the risks, mitigate the same and monitor the development and deployment of risk mitigation action plans for the businesses of the Company.

The Company has deployed a risk management process that includes risk identification, assessment and its treatment, mitigation, monitoring, and reviewing actions. The Company prioritises and manages the risks identified through its Risk Registers.

The Committee regularly presents the risk assessment and mitigation procedures adopted to assess the reliability of the risk management structure and efficiency of the process before the Audit Committee and the Board of Directors of the Company at their respective meetings.

The Committee meets every quarter, discusses all the mapped risks, evaluates future risks and reviews the mitigation plan for the identified risks for all business segments.

F. PROSPECTS:

Wind energy generation is largely dependent on natural factors such as the velocity of wind, continuity of the flow, etc., and is unpredictable and beyond control. The business is also largely impacted adversely by changes made by the Regulatory Authorities in the open access policies.

The market for Renewable Energy Certificates (RECs) continues to be sluggish, this trend is expected to continue in the current Financial Year.

G. INTERNAL CONTROLS SYSTEM AND THEIR ADEQUACY:

The Company has in place an adequate internal controls system to ensure operational efficiency, accuracy, and promptness in financial reporting and compliance with various laws and regulations.

The internal controls system is supported by the internal audit process. An Internal Auditor has been appointed for this purpose. The Audit Committee of the Board reviews the Internal Audit Report and the adequacy and effectiveness of internal controls periodically.

H. CAUTIONARY STATEMENT:

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

I. SEBI REGULATIONS AND LISTING FEES:

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

J. DETAILS OF MATERIAL SUBSIDIARY:

In terms of the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Kirloskar Ferrous Industries Limited (KFIL) is a material subsidiary of the Company, in which, the Company holds 50.93% of its total shareholding.

During the period under review, KFIL has not sold / disposed off and leased assets more than 20% of its assets.

K. SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS:

Kirloskar Ferrous Industries Limited (KFIL), a listed material subsidiary of the Company, has acquired a controlling interest and holds 51.25% of the issued, subscribed, and paid-up equity share capital of ISMT Limited (ISMT) and ISMT has, therefore, become a subsidiary of KFIL with effect from 10 March 2022, pursuant to the provisions of Section 2 (87) (ii) of the Companies Act, 2013, (the Act).

Consequently, pursuant to the provisions of Section 2(87)(ii) of the Act, ISMT has become a subsidiary of the Company with effect from 10 March 2022.

Accordingly, the Company has the following subsidiaries as on 31 March 2022:

1. Avante Spaces Limited, a Wholly-owned Subsidiary Company;

2. Kirloskar Ferrous Industries Limited (KFIL], Subsidiary Company; and

3. ISMT Limited, a subsidiary of the Subsidiary Company (a subsidiary of KFIL].

The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with IND AS 110, issued by the Ministry of Corporate Affairs, form part of this Annual Report. A statement containing the salient features of the Financial Statement of the subsidiary companies is attached to the Financial Statements of the Company in Form AOC-1.

Pursuant to the provisions of Section 136 of the Act, and its Rules thereof including amendments thereunder, the Financial Statements along with relevant documents of the Company and its subsidiaries, are available on the Companyâs website, viz., www.kirloskarindustries.com.

The Financial Statements of the subsidiaries and related detailed information will be kept for inspection by any member at the Companyâs Registered Office and will also be made available to the members on demand, at any point of time.

BRIEF HIGHLIGHTS OF BUSINESSES OF SUBSIDIARY COMPANIES:

AVANTE SPACES LIMITED:

During the year under review, the name of âWellness Space Developers Limitedâ, a Wholly-Owned Subsidiary of the Company has been changed to âAvante Spaces Limitedâ (Avante] with effect from 29 June 2021.

The Board of Directors of Avante in its meeting held on 23 July 2021, had approved a revised plan in respect of mixed-use development on land parcels bearing Survey Numbers 13/A, 13/B/C/D, 156A, 156B, 156C/2, 12/2, and 12/5 at Kothrud, Pune, of approximately 1.8 million sq. ft. leasable area, as per the revised Concept Design Drawings and strategies presented before the Board. This has been done pursuant to the Unified Development Control Regulation notified on 2 December 2020, which has had a positive impact on the project development for Floor Space Index (FSI] and leasable area.

In furtherance of the same, Avante has taken various measures for the development of the land parcels at Kothrud.

The works continued on design, project execution and statutory fronts as per the project plan in spite of COVID-19 waves during the year. Commodity prices also increased substantially impacting the project cost. Avante mitigated the impacts by taking various measures and it is under control within the overall Project Plan.

During the year, Avante has spent ? 119.71 Crores on real estate activities.

KIRLOSKAR FERROUS INDUSTRIES LIMITED:

Kirloskar Ferrous Industries Limited (KFIL] is in the business of manufacture of pig iron and castings and has its manufacturing facilities located at Bevinahalli village and Hiriyur in Karnataka and Solapur in Maharashtra.

The Board of Directors of KFIL declared an interim dividend of ? 2.50 (50%] per equity share on 24 January 2022 and paid on 18 February 2022.

The Board of Directors of KFIL in its meeting held on 17 May 2022, has also recommended a final dividend of ? 3 (60%] per equity share for the Financial Year ended 31 March 2022. Accordingly, the total dividend (inclusive of interim dividend declared and paid] for the Financial Year 2021-2022 is 110%.

KFIL achieved Net Sales of ? 3,614.97 Crores as compared to ? 2,038.08 Crores in the previous year. The Profit Before Tax for the year under review stood at ? 542.69 Crores as compared to ? 363.19 Crores of the previous year after providing for depreciation and amortisation.

During the year under review, KFIL maintained the leadership position in the castings business, which recorded a growth of 23.60% over previous year, with substantial capacity utilisation improvement in Foundry Line II at Koppal Plant. The operations of the Pig Iron Plant of KFIL at Hiriyur was stabilised and the Sinter project was completed as per the timeline. The plant was operational throughout the year and contributed both in volume growth and value growth of KFIL.

KFIL sold 4,95,555 MT of Pig Iron (includes 1,50,431 MT from Hiriyur Plant] valued at ? 2,201.77 Crores as compared to 3,13,690 MT of Pig Iron valued at ? 1,067.32 Crores in the previous year.

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

KFIL sold 1,14,342 MT of castings aggregating to ? 1,289.63 Crores during the financial year 2021-2022 as compared to 92,507 MT castings aggregating to ? 874.40 Crores in the previous financial year.

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

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

During the year under review, iron ore prices increased from around H 6,500 per MT in April 2021 to around H 8,000 per MT by June 2021 and prices remained range bound till October 2021. However, prices started reducing from November 2021 and touched around H 6,000 per MT by March 2022. The fluctuation in iron ore prices is mainly attributed to variation in steel production in China.

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

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

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

KFIL continuously worked on improving the casting sales volume growth and quality at both locations of Koppal and Solapur, which has resulted increase in the casting sales growth of 23.60% over the previous year and achieved the total rejection of 5.20%.

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

KFIL continues to focus on increasing the revenue from supply of castings in machined condition and around 12% of casting were sold in machined condition.

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

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

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

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

During the year under review, KFIL was successful in adding two new customers and increase in share of business and adding new products from the current customers and also increased the supply of machined castings.

KFIL has completed the following projects during the year under review:

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

â¢ The Company has undertaken various projects for debottlenecking and improving the capacity utilisation and also undertook up-gradation on technology / infrastructure in foundry and machine shop both at Koppal and Solapur units, to meet the increasing demand for castings from the customers.

KFIL has undertaken the following projects during the year under review:

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

â¢ Establishment of Coke Oven Phase II to enhance the coke capacity from 2 lakhs MT per annum to 4 lakhs MT per annum and Power Plant (using waste gas generated from Coke Oven plant).

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

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

â¢ Expanding machining capacity to add more value.

ISMT Limited (ISMT)

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

Consequently, pursuant to the provisions of Section 2 (87] (ii] of the Act, ISMT has become a subsidiary of the Company with effect from 10 March 2022.

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

The acquistion of ISMT has facilitated KFILto enter a business segment of steel manufacturing and seamless tubes.

Performance Highlights:									(? in Crores]
	Name and Registered Office of ISMT		Percentage Holding of KFIL		Particulars				Consolidated Financials for FY 2021-2022
ISMT Limited				51.25	Total Income				2,182.03
Panama House,					Total Expenses				2,176.50
Viman Nagar,					Profit before Exceptional Items and Tax				5.53
Pune 411014					Exceptional Items				(2,511.36]
Maharashtra					Profit before Tax				2,516.91
India					Tax expenses				142.83
					Profit after Tax				2,347.08
					Other Comprehensive Income				(6.21]
					Total Comprehensive Income				2,367.87
L.	DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:
Details of significant changes, i.e., change of 25% or more, as compared to the immediately previous Financial Year in key financial ratio, along with detailed explanation thereof:
	Sr. No.	Particulars		Ratio as on 31 March 2022		Ratio as on 31 March 2021	% of Change		Explanations, if any
		Debtorsâ Turnover (in no of days]		32		6		433	Refer Note No. 1
ii.		Inventory Turnover (in no.	of days]	1		2		(40]	Refer Note No. 2
in.		Interest Coverage Ratio		-		-		-	Refer Note No. 3
iv.		Current Ratio		1.19		3.80		(69]	-
V.		Debt Equity Ratio		-		-		-	Refer Note No. 4
Notes:
1. Debtors relate only to windmill business. 2. Inventory represents number of Renewable Energy Certificates (RECs] in stock obtained in respect of windmill business. 3. The Company does not have any interest cost. 4. The Company does not have any borrowings.
There are no sector-specific equivalent ratios for disclosure by the Company.
M.	RETURN ON NET WORTH:
Details of change in Return on Net Worth as compared to the immediately previous Financial Year as follows:
	Sr. No.	Particulars		Ratio as on 31 March 2022		Ratio as on 31 March 2021	% of Change		Explanations, if any
1.		Net worth			3.77	1.92		1.85	Refer Note No. 1
Note:
1. Return on Net Worth has increased since net profit has increased in spite of increase in increase in fair market value of equity instruments from 31 March 2021 to 31 March 2022.								net worth due to a significant

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

1. EXTRACT OF ANNUAL RETURN:

In terms of the provisions of Section 92 (3) read with the provision of Section 134 (3) (a) of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, including amendments thereunder, the Annual Return filed with the Ministry of Corporate Affairs (MCA), for the Financial Year 2020-2021, is available on the website of the Company, viz., www. kirloskarindustries.com and the Annual Return for the Financial Year 2021-2022, will be made available on the website of the Company once it is filed with the MCA.

2. NUMBER OF MEETINGS OF THE BOARD:

During the period under review, 7 Board Meetings were convened and held, the details of which form part of the Report on Corporate Governance. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

3. DIRECTORSâ RESPONSIBILITY STATEMENT:

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

a) in the preparation of the Annual Financial Statements for the year ended 31 March 2022, the applicable accounting standards had been followed and there were no material departures;

b) accounting policies as mentioned in Note No. 2 of the Notes forming part of the Financial Statements have been selected and applied consistently. Further, judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2022 and of the Profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Annual Financial Statements have been prepared on a going concern basis;

e) proper internal financial controls were in place and that the internal financial controls were adequate and were operating effectively; and

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

4. A STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS:

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 (7) of the Companies Act, 2013, and Rules thereunder including amendments thereto and Regulation 16 (1) (b) and 25 (8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, including amendments thereto and also confirmed that they have complied with the Code for Independent Directors prescribed in Schedule IV to the Act.

Further, pursuant to Sub-rule (1) and (2) of Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 and amendments thereto, all Independent Directors confirmed that they have enrolled their name in the data bank with the Indian Institute of Corporate Affairs, New Delhi, India, within prescribed time period.

In the opinion of the Board, each of the Independent Director appointed / re-appointed during the period under review possess requisite integrity, expertise, and experience for acting as an Independent Director of the Company.

The Company has laid down a Code for the Board of Directors and Senior Management of the Company (Code of Conduct). The Code of Conduct is available on the Companyâs website, viz., www.kirloskarindustries.com.

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

5. COMPANYâS POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION:

The Board has on the recommendation of the Nomination and Remuneration Committee adopted a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management Personnel and their remuneration.

The Nomination and Remuneration Policy is available on the website of the Company, viz., www.kirloskarindustries.com.

6. AUDITORS:

a. Statutory Auditors:

Kirtane and Pandit LLP, Chartered Accountants, (Firm Registration Number 105215W), Pune, were appointed as the Statutory Auditors of the Company under Section 139 of the Companies Act, 2013, (the Act), to hold office for a term of five years from the conclusion of the Annual General Meeting (AGM) held on 10 August 2021, till the conclusion of the AGM of the Company, to be held in the year 2026.

The Company has received a certificate from the Statutory Auditors to the effect that they are fulfilling requirements prescribed under the provisions of Section 141 of the Act.

b. Cost Auditors:

c. Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company had appointed Mr. Mahesh J. Risbud, Practicing Company Secretary, (FCS 810 CP 185), Pune, to undertake the Secretarial Audit of the Company.

The Report of the Secretarial Audit is annexed as âAnnexure IIâ to this Report.

Mr. Mahesh J. Risbud, Practising Company Secretary, Pune, has submitted Secretarial Compliance Report as laid down in SEBI Circular CIR/CFD/CMD1/27/2019 dated 8 February 2019 and has also confirmed that the Company has complied with all applicable SEBI Regulations and circulars / guidelines issued thereunder, for the Financial Year 2021-2022.

7. MAINTENANCE OF COST RECORDS:

Pursuant to the Companies (Cost Records and Audit) Rules, 2014, dated 31 December 2014, the Company was not required to maintain cost records relating to Electricity Industry (Windmill) in Form CRA - 1 for the Financial Year 2021-2022.

8. EXPLANATION OR COMMENTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS:

There are no qualifications, reservations or adverse remarks or disclaimer made by the Statutory Auditor in their Audit Report or by the Practicing Company Secretary in the Secretarial Audit Report for the year ended 31 March 2022.

The notes to the Accounts referred to in the Auditors Reports are self-explanatory and therefore no further clarifications are required.

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

During the period under review, your Company has given a loan of H 139.65 Crores to Avante Spaces Limited (Avante), a Wholly Owned Subsidiary Company. Your Company has not granted any guarantee.

During the period under review, the Company has invested of H 15 Crores in equity capital of Avante. The Company also purchased one preference share of Kirloskar Proprietary Limited at the rate of H 100. The details are given in the Financial Statements.

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

Pursuant to the provisions of Section 134 of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014, the particulars of all contracts or arrangements entered into by the Company with related parties have been done at armâs length and are in the ordinary course of business. Hence, no particulars are being provided in Form AOC - 2. Related party disclosures as per the Indian Accounting Standard 24 (IND AS 24) have been provided in Note No. 45 to the Financial Statements.

None of the related party transactions entered into by the Company, were materially significant, warranting membersâ approval under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, including amendments thereunder.

11. STATE OF COMPANYâS AFFAIRS:

Discussion on state of Companyâs affairs has been covered in the Management Discussion and Analysis Report.

12. AMOUNTS PROPOSED TO BE CARRIED TO RESERVES:

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

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

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

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

A. Conservation of Energy and Technology Absorption:

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

B. Foreign exchange earnings and outgo:

(H in Crores)

Particulars Amount

Foreign exchange earnings Nil

Foreign exchange Outgo Nil

15. RISK MANAGEMENT POLICY:

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

During the year under review, the Risk Management

Policy developed by the Company guides the risk management processes which are in line with the nature of the Companyâs operations.

The risk management process works at various levels across the organisation. It is an ongoing process and forms an integral part of management focus.

16. CORPORATE SOCIAL RESPONSIBILITY:

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

Annual Report on CSR activities includes details about the CSR policy developed and implemented by the Company CSR initiatives taken during the year are annexed as âAnnexure IIIâ to this Report.

17. BOARD EVALUATION:

Pursuant to the provisions of the Companies Act, 2013, and Regulation 17 (10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out a performance evaluation of its own performance and that of its committees and individual Directors. Performance evaluation has been carried out as per the criteria prescribed by the Nomination and Remuneration Committee.

18. PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES, ASSOCIATES, AND JOINT V	ENTURE COMPANIES: (H in Crores) 2021-2022 Amount
Name and Registered Office of % Holding Particulars the Subsidiary Company	ENTURE COMPANIES: (H in Crores) 2021-2022 Amount
Avante Spaces Limited, 100 Total income	1.14
Office No. 801, 8th Floor, Cello Profit / (Loss) before tax	(4.25)
Platina, Fergusson College Tax expenses (including deferred tax)	(0.57)
Road, Shivajinagar, Pune 411 Profit / (Loss) for the year	(3.68)
005 Other comprehensive income for the year	(0.22)
Total comprehensive income for the period	(0.16)
Profit / (Loss) brought forward from previous year	(1.02)
Final Dividend paid on equity shares	Nil
Tax on above Dividend	Nil
Profit / (Loss) available for appropriation	(3.68)
Transfer to General Reserves	Nil
Balance carried to surplus / (deficit) in the Statement of Profit and Loss	(4.86)

	(? in Crores] 2021-2022 Amount
Name and Registered Office of % Holding Particulars the Subsidiary Company	(? in Crores] 2021-2022 Amount
Kirloskar Ferrous Industries 50.93 Total income	3,626.26
Limited, 13, Laxmanrao Profit before tax	542.69
Kirloskar Road, Khadki, Tax expenses	136.59
Pune 411003 Profit for the year	406.10
Other comprehensive income for the year	3.41
Total comprehensive income for the period	409.51
Profit brought forward from previous year	659.65
Transfer from Share Options	(2.87]
Final Dividend paid on equity shares	(41.53]
Interim dividend paid on equity shares	(34.67]
Transfer to General Reserves	(5.00]
Balance carried to surplus in the Statement of Profit and Loss	985.09
	(? in Crores] 2021-2022 Amount
Name and Registered Office of % Holding Particulars the Associate Company	(? in Crores] 2021-2022 Amount
# Kirloskar Brothers Limited, 23.91 Total income	2,201.60
Yamuna, S. No. 98/3 to 7, Plot Total expenditure	2,065.40
No. 3, Baner, Profit before exceptional items and taxation	136.20
Pune 411045 Profit before taxation	111.10
Provision for tax (including Deferred Tax]	32.90
Net profit	78.20
Other comprehensive income	2.80
Balance of Profit / (Loss] from previous year	Not available
Dividend paid on equity shares	Not available
Tax on above dividend	Not available
Profit available for appropriation	Not available
Transfer to General Reserves	Not available
Balance carried to surplus in the Statement of Profit and Loss	Not available
Note: # The Company does not have significant influence on Kirloskar Brothers Limited (KBL] as it does not participate in the management and / or financial decisions of KBL. As such KBL is not an Associate Company of the Company under the IND AS 24 and as such its financials are not included in the Consolidated Financial Statements of the Company. Hence, the aforesaid information is obtained from the website of KBL for the quarter and year ended 31 March 2022. 19. CHANGE IN THE NATURE OF BUSINESS, IF ANY: In Financial Year 2021-2022, there was no change in the nature of business of the Company. 20. DETAILS OF APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL: Directors appointed / re-appointed during the year:
Name of Director Designation Terms of Appointment
Mr. Atul Kirloskar Chairman Re-appointed w.e.f. 10 August 2021, subject to retirement by rotation. Mr. Vinesh Kumar Jairath Non-Executive Director Re-appointed w.e.f. 10 August 2021, subject to retirement by rotation. Ms. Aditi Chirmule Executive Director The Board of Directors in its meeting held on 30 October 2021, reappointed Ms. Aditi Chirmule as the Executive Director of the Company, for a period of 5 years with effect from 25 January 2022, subject to the approval of the members in the ensuing Annual General Meeting. Mr. D. Sivanandhan Independent Director Re-appointed w.e.f. 11 May 2022, as an Independent Director to hold office for a second term up to his attaining the age of 75 years, i.e., up to 2 February 2026, with effect fromll May 2022, subject to the approval of the members in the ensuing Annual General Meeting.

Mr. Atul Kirloskar and Mr. Vinesh Kumar Jairath retired by rotation and were re-appointed in the Annual General Meeting held on 10 August 2021.

Key Managerial Personnel appointed during the year:

During the period under review, the Company has not appointed any Key Managerial Personnel.

Directors and Key Managerial Personnel resigned during the year 2021-2022:

During the year under review, Mr. Sunil Shah Singh, ceased to be an Independent Director of the Company, with effect from 19 October 2021, on completion of his tenure as an Independent Director. Mr. Nihal Kulkarni, resigned as a Director of the Company, with effect from 9 February 2022.

During the year under review, Mr. Umesh Shastry resigned as a Chief Financial Officer of the Company, with effect from 1 February 2022.

21. DIRECTORS PROPOSED TO BE APPOINTED / REAPPOINTED AT THE ENSUING ANNUAL GENERAL MEETING:

Mr. Anil Alawani who retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The Company has received the requisite disclosure / declaration from Mr. Anil Alawani.

On the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company in its meeting held on 26 May 2022, has re-appointed Mr. Mahesh Chhabria as the Managing Director of the Company, for a term of 5 years with effect from 4 July 2022.

A proposal for his re-appointment as the Managing Director of the Company with effect from 4 July 2022, for a term of 5 years and remuneration payable to him for the period effective from 4 July 2022 to 3 July 2025, is being placed before the members for their approval at the ensuing Annual General Meeting.

On the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company in its meeting held on 30 October 2021, has reappointed Ms. Aditi Chirmule as the Executive Director of the Company, for a further period of 5 consecutive years with effect from 25 January 2022.

A proposal for her re-appointment as the Executive Director of the Company with effect from 25 January 2022, for a term of 5 years and remuneration payable to her for the period effective from 25 January 2022 to 24 January 2025, is being placed before the members for their approval at the ensuing Annual General Meeting.

On the recommendation of the Nomination and Remuneration Committee, in accordance with the provisions of Section 161 of the Companies Act, 2013, (the Act), read with the Articles of Association of the Company, the Board of Directors of the Company coopted Mr. Vijaydipak Varma and Ms. Purvi Sheth as Additional Independent Directors with effect from 15 October 2021 and 26 May 2022, respectively.

Mr. Vijaydipak Varma and Ms. Purvi Sheth hold office up to the date of the ensuing Annual General Meeting of the Company. The Company has received a requisite notice under Section 160 of the Act, in writing from a member signifying intention to propose the appointment of Mr. Vijaydipak Varma and Ms. Purvi Sheth as candidates for the office of Directors at the ensuing Annual General Meeting. Mr. Vijaydipak Varma and Ms. Purvi Sheth are eligible for appointment.

In the opinion of the Board of Directors, Mr. Vijaydipak Varma and Ms. Purvi Sheth fulfill the conditions specified in the Act, and Rules thereunder and also possess high integrity, repute, requisite expertise and experience (including the proficiency) so as to enable the Board to discharge its functions and duties effectively and they are independent of the management.

Mr. Vijaydipak Varma is exempted from passing the online proficiency test pursuant to the provisions of Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

Ms. Purvi Sheth has passed online proficiency test pursuant to the provisions of Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

The Company has also received requisite disclosures / declarations from Mr. Vijaydipak Varma and Ms. Purvi Sheth under Section 149 of the Act, and other applicable provisions of the Act and SEBI (Listing Obligations and Disclosure Requirements), 2015, (the Regulations) and its amendments thereunder.

Upon the recommendation of the Nomination and Remuneration Committee, the Board of Directors has sought the approval of the members for the reappointment of Mr. D. Sivanandhan and Mr. Ashit Parekh, as Independent Directors to hold office for a second term up to 2 February 2026, and 3 July 2027, respectively.

In the opinion of the Board of Directors, Mr. D. Sivanandhan and Mr. Ashit Parekh fulfill the conditions specified in the Act and Rules thereunder and also possess high integrity, repute, requisite expertise and experience (including the proficiency) so as to enable the Board to discharge its functions and duties effectively and they are independent of the management.

Mr. D. Sivanandhan is exempted from passing the online proficiency test and Mr. Ashit Parekh has passed the online proficiency test.

The Company has also received requisite disclosures / declarations from Mr. D. Sivanandhan and Mr. Ashit Parekh under Section 149 of the Act, and other applicable provisions of the Act and the Regulations and its amendments thereunder.

The brief resumes and other details relating to Directors who are proposed to be appointed / re-appointed as required to be disclosed under Regulation 36 (3) of the Regulations, form part of the Statement settling out material facts annexed to the Notice of the Annual General Meeting.

The resolutions seeking approval of the members for the appointment / re-appointment of these Directors have been incorporated in the Notice of the forthcoming Annual General Meeting of the Company.

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

Kirloskar Ferrous Industries Limited (KFIL), a subsidiary company of the Company has acquired a controlling interest and holds 51.25% of the issued, subscribed and paid-up equity share capital of ISMT Limited (ISMT) and that ISMT has, therefore, become a subsidiary of KFIL with effect from 10 March 2022, pursuant to the provisions of Section 2 (87) (ii) of the Companies Act , 2013, (the Act).

Consequently, pursuant to the provisions of Section 2 (87) (ii) of the Act, ISMT has become a subsidiary of the Company with effect from 10 March 2022.

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

None

24. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYâS OPERATIONS IN FUTURE:

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

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

The Company has developed a strong two-tier internal control framework comprising entity level controls and process level controls. The entity level controls of the Company include elements such as defined Code of Conduct, Whistle Blower Policy / Vigil Mechanism, rigorous management review and Management Information System (MIS) and strong internal audit mechanism. The process level controls have been ensured by implementing

appropriate checks and balances to ensure adherence to Company policies and procedures, efficiency in operations and also reduce the risk of frauds.

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

26. COMPOSITION OF THE AUDIT COMMITTEE:

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

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

28. Neither any application has been made or any proceeding has been pending against the Company under the Insolvency and Bankruptcy Code, 2016.

VII. INFORMATION FORMING PART OF THE BOARDâS REPORT PURSUANT TO RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014:

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

The particulars of top ten employees pursuant to the aforesaid Rules form part of this Report. In terms of Section 136 (1) of the Companies Act, 2013, the Boardâs Report is being sent to the members without this Annexure. The members interested in obtaining a copy of this Annexure may write to the Company Secretary at the Companyâs Registered Office.

VIII. VIGIL MECHANISM:

The Company has a Whistle Blower Policy / Vigil Mechanism (the Policy) to deal with instances of fraud, unethical behavior, etc. The Policy provides a mechanism for Directors and employees of the Company and other persons dealing with the Company to report genuine concerns including but not limited to unethical behavior, actual or suspected fraud or violation of the Companyâs Code of Conduct for Board of Directors and Senior Management or ethics policy or leakage of Unpublished Price Sensitive Information (UPSI), by any person, who is in possession of UPSI, to any other person in any manner whatsoever, except as otherwise permitted under the SEBI (Prohibition of Insider Trading) Regulations, 2015, or any other instance to the Chairman of the Audit Committee of the Board of Directors of the Company. The Policy is placed on the Companyâs website, viz., www.kirloskarindustries.com.

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

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

The Committee comprises four members including one external member.

During the period under review, four meetings of the Committee were held on 29 April 2021, 29 July 2021, 20 October 2021, and 5 January 2022.

The Company has in place a Policy for Prevention of Sexual Harassment at the workplace. This would, inter alia, provide a mechanism for the resolution, settlements, or prosecution of acts or instances of sexual harassment at the workplace and to ensure that all employees are treated with respect and dignity.

The details of complaints filed, disposed off, and pending during the Financial Year pertaining to sexual harassment is provided in the Business Responsibility Report of this Report.

X. CASH FLOW:

A Cash Flow Statement for the year ended 31 March 2022, is attached to the Balance Sheet as a part of the Financial Statements.

XI. COMPLIANCES WITH RESPECT TO APPLICABLE SECRETARIAL STANDARDS:

During the period under review, the Company has complied with all the applicable secretarial standards.

XII. CORPORATE GOVERNANCE:

In terms of Regulation 34 (3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Report on the Corporate Governance along with a Compliance Certificate issued by the Statutory Auditors of the Company is attached and forms part of the Annual Report.

XIII.REMUNERATION RECEIVED COMPANIES:		BY THE MANAGING DIRECTOR / EXECUTIVE DIRECTOR FROM SUBSIDIARY (H in Crores)
Sr.	Name of Director	Designation	Remuneration received /	Remuneration received /
No.			receivable from Kirloskar	receivable from Avante
			Ferrous Industries Limited,	Spaces Limited, Wholly-
			Subsidiary Company	Owned Subsidiary Company
1	Mr. Mahesh Chhabria	Managing Director	0.82	Nil
2	Ms. Aditi Chirmule	Executive Director	Nil	Nil

XIV. BUSINESS RESPONSIBILITY REPORT:

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (the Regulations), mandate the inclusion of the Business Responsibility Report (BRR) as part of the Annual Report for top 1000 listed entities based on market capitalisation. In compliance with the Regulations, the Company has integrated BRR disclosures into the Annual Report.

ACKNOWLEDGEMENTS:

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

For and on behalf of the Board of Directors

Sd/-

ATUL KIRLOSKAR

CHAIRMAN

Pune: 26 May 2022 DIN 00007387

Mar 31, 2018

To The Members,

The Directors have pleasure in presenting this 24th Annual Report with the Audited Annual Accounts of the Company for the year ended 31 March 2018.

I. FINANCIAL PERFORMANCE (STANDALONE):

(Rs. in Lakhs)

Particulars	2017-18	2016-17
Total Income	8,039.50	4,796.60
Total Expenditure	2,155.20	1,050.27
Profit before exceptional items and taxation	5,884.30	3,746.33
Profit before taxation	5,884.30	3,746.33
Provision for tax (including Deferred Tax)	586.12	863.92
Net Profit	5,298.18	2,882.41
Balance of Profit / (Loss) from previous year	42,749.65	39,867.24
Dividend paid on equity shares for the Financial Year 2016-17	1,941.73	--
Tax on final dividend for the Financial Year 2016-17	143.62	--
Profit available for appropriation	48,047.83	42,749.65
Balance carried to Surplus in Statement of Profit and Loss	45,962.48	42,749.65

II. DIVIDEND:

Your Directors recommend 210 % dividend i.e., Rs. 21 per equity share of Rs. 10 each (Previous year final dividend 200%, i.e., Rs. 20 per equity share of Rs. 10 each) for the Financial Year ended 31 March 2018.

III. CLASSIFICATION OF THE COMPANY AS A CORE INVESTMENT COMPANY (CIC):

The Company is classified as a Core Investment Company (CIC) and exempt from registration with the Reserve Bank of India (RBI).

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

1. EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT - 9, are annexed as âAnnexure IIâ to this Report.

2. NUMBER OF MEETINGS OF THE BOARD:

During the year under review, seven Board Meetings were convened and held, the details of which form part of Report on Corporate Governance. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

3. DIRECTORSâ RESPONSIBILITY STATEMENT:

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

a) in the preparation of the Annual Financial Statements for the year ended 31 March 2018, the applicable accounting standards had been followed and there were no material departures;

b) accounting policies as mentioned in Note 2 of the Notes forming part of the Financial Statements have been selected and applied consistently. Further, judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2018 and of the Profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Annual Financial Statements have been prepared on a going concern basis;

e) proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and

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

4. A STATEMENT ON DECLARATION BY THE INDEPENDENT DIRECTORS:

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

5. COMPANYâS POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION:

The Board has on the recommendation of the Nomination and Remuneration Committee adopted a policy for selection and appointment of Directors, Key Managerial Personnel (KMP) and Senior Management Personnel and their remuneration.

The Nomination and Remuneration Policy is available on the website of the Company, viz.,www.kil.net.in.

6. AUDITORS:

a. Statutory Auditors:

G. D. Apte & Co., Chartered Accountants, (Firm Registration Number 100515W), Pune, were appointed as the Statutory Auditors of the Company under Section 139 of the Companies Act, 2013, to hold the office for a second term of five years from the conclusion of the Annual General Meeting (AGM) held on 11 August 2016, till the conclusion of the AGM of the Company, to be held in the year 2021, subject to the ratification of the appointment by the members at every AGM.

Pursuant to the first proviso to Section 139 of the Companies Act, 2013, the appointment of the Statutory Auditors was required to be placed for ratification at every Annual General Meeting. The said proviso has been omitted by Ministry of Corporate Affairs (MCA) vide its Notification dated 7 May 2018, with immediate effect.

The Company has received an eligibility certificate from the Auditors.

b. Cost Auditors:

Pursuant to the Companies (Cost Records and Audit) Rules, 2014, dated 31 December 2014, the Company was not required to audit cost records relating to Electricity Industry (Windmills) for the Financial Year 2017-18. However, the Company was required to maintain cost records in Form CRA - 1. Accordingly, the Company has maintained cost records in Form CRA - 1.

c. Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Mr. Mahesh J. Risbud, Practicing Company Secretary, (FCS 810 CP 185), Pune, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed as âAnnexure IIIâ to this Report.

7. EXPLANATION OR COMMENTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS:

There are no qualifications, reservations or adverse remarks or disclaimer made by the Statutory Auditors in their Audit Report or by the Practicing Company Secretary in the Secretarial Audit Report for the year ended 31 March 2018.

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

Your Company has not granted any loan or guarantee.

During the year under review, your Company made investments of Rs. 956 Lakhs in equity shares of Kirloskar Pneumatic Company Limited (KPC).

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

Pursuant to the provisions of Section 134 of the Companies Act, 2013, read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of all contracts or arrangements entered into by the Company with Related Parties have been done at armâs length and are in the ordinary course of business. Hence, no particulars are being provided in Form AOC - 2. Related Party disclosures as per the Accounting Standard 18 have been provided in Note 33 to the Financial Statements.

10. STATE OF COMPANYâS AFFAIRS:

Discussion on state of Companyâs affairs has been covered in the Management Discussion and Analysis Report.

11. AMOUNTS PROPOSED TO BE CARRIED TO RESERVES:

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

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

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

A. Conservation of Energy and Technology Absorption:

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

B. Foreign exchange earnings and outgo:

14. RISK MANAGEMENT POLICY:

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

15. CORPORATE SOCIAL RESPONSIBILITY:

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

Annual Report on CSR activities includes details about the CSR policy developed and implemented by the Company. CSR initiatives taken during the year is annexed herewith as âAnnexure IVâ to this Report.

16. BOARD EVALUATION:

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10) of the Regulations, the Board has carried out performance evaluation of its own performance and that of its committees and individual Directors.

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

Name and Registered Office of the Subsidiary Company	% Holding	Particulars	Amount (Rs. in Lakhs)
Kirloskar Ferrous Industries	51.45	Total Income	1,72,903
Limited, 13, Laxmanrao Kirloskar Road, Khadki, Pune 411 003		Profit before tax	5,442
		Tax Expenses	1,642
		Profit for the year	3,800
		Other comprehensive income for the year	(61)
		Total comprehensive income for the period	3,739
		Profit brought forward from previous year	27,508
		Dividend paid on equity shares for F.Y. 20162017	(2,403)
		Tax on above Dividend for F.Y 2016-2017	(489)
		Profit available for appropriation	28,355
		Transfer to General Reserves	500
		Balance carried to Surplus in Statement of Profit and Loss	27,855

Name and Registered Office of the Associate Company	% Holding	Particulars	Amount (Rs. in Lakhs)
# Kirloskar Brothers Limited, Udyog Bhavan, Tilak Road, Pune 411 030	23.91	Total Income	62,040
		Total Expenditure	57,040
		Profit before exceptional items, finance cost and taxation	5,000
		Finance Cost	--
		Profit before taxation	5,000
		Provision for tax (including Deferred Tax)	1,750
		Net Profit	3,250
		Other Comprehensive Income	(10)
		Balance of Profit / (Loss) from previous year	Not available
		Dividend paid on equity shares for F.Y 20162017	Not available
		Tax on above Dividend for F.Y 2016-2017	Not available
		Profit available for appropriation	Not available
		Transfer to General Reserves	Not available
		Balance carried to Surplus in Statement of Profit and Loss	Not available

Note:

# The Company does not have significant influence on Kirloskar Brothers Limited (KBL) as it does not participate in the management and / or financial decisions of KBL. As such KBL is not an Associate Company of the Company under the Accounting Standard 18 and as such its financials are not included in the Consolidated Financial Statements of the Company. Hence, the aforesaid information is obtained from the quarter and year ended financial results of KBL approved by its Board on 11 May 2018 and published on 12 May 2018.

18. CHANGE IN THE NATURE OF BUSINESS, IF ANY:

Your Company is carrying on the business of Wind Power Generation.

To enable the Company to commence real estate activities, during the year the Company has amended the Main Object Clause of the Company.

On account of amendment in Memorandum of Association of the Company, the activity code has changed in the MCA record and accordingly the CIN has changed to L70100PN1978PLC088972.

19. DETAILS OF APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL: Directors appointed / re-appointed during the year

Name of Director	Designation	Terms of appointment
Mr. Atul Kirloskar *	Chairman	Re-appointed with effect from 28 August 2017, subject to retirement by rotation.
Mr. D. Sivanandhan **	Independent Director	Five consecutive years commencing from 11 May 2017 up to 10 May 2021
Mr. Vinesh Kumar Jairath ***	Independent Director	Five consecutive years commencing from 4 July 2017 up to 3 July 2021
Mr. Ashit Parekh ***	Independent Director	Five consecutive years commencing from 4 July 2017 up to 3 July 2021

* Mr. Atul Kirloskar retired by rotation and was re-appointed in the Annual General Meeting held on 28 August 2017.

** Mr. D. Sivanandhan was co-opted as an Additional Independent Director with effect from 11 May 2017 and appointed in the Annual General Meeting held on 28 August 2017.

*** Mr. Vinesh Kumar Jairath and Mr. Ashit Parekh were co-opted as Additional Independent Directors with effect from 4 July 2017 and appointed in the Annual General Meeting held on 28 August 2017.

**** The Board of Directors of the Company in its meeting held on 14 June 2018, appointed Mr. Vinesh Kumar Jairath as an Additional Non-Excutive Director and also in the capacity as Advisor to the Company for a period of 5 years with effect from 14 June 2018.

Key Managerial Personnel (KMP) appointed during the year

During the year under review, Mr. Mahesh Chhabria, Managing Director of the Company, has been appointed as Key Managerial Personnel of the Company.

20. DIRECTORS AND KEY MANAGERIAL PERSONNEL RESIGNED DURING THE YEAR 2017-18:

None

21. DIRECTORS PROPOSED TO BE APPOINTED / RE-APPOINTED AT THE ENSUING ANNUAL GENERAL MEETING:

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

The Company has also received the requisite disclosure / declaration from Mr. Nihal Kulkarni.

In accordance with the provisions of Section 161 of the Companies Act, 2013, read with the Articles of Association of the Company, the Board of Directors of the Company in its meeting held on 17 May 2018, co-opted Mr. Satish Jamdar and Mrs. Mrunalini Deshmukh as Additional Independent Directors, as recommended by the Nomination and Remuneration Committee.

These newly co-opted Directors hold office up to the date of the ensuing Annual General Meeting of the Company. The Company has received requisite notices under Section 160 of the Companies Act, 2013, in writing from a member signifying their intention to propose Mr. Satish Jamdar and Mrs. Mrunalini Deshmukh as candidates for the office of Directors at the ensuing Annual General Meeting. All of them are eligible for appointment.

The Company has also received the requisite disclosure / declaration from Mr. Satish Jamdar and Mrs. Mrunalini Deshmukh under Section 149 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 2013.

The Board of Directors of the Company in its meeting held on 14 June 2018, co-opted Mr. Vinesh Kumar Jairath as an Additional Non-Executive Director, as recommended by the Nomination and Remuneration Committee.

Mr. Vinesh Kumar Jairath holds office up to the date of the ensuing Annual General Meeting of the Company. The Company has received requisite notice under Section 160 of the Companies Act, 2013, in writing from a member signifying intention to propose Mr. Vinesh Kumar Jairath as candidate for the office of a Director at the ensuing Annual General Meeting. He is eligible for appointment.

The brief resumes and other details relating to the Directors who are proposed to be appointed / re-appointed, as required to be disclosed under Regulation 36(3) of the Regulations, forms part of the Statement setting out material facts annexed to the Notice of the Annual General Meeting.

The resolutions seeking approval of members for the appointment and re-appointment of these Directors have been incorporated in the Notice of the forthcoming Annual General Meeting of the Company.

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

None

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

None

24. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYâS OPERATIONS IN FUTURE:

To the best of our knowledge, the Company has not received any such order from the Regulators, Courts or Tribunals during the year, which may impact the Going Concern Status or the Companyâs operation in future.

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

26. COMPOSITION OF AUDIT COMMITTEE:

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

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

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

VI. VIGIL MECHANISM:

The Company has a Whistle Blower Policy / Vigil Mechanism (âthe Policyâ) to deal with instances of fraud, unethical behavior, etc. The Policy provides a mechanism for directors and employees of the Company and other persons dealing with the Company to report genuine concerns including but not limited to unethical behavior, actual or suspected fraud or violation of the Companyâs Code of Conduct for Board of Directors and Senior Management or ethics policy or any other instance to the Chairman of the Audit Committee of the Board of Directors of the Company. The Policy is placed on the Companyâs website, viz., www.kil.net.in.

VII. PREVENTION OF SEXUAL HARASSMENT POLICY:

The Internal Complaint Committee (the Committee) comprises of four members.

During the Financial Year under review, two meetings of the Committee were held on 4 October 2017 and 9 January 2018.

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

VIII. CASH FLOW:

A Cash Flow Statement for the year ended 31 March 2018, is attached to the Balance Sheet as a part of the Financial Statements.

IX. COMPLIANCES WITH RESPECT TO APPLICABLE SECRETARIAL STANDARDS

During the year under review, the Company has complied with all the applicable Secretarial Standards.

X. CORPORATE GOVERNANCE:

In terms of Regulation 34(3) of the Regulations, a Report on the Corporate Governance along with Compliance Certificate issued by the Statutory Auditors of the Company is attached and forms part of the Annual Report.

ACKNOWLEDGEMENTS:

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

For and on behalf of the Board of Directors

MAHESH CHHABRIA ADITI CHIRMULE

MANAGING DIRECTOR EXECUTIVE DIRECTOR

DIN 00166049 DIN 01138984

Mumbai : 14 June 2018

Mar 31, 2017

To The Members,

The Directors have pleasure in presenting this Annual Report with the Audited Annual Accounts of the Company for the year ended 31 March 2017.

I. FINANCIAL PERFORMANCE (STANDALONE):

Rs. (in Lakhs)

Particulars	2016-17	2015-16
Total Income	4,796.60	7,669.93
Total Expenditure	1,050.27	832.11
Profit before exceptional items and taxation	3,746.33	6,837.82
Profit before taxation	3,746.33	6,837.82
Provision for tax (including Deferred Tax)	863.92	812.81
Net Profit	2,882.41	6,025.01
Balance of Profit / (Loss) from previous year	39,867.24	36,000.59
Surplus available for appropriation	42,749.65	42,025.60

APPROPRIATIONS:

Your Directors propose to appropriate the available surplus as follows:

Particulars
Interim Dividend	Nil	1,941.73
Tax on Interim Dividend	Nil	216.63
Balance carried to Balance Sheet	42,749.65	39,867.24

II. DIVIDEND:

Your Directors recommend 200% dividend i.e., f 20 per equity share of f 10 each (Previous year interim dividend 200% i.e., f 20 per equity share of Rs. 10 each) for the Financial Year ended 31 March 2017.

III. CLASSIFICATION OFTHECOMPANYASACORE INVESTMENT COMPANY (CIC):

The Company is classified as a Core Investment Company (CIC) and exempt from registration with the Reserve Bank of India (RBI).

IV. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

A. OPERATIONS OF THE COMPANY: WINDMILLS:

The Company has seven windmills in Maharashtra with total installed capacity of 5.6 Megawatt (MW). The windmills are located at Tirade Village, Tal. Akole, Dist. Ahmednagar. The windmills have generated net wind energy of 49.05 Lakh units of electricity in the year under review as against 89.93 Lakh units of electricity in the previous year showing decrease of 54% over the previous year.

During the year under review, generation of units from the windmills has gone down due to various reasons viz., major break down of one Wind Energy Generator (WEGs) during the period of 7 months, non-availability of timely maintenance due to internal issues of Wind World India Limited (WWIL), service providers, unfavorable weather conditions and agitation by local people against operation of windmills.

The Company is required to apply for Open Access Permission to Maharashtra State Electricity Distribution Company Limited (MSEDCL) every Financial Year. Currently, the Company has the necessary Open Access Permission and is selling the wind power units generated to a third party consumer.

All the seven windmills are registered with the National Load Dispatch Centre (NLDC)and are eligible for the Renewable Energy Certificates (RECs). During the year, the Company has sold 5,120 RECs as against 3,243 RECs in the previous year. This has resulted in revenue of Rs. 77 Lakhs (previous year Rs. 49 Lakhs) during the year. The Company is having 10,537 RECs units as on 31 March 2017 (previous year 9,593 units).

OTHERS:

The Company owns lands and buildings thereon and apartments and offices in Pune, Bangalore, New Delhi and Jaipur. The Company has granted most of these lands and buildings and offices on leave and license basis to group and other companies.

During the year under review, your Company made investments of Rs. 26.48 Lakhs in equity shares of Kirloskar Ferrous Industries Limited (KFIL). Pursuant to the said investment, the Company''s holding in KFIL has increased to 51.45% as on 31 March 2017, from 51.43% as on 31 March 2016. During the year under review, the Company has invested Rs. 1 Lakh in S.L. Kirloskar CSR Foundation. The Company has thereafter transferred 200 equity shares of Rs. 10 each in the share capital of S.L. Kirloskar CSR Foundation. As a result, the holding of the Company in S.L. Kirloskar CSR Foundation is reduced to 19.60% from 20% as on 31 March 2017.

B. COMPANY PERFORMANCE:

During the year under review, your Company earned an income of Rs. 4,797 Lakhs (previous year Rs. 7,670 Lakhs). The fall in income in the year under review is on account of most of the companies, in which your Company holds shares have not declared any dividend in the year under review. In the previous year, these companies had declared dividend twice.

In the year under review, the Company received dividend of Rs. 713 Lakhs declared by the investee companies for the Financial Year2016-17.

The Profit Before Tax is at Rs. 3,746 Lakhs (previous year Rs. 6,838 Lakhs) after providing for depreciation of Rs. 100 Lakhs (previous year Rs. 89 Lakhs).

C. HUMAN RESOURCES:

As on 31 March 2017, the Company has 8 employees on its roll, including the Executive Director.

D. EMPLOYEE STOCK OPTION PLAN:

Human resource is the key resource for the continuous growth and development of a company. The Company strongly believes that an equity component in the compensation goes a long way in aligning the objectives of an individual with those of the organization.

To enable the employees, present and future, to share the wealth that they help to create for the organization over a certain period of time, the Board of Directors in its meeting held on 4 July 2017, considered and approved to introduce and implement âKirloskar Industries Limited - Employee Stock Option Plan 2017â (KILESOP2017) in accordance with the provisions of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, (SEBISBEB Regulations), subject to the approval of the members.

Details of the proposal for the KIL ESOP 2017 are mentioned in the Statement setting out material facts annexed to the Notice of the ensuing Annual General Meeting.

E. CONCERNS AND THREATS:

Following are the identified risk/ concerns and threats for the operations of the Company:

- Natural calamities like cyclones, earthquake and fire or act of God damage the windmills.

- Agitation by the local people against the operation of windmills.

- Frequent and erratic changes in the Open Access Rules and Regulations and administrative delay in issuing Open Access Permission.

- Underutilization by customer of units generated specially due to non-working in various Time Zones.

- Major maintenance due to failure of important components of the windmills.

- Disturbances and failure in the Maharashtra State Electricity Distribution Company Limited (MSEDCL) grid.

- Non-availability of timely maintenance by service provider adversely affecting the operations of the windmills.

F. PROSPECTS:

Wind energy generation is largely dependent on natural factors such as velocity of wind, continuity of the flow, etc. and are unpredictable and beyond control. The business is also largely impacted adversely by frequent and erratic changes made by the MSEDCL in the open access policies.

The market for Renewable Energy Certificates (RECs) continues to be sluggish; this trend is expected to continue in the current Financial Year. Consequently, there is a risk of RECs getting lapsed. Further, the Central Electricity Regulatory Commission vide its order dated 30 March 2017, reduced the realizable rate of RECs from f 1,500/unit to f 1,000/unit. Considering the same, the Company is evaluating the proposal of selling green energy i.e., without availing RECs benefits.

G. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has adequate internal control systems to ensure operational efficiency, accuracy and promptness in financial reporting and compliance of various laws and regulations.

The internal control system is supported by the internal audit process. An Internal Auditor has been appointed for this purpose. The Audit Committee of the Board reviews the Internal Audit Report and the adequacy and effectiveness of internal controls periodically.

H. CAUTIONARY STATEMENT:

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

I. SEBI REGULATIONS AND LISTING FEES:

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

J. SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS:

As on 31 March 2017, the Company has one subsidiary, i.e., Kirloskar Ferrous Industries Limited (KFIL).

The Board presents Audited Consolidated Financial Statements incorporating the duly Audited Financial Statements of KFIL and as prepared in compliance with the Company''s Accounting Standard 21 as per the Company''s (Accounting Standards) Amendment Rules, 2016, notified by the Ministry of Corporate Affairs (MCA) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (the Regulations).

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

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

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

BRIEF HIGHLIGHTS OF BUSINESSES OF SUBSIDIARY COMPANY: KIRLOSKAR FERROUS INDUSTRIES LIMITED (KFIL):

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

The Board of Directors of KFIL has recommended a dividend of Rs. 1.75 (35%) per equity share (Previous year interim dividend 25% i.e., Rs. 1.25 per equity share of Rs. 5 each) for the Financial Year ended 31 March 2017.

KFIL achieved net sales of Rs. 1,13,370 Lakhs (previous year Rs. 1,11,390 Lakhs).

Profit Before Tax (PBT) for the year under review stood at Rs. 12,146 Lakhs, as compared to Rs. 8,522 Lakhs of previous year. Also Profit After Tax (PAT) for the year under review stood at Rs. 9,057 Lakhs, as compared to Rs. 5,773 Lakhs of the previous year.

KFIL sold 2,53,495 MT of Pig Iron valued atRs. 58,891 Lakhs during the Financial Year 2016-17, as compared to 2,89,485 MT of Pig Iron valued at Rs. 62,312 Lakhs in the previous year.

KFIL sold 65,892 MT castings aggregating to Rs. 51,912 Lakhs during Financial Year 2016-17, as compared to 56,661 MT castings aggregating to Rs. 46,067 Lakhs in the previous year.

KFIL participated in the auction of mines but the mines have been won by other companies a price which was not economical to KFIL.

Government has informed that the Financial Year 2017-18, would be an important year for the mining industry as there are around 300 mineral blocks to be leased (of which, Karnataka alone has about 100 odd leases). These mines would be auctioned in different states during the Financial Year 2017-18. KFIL will pursue in its efforts to acquire iron ore mines from the e-auction.

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

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

KFIL has undertaken the following projects during the year under review:

1) Commenced the civil work for machine shop at Koppal Plant and is expected to be completed in first half of Financial Year 2017-18. Simultaneously KFIL is working on getting the orders for machined castings from its customers and also on procuring machines for machining of castings. Machine shop will be commissioned progressively in a phased manner based on the order position. The completion of machine shop will facilitate an increase in business by bringing more value added items for KFIL.

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

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

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

V. PARTICULARS OF INFORMATION FORMING PART OF THE BOARDS'' REPORT PURSUANT TO SECTION 134

OF THE COMPANIES ACT, 2013, RULE 8 OF THE COMPANIES (ACCOUNTS) RULES 2014 AND RULE 5 OF THE

COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014:

1. EXTRACT OF ANNUAL RETURN:

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

2. NUMBER OF MEETINGS OF THE BOARD:

During the year under review, six Board Meetings were convened and held, the details of which form part of Report on Corporate Governance. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

3. DIRECTORS'' RESPONSIBILITY STATEMENT:

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

a) in the preparation of the Annual Financial Statements for the year ended 31 March 2017, the applicable accounting standards had been followed and there were no material departures;

b) accounting policies as mentioned in Note 2 of the Notes forming part of the Financial Statements have been selected and applied consistently. Further, judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company asat31 March 2017 and of the Profit of the Company for the year ended on that date;

d) the Annual Financial Statements have been prepared on a going concern basis;

e) proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and

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

4. ASTATEMENT ON DECLARATION GIVEN BYTHE INDEPENDENT DIRECTORS:

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

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

6. AUDITORS:

a. Statutory Auditors:

G. D. Apte & Co., Chartered Accountants, (Firm Registration Number 100515W), Pune, have been reappointed as the Statutory Auditors of the Company to hold the office for a second term of five years from the conclusion of the Annual General Meeting (AGM) held on 11 August 2016, till the conclusion of the AGM of the Company, to be held in the year 2021, subject to the ratification of the appointment by the members at every AGM.

The requisite eligibility certificate as per Sections 139 and 141 of the Companies Act, 2013, has been received by the Company.

b. Cost Auditors:

Pursuant to the Companies (Cost Records and Audit) Rules, 2014, dated 31 December 2014, the Company was neither required to maintain cost records relating to Electricity Industry (Windmills) for the Financial Year 2016-17, in Form (CRA-1) nor was it required to get the records audited.

c. Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Mr. Mahesh J. Risbud, Practicing Company Secretary (FCS 810 CP 185) to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed as ''Annexure III'' to this Report.

7. EXPLANATION OR COMMENTS OF STATUTORY AUDITORS AND SECRETARIALAUDITORS:

There are no qualifications, reservations or adverse remarks of G. D. Apte & Co., Statutory Auditors in their Audit Report and of Mr. Mahesh J. Risbud, Practicing Company Secretary, in his Secretarial Audit Report for the year ended 31 March 2017.

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

Your Company has not granted any loan or guarantee.

During the year under review, the Company has invested f 1 Lakh in S.L. Kirloskar CSR Foundation. The Company has thereafter transferred 200 equity shares of Rs. 10 each in the share capital of S.L. Kirloskar CSR Foundation. As a result, the holding of the Company in S.L. Kirloskar CSR Foundation is reduced to 19.60% from 20% as on 31 March 2017.

During the year under review, your Company made investments ofRs. 26.48 Lakhs in equity shares of Kirloskar Ferrous Industries Limited (KFIL).

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

Pursuant to the provisions of Section 134 of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014, the particulars of all contracts or arrangements entered into by the Company with Related Parties have been done at arm''s length and are in the ordinary course of business. Hence, no particulars are being provided in Form AOC-2. Related Party disclosures as per the Accounting Standard 18 have been provided in Note 33 to the Financial Statements.

10. STATE OF COMPANY''S AFFAIRS:

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

11. AMOUNTS PROPOSED TO BE CARRIED TO RESERVES:

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

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

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

A. Conservation of Energy and Technology Absorption:

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

B. Foreign exchange earnings and outgo: NIL

14. RISK MANAGEMENT POLICY:

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

15. CORPORATE SOCIAL RESPONSIBILITY:

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

16. BOARD EVALUATION:

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 (10) of the Regulations, the Board has carried out performance evaluation of its own performance and that of its committees and individual Directors.

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

Name and Registered Office of the Subsidiary Company	% Holding	Particulars	Amount (Rs. in Lakhs)
Kirloskar Ferrous Industries Limited, 13, Laxmanrao Kirloskar Road, Khadki, Pune411 003	51.45	Total Income	1,13,926
		Total Expenditure	1,00,414
		Profit before exceptional items and taxation	12,146
		Profit before taxation	12,146
		Provision for tax (including Deferred Tax)	3,089
		Net Profit	9,057
		Balance of Profit / (Loss) from previous year	18,954
		Less: Interim Dividend	-
		Less: Dividend Distribution Tax on Interim Dividend	-
		Less: Transfer to General Reserve	500
		Balance carried to Balance Sheet	27,511

# Kirloskar Brothers Limited, Udyog Bhavan, Tilak Road, Pune 411 030	23.91	Total Income	1,84,128
		Total Expenditure	1,78,799
		Profit before exceptional items, finance cost and taxation	5,329
		Finance Cost	...
		Profit before taxation	5,329
		Provision for tax (including Deferred Tax)	2,029
		Net Profit	3,300
		Other Comprehensive Income	(114.50)
		Balance of Profit / (Loss) from previous year	16,966
		Less: Interim Dividend	...
		Less : Dividend Distribution Tax	â
		Balance carried to Balance Sheet	20,151

Note:

# The Company does not have significant influence on Kirloskar Brothers Limited (KBL) as it does not participate in the management and I or financial decisions of KBL. As such KBL is not an Associate Company of the Company under the Accounting Standard 18 and as such, its financials are not included in the Consolidated Financial Statements of the Company. Hence, the aforesaid information is obtained from the Annual Report of KBL for the financial year ended 31 March 2017, uploaded on the website of KBL.

Name and Registered Office of the Associate Company

## Kothrud Power Equipment Limited 13/A, Karve Road, Kothrud,

Pune 411 038

% Holding

Note: The Consolidated Financial Statements do not include the financials of Kothrud Power Equipment Limited. Refer Note 32 of the Consolidated Financial Statements of the Company for the Financial Year 2016-17. In view of this, the financial information as required hereinabove is not given.

## Kothrud Power Equipment Limited has been struck off from the Register of Companies and consequently, ceased to be an Associate Company with effect from 20 January 2017.

18. CHANGE IN THE NATURE OF BUSINESS, IF ANY:

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

19. DETAILS OF APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL: Directors appointed I re-appointed during the year

Name of Director	Designation	Terms of appointment
Mahesh Chhabria*	Independent Director**	Five consecutive years commencing from 11 August 2016 up to 10 August 2021.
Sunil Shah Singh	Additional Independent Director	Co-opted as an Additional Independent Director w.e.f. 190ctober2016.
AnilAlawani***	Director	Re-appointed with effect from 11 August 2016, subject to retirement by rotation.
Aditi Chirmule	Executive Director	The Board of Directors in its meeting held on 18 January 2017, re-appointed Ms. Aditi Chirmule as the Executive Director of the Company for a period of 5 years with effect from 25 January 2017, subject to the approval of the members in the ensuing Annual General Meeting. Details of the proposal for re-appointment of Ms. Aditi Chirmule are mentioned in the Statement setting out material facts annexed to the Notice of the ensuing Annual General Meeting.

* Mr. Mahesh Chhabria was co-opted as an Additional Independent Director with effect from 24 May 2016 and appointed in the Annual General Meeting held on 11 August 2016.

** The Board of Directors of the Company in its meeting held on 4 July 2017, appointed Mr. Mahesh Chhabria as the Managing Director of the Company, for a term of five (5) years with effect from 4 July 2017.

*** Mr. AnilAlawani retired by rotation and was re-appointed in the Annual General Meeting held on 11 August

2016.

Key Managerial Personnel (KMP) appointed during the year

During the year under review, Ms. Aditi Chirmule, Executive Director of the Company, has been re-appointed as Key Managerial Personnel of the Company.

20. DIRECTORS AND KEY MANAGERIAL PERSONNEL RESIGNED DURINGTHE YEAR2016-17:

During the year under review, Mr. Shrikrishna Inamdarand Mrs. Priyamvada Ranade, Independent Directors of the Company, tendered their resignations from the office of Director of the Company with effect from 8 June 2016 and 15 February 2017, respectively.

Mr. Vijay Bajhal, completed his term on 1 September 2016 and consequently, ceased to be a Director of the Company with effect from 2 September 2016.

The Company expresses its appreciation for the assistance and guidance provided by these Directors during their tenure as Directors of the Company.

21. DIRECTORS PROPOSED TO BE APPOINTED I RE-APPOINTED AT THE ENSUING ANNUAL GENERAL MEETING:

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

The Board of Directors of the Company in its meeting held on 4 July 2017, appointed Mr. Mahesh Chhabria as the Managing Director of the Company, for a term of five (5) years with effect from 4 July 2017. Consequently, he ceased to be an Independent Director of the Company. A proposal for his appointment as the Managing Director and remuneration payable to him is being placed before the members for their approval at the ensuing Annual General Meeting.

The Board of Directors of the Company in its meeting held on 18 January 2017, has re-appointed Ms. Aditi Chirmule, as the Executive Director of the Company fora further period of five (5) consecutive years with effect from 25 January 2017. A proposal for her re-appointment as the Executive Director and remuneration payable to her is being placed before the members for their approval at the ensuing Annual General Meeting.

In accordance with the provisions of Section 161 of the Companies Act, 2013, read with the Articles of Association of the Company, the Board of Directors of the Company in its meeting held on 19 October 2016 and 11 May 2017, co-opted Mr. Sunil Shah Singh and Mr. D. Sivanandhan, respectively, as Additional Independent Directors, as recommended by the Nomination and Remuneration Committee. Further, the Board of Directors of the Company in its meeting held on 4 July 2017, co-opted Mr. Vinesh Kumar Jairath and Mr. Ashit Parekh, as Additional Independent Directors, as recommended by the Nomination and Remuneration Committee.

These newly co-opted Directors hold office up to the date of the ensuing Annual General Meeting of the Company. The Company has received requisite notices under Section 160 of the Companies Act, 2013, in writing from a member signifying their intention to propose Mr. Sunil Shah Singh, Mr. D. Sivanandhan, Mr. Vinesh Kumar Jairath and Mr. Ashit Parekh as candidates for the office of Directors at the ensuing Annual General Meeting. All of them are eligible for appointment.

The Company has also received the requisite disclosure I declaration from Mr. Sunil Shah Singh, Mr. D. Sivanandhan, Mr. Vinesh Kumar Jairath and Mr. Ashit Parekh under Section 149 and other applicable provisions of the Companies Act, 2013.

The brief resumes and other details relating to the Directors who are proposed to be appointed I re-appointed, as required to be disclosed under Regulation 36 (3) of the Regulations, forms part of the Statement setting out material facts annexed to the Notice of the Annual General Meeting.

The resolutions seeking approval of members for the appointment of these Directors have been incorporated in the notice of the forthcoming Annual General Meeting of the Company.

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

During the year under review, Kothrud Power Equipment Limited has been struck off from the Register of Companies and consequently ceased to be an Associate Company with effect from 20 January 2017.

23. DETAILS RELATING TO DEPOSITS, COVERED UNDERCHAPTER VOF THE COMPANIES ACT, 2013:

None.

24. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BYTHE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE:

To the best of our knowledge, the Company has not received any such orders from the Regulators, Courts or Tribunals during the year, which may impact the Going Concern Status or the Company''s operation in future.

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

The Company has developed a strong two-tier internal control framework comprising entity level controls and process level controls. The entity level controls of the Company include elements such as defined Code of Conduct, Whistle Blower Policy I Vigil Mechanism, rigorous management review and MIS and strong internal audit mechanism. The process level controls have been ensured by implementing appropriate checks and balances to ensure adherence to Company policies and procedures, efficiency in operations and also reduce the risk of frauds.

26. COMPOSITION OF AUDIT COMMITTEE:

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

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

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

VII. VIGIL MECHANISM:

The Company has a Whistle Blower Policy /Vigil Mechanism (ââthe Policyâ) to deal with instances of fraud, unethical behavior, etc. The Policy provides a mechanism for directors and employees of the Company and other persons dealing with the Company to report genuine concerns including but not limited to unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct for Board of Directors and Senior Management or ethics policy or any other instance to the Chairman of the Audit Committee of the Board of Directors of the Company. The Policy is placed on the Company''s website, viz., www.kil.net.in.

VIII. PREVENTION OF SEXUAL HARASSMENT POLICY:

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

IX. CASH FLOW:

A Cash Flow Statement for the year ended 31 March 2017, is attached to the Balance Sheet as a part of the Financial Statements.

X. CORPORATE GOVERNANCE:

In terms of Regulation 34 of the Regulations, a Report on the Corporate Governance along with Compliance Certificate issued by the Statutory Auditors of the Company is attached and forms part of the Annual Report.

ACKNOWLEDGEMENTS:

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

For and on behalf of the Board of Directors

ATUL KIRLOSKAR

CHAIRMAN

Pune:4 July 2017 DIN00007387

Mar 31, 2015

Dear Members,

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

FINANCIAL PERFORMANCE:

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

Total Income 6,247.79 6,377.90

Total Expenditure 818.98 970.40

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

Profit before taxation 5,428.81 5,407.50

Provision for tax (including Deferred Tax) 915.77 740.35

Net Profit 4,513.04 4,667.15

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

Less: Depreciation 35.22 Nil

Add: Reversal of Dividend Distribution Tax Nil 63.00

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

Surplus available for appropriation 38,156.88 32,462.83

APPROPRIATIONS:

Your Directors propose to appropriate the available surplus as follows:

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

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

Proposed Dividend 1,941.73 388.35

Tax on proposed dividend 214.56 -

Transfer to General Reserve - 466.72

Balance carried to Balance Sheet 36,000.59 30,674.33

DIVIDEND:

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

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

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

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

SEBI REGULATIONS AND LISTING FEES:

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

SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS:

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

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

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

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

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

BRIEF HIGHLIGHTS OF BUSINESSES OF SUBSIDIARY COMPANY:

KIRLOSKAR FERROUS INDUSTRIES LIMITED (KFIL)

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

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

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

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

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

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

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

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

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

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

EXTRACT OF ANNUAL RETURN:

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

NUMBER OF MEETINGS OF THE BOARD:

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

DIRECTORS'' RESPONSIBILITY STATEMENT:

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

a) in the preparation of the Annual Financial Statements for the year ended 31 March 2015, the applicable accounting standards have been followed and there were no material departures;

b) accounting policies as mentioned in Note 2 of the Notes to the Financial Statements have been selected and applied consistently. Further, judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2015 and of the profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Annual Financial Statements have been prepared on a going concern basis;

e) proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and

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

A STATEMENT ON DECLARATION GIVEN BY THE INDEPENDENT DIRECTORS:

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

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

The Company constituted a Nomination and Remuneration Committee. The Board has on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, KMPs and Senior Management Personnel and their remuneration. The policy is annexed as ''Annexure II'' to this Report.

AUDITORS:

1. Statutory Auditors:

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

2. Cost Auditors:

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

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

3. Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. M. J. Risbud, Practicing Company Secretary (FCS 810 CP 185) to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as ''Annexure III'' to this Report.

EXPLANATION OR COMMENTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS:

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

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

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

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

Pursuant to the provisions of Section 134 of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014, the particulars of contracts or arrangements entered into by the Company with Related Parties have been done at arm''s length and are in the ordinary course of business. Hence, no particulars are being provided in Form AOC-2. Related Party disclosures as per AS -18 have been provided in Note 31 to the Financial Statements.

STATE OF COMPANY''S AFFAIRS:

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

AMOUNTS PROPOSED TO BE CARRIED TO RESERVES:

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

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

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

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

A. Conservation of Energy and Technology Absorption:

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

B. Foreign exchange earnings and outgo:

Sr. No. Particulars Amount in Rs.

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

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

RISK MANAGEMENT POLICY:

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

CORPORATE SOCIAL RESPONSIBILITY (CSR):

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

BOARD EVALUATION:

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

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

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

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

Profit before exceptional items and taxation 7,184.45

Profit before taxation 7,184.45

Provision for tax (including Deferred Tax) 2,256.81

Net Profit 4,927.64

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

Less: Proposed Dividend 1,716.35

Less : Dividend Distribution Tax 351.42

Less : Transfer to General Reserve 500.00

Balance carried to Balance Sheet 15,754.24

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

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

Total Expenditure 1,59,013.01

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

Profit before taxation 552.89

Provision for tax (including Deferred Tax) (295.80)

NetProfit 848.69

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

Less : Dividend Distribution Tax Not available

Balance carried to Balance Sheet Not available

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

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

%Holding 50%

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

CHANGE IN THE NATURE OF BUSINESS, IF ANY:

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

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

Directors appointed during the year

Name of Director Designation Terms of appointment

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

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

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

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

2014 upto 1 September 2016

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

2014 up to 1 September 2019

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

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

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

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

Name of KMP Designation

Ms. Aditi V. Chirmule Executive Director

Mrs. Jasvandi M. Deosthale Chief Financial Officer

Mrs. Ashwini V. Mali Company Secretary

Directors and KMP''s resigned during the year

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

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

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

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

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

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

None.

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

None.

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

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

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

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

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

COMPOSITION OF AUDIT COMMITTEE:

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

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

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

VIGIL MECHANISM:

The Company has formulated and implemented the Whistle Blower Policy / Vigil Mechanism (''the Policy'') during the year under review. This has provided a mechanism for directors and employees of the Company and other persons dealing with the Company to report to the Chairman of the Audit Committee; any instance of unethical behaviour, actual or suspected fraud or violation of the Company''s code of conduct. The Policy has also been uploaded on the Company''s website.

PREVENTIONS OF SEXUAL HARASSMENTS POLICY:

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

CASH FLOW:

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

CORPORATE GOVERNANCE:

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

ACKNOWLEDGEMENTS:

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

For and on behalf of the Board of Directors

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

Mar 31, 2014

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

Financial Performance:

Particulars 2013-14 2012-13

(in lakhs) (in lakhs)

Total Income 6,377.90 5,179.84

Total Expenditure 970.40 883.94

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

Profit before taxation 5,407.50 4,295.90

Provision for tax (including Deferred Tax) 740.35 685.00

Net Profit 4,667.15 3,610.90

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

Reversal of Dividend Distribution Tax for 2012-13 63.00

Surplus available for appropriation 32,462.83 25,656.40

Appropriations:

Your Directors propose to appropriate the available surplus as follows:

Particulars 2013-14 2012-13

(in lakhs) (in lakhs)

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

Proposed Dividend 388.35 388.35

Tax on proposed dividend - 63.00

Transfer to General Reserve 466.72 361.09

Balance carried to Balance Sheet 30,674.33 27,732.68

Dividend:

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

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

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

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

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

SEBI Regulations and Listing Fees:

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

Subsidiary Company and Consolidated Financial Statements

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

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

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

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

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

Brief highlights of businesses of subsidiary company:

Kirloskar Ferrous Industries Limited (KFIL)

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

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

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

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

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

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

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

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

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

Directors:

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

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

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

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

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

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

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

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

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

Directors'' Responsibility Statement:

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

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

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

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

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

Cash Flow:

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

Corporate Governance:

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

Auditors:

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

Fixed / Public Deposit:

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

Statutory Disclosures:

(A) Conservation of Energy and Technology Absorption

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

(B) Foreign Exchange Earnings and Outgo

i. Total Foreign exchange used Nil

ii.Total Foreign exchange earned 6.86 Lakhs

Particulars of Employees:

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

Companies Act, 2013:

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

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

Acknowledgments:

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

For and on behalf of the Board of Directors

Place: Pune ATUL C. KIRLOSKAR

Date : 18 July 2014 CHAIRMAN

Mar 31, 2013

To the Members,

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

Financial Performance:

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

Total Income 5,179.84 7,863.45

Total Expenditure 883.94 941.35

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

Profit before taxation 4,295.90 6,922.10

Provision for tax ( including Deferred Tax) 685.00 176.50

Net Profit 3,610.90 6,745.60

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

Surplus available for appropriation 29,267.30 28,131.43

Appropriations:

Your Directors propose to appropriate the available surplus as follows:

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

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

Reserve Bank of India Act, 1934 722.18 1,349.12

Proposed Dividend 388.35 388.35

Tax on proposed dividend 63.00 63.00

Transfer to General Reserve 361.09 674.56

Balance carried to Balance Sheet 27,732.68 25,656.40

Dividend:

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

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

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

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

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

SEBI Regulations & Listing Fees:

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

Directors:

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

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

Directors'' Responsibility Statement:

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

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

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

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

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

Cash Flow:

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

Corporate Governance:

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

Auditors:

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

Fixed / Public Deposit:

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

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

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

(B) Foreign Exchange Earnings and Outgo

i. Total foreign exchange used Rs. Nil

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

Particulars of Employees:

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

Acknowledgments:

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

For and on behalf of the Board of Directors

Place: Pune ATUL C. KIRLOSKAR

Date: 29 April 2013 CHAIRMAN

Mar 31, 2012

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

Financial Performance:

Particulars 2011-2012 2010-2011

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

Total Income 7,863.45 6,888.65

Total Expenditure 941.35 868.20

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

Profit before taxation 6,922.10 6,020.45

Provision for tax (including Deferred Tax) 176.50 486.88

Net Profit 6,745.60 5,533.57

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

Surplus available for appropriation 28,131.43 22,221.28

Appropriations:

Your Directors propose to appropriate the available surplus as follows:

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

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

Proposed Dividend 388.35 242.72

Tax on proposed dividend 63.00 39.37

Transfer to General Reserve 674.56 553.36

Balance carried to Balance Sheet 25,656.40 21,385.83

Dividend:

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

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

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

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

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

SEBI Regulations & Listing Fees:

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

Directors:

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

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

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

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

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

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

Directors' Responsibility Statement:

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

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

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

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

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

Corporate Governance:

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

Auditors:

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

Fixed I Public Deposit:

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

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

(B) Foreign Exchange Earnings and Outgo

i. Total Foreign exchange used Rs Nil

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

Particulars of Employees:

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

Acknowledgments:

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

For and on behalf of the Board of Directors

Place: Pune ATULC. KIRLOSKAR

Date: 26 April 2012 Chairman

Mar 31, 2011

The Directors have pleasure in presenting this Report with audited annual accounts of the Company for the year ending 31 March 2011.

Issue of Shares pursuant to the Scheme of Arrangement of Demerger and Relisting on Stock Exchanges:

Pursuant to the Scheme of Arrangement of Demerger between the Company and Kirloskar Engines India Limited (now known as Kirloskar Oil Engines Limited) (KEIL), 97,08,650 equity shares of Rs. 10/- each were issued on 30 April 2010 to all those members of the Company, who were holding shares as on the Record Date i.e. 22 April 2010. The equity shares were issued to every member of the Company in the ratio, for example holding 20 equity shares of Rs. 2/- each in the Company as on the Record Date, 15 new equity shares of Rs. 2/- each in KEIL and 1 new equity share of Rs. 10/- each, credited as fully paid up in the Company.

The trading in the new equity shares of the Company recommenced on both the Stock Exchanges with effect from 24 June 2010.

Payment of Fractional Entitlements:

Pursuant to the Scheme of Arrangement for Demerger, the fractional entitlements arising out of the issue of shares under the said Scheme were consolidated into 5,585 equity shares of Rs. 10/- each. These shares were sold in the open market at an average price of Rs. 348.20. The Company is in the process of distributing the net sale proceeds (after deduction of the expenses incurred) to the members respectively entitled to the same in proportion to their fractional entitlements, as far as practicable.

Shifting of Registered Office of the Company:

Registered Office of the Company has been shifted from Laxmanrao Kirloskar Road, Khadki, Pune 411 003 to 13/A, Karve Road, Kothrud, Pune Ã 411038 with effect from 1 November 2010.

Financial Performance:

Particulars 2010-2011 2009-2010 Rs. in 000s Rs. in 000s

Total Income 688,865 507,365

Total Expenditure 86,820 85,649

Profit before exceptional items & taxation 602,045 421,716

Profit before taxation 602,045 421,716

Provision for tax (including Deferred Tax) 48,688 34,789

Net Profit 553,357 386,927

Balance of Profit / (Loss) from previous year 1,668,771 1,661,297

Surplus available for appropriation 2,222,128 2,048,224

Appropriations:

Your Directors propose to appropriate the available surplus as follows:

Rs. in 000s Rs. in 000s

Proposed Dividend 24,272 -

Interim Dividend - 291,260

Tax on proposed dividend 3,937 49,500

Transfer to General Reserve 55,336 38,693

Balance carried to Balance Sheet 2,138,583 1,668,771

Dividend:

Your Directors recommend a dividend of 25% (Rs. 2.50 per equity share of Rs. 10/- each) (previous year dividend was 75% i.e. Rs.1.50 per equity share of Rs. 2/- each) for the financial year ended 31 March 2011.

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

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

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

Management Discussion and Analysis:

The Company has seven windmills in Maharashtra with total installed capacity of 5.6 MW, located at Tirade Village, Tal- Akole, Dist. - Ahmednagar. Operational performance of windmills is commented upon in this Management Discussion and Analysis.

Operations of the Company:

Windmills:

The Company has seven windmills in Maharashtra with total installed capacity of 5.6 MW. The Mills are located at Tirade Village, Tal- Akole, Dist. - Ahmednagar. The windmills have generated net wind energy of 78.95 lakhs units of electricity in the year under review as against 89.64 lakhs units of electricity in the previous year. The decline was due to machine performance issues with the service providers, unfavorable weather conditions and shut-down of one windmill for repairs in August 2010. These units of electricity generated were captively consumed by the Company before the Scheme of Arrangement came into effect. On the coming into effect of the Scheme, in the year under review, the Company approached Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) requesting an amendment to the Wind Energy Wheeling and Banking Agreement permitting sale of such units to Kirloskar Oil Engines Ltd. (KOEL) which has been entered into as on the date of this Report.

Others:

The Company owns land and buildings thereon in Pune, and apartments and offices in Mumbai, Bangalore, New Delhi and Jaipur. The Company continues the leave and license arrangements in respect of most of these land and buildings, and apartments / offices, with Kirloskar Oil Engines Ltd. (KOEL) and other companies in the Group.

The Company has invested Rs. 450 crores (previous year Rs. 175 crores) in the equity shares of various companies, which are mainly Group companies.

During the year under review, your Company acquired equity shares of Kirloskar Brothers Limited (KBL). Pursuant to the said acquisition, the Companys holding in KBL has been increased from 10.42% to 23.93%.

The Company sold its investments in Housing Development Finance Corporation Ltd. (HDFC). The proceeds from the said sale have been placed as fixed deposits with scheduled commercial banks. The total amount placed as fixed deposits as on 31 March 2011 is Rs. 67 crores.

Company Performance:

During the year under review, your Company achieved an income of Rs. 68.9 crores (previous year Rs. 50.7 crores).

The profit before tax is Rs. 60.2 crores (previous year Rs. 42.2 crores) after providing for depreciation of Rs. 3.1 crores (previous year Rs. 3.1 crores).

Human Resources:

The total number of employees as on 31 March 2011 are 6.

Concerns and Threats:

Following are the identified risk/ concerns and threats for the operations of the Company.

- Natural calamities like cyclones, earth quake and fire or act of God may damage the windmills.

- Agitation by the local people against the operation of wind mills.

- Major maintenance due to failure of important components of the windmills.

- Disturbances and failure in the Maharashtra State Electricity Distribution Company Limited grid.

- Delay in registration of the Companys project for Voluntary Credit Scheme resulting in delay in obtaining the benefits from sale of such Voluntary Emission Reduction certificates.

Prospects:

Wind energy generation is largely dependent on natural factors such as velocity of wind, continuity of the flow, etc. and therefore cannot be commented upon. However, in addition to unit generation, the Company may also get the benefits of Renewable Energy Certificate Mechanism and Clean Development Mechanism benefits under the Voluntary Carbon Scheme (VCS). The Company has already made a detailed submission to authorised validator for registration of the project under VCS and obtaining Voluntary Emission Reduction (VER). The registration process as well as generation of VER is expected to be completed during the year. Your Company expects to receive additional monetary benefits from the sale of such VER.

Internal Control Systems and their adequacy:

Renowned auditing firms continue to conduct the Internal Audits of the business of the Company. The internal audit program is designed to ensure extensive review of the business of the Company and is not restricted only to a review of finance and accounting functions. The Internal Auditors also check, validate and report on the internal controls in place in the areas covered during the audit.

Cautionary Statement:

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

SEBI Regulations & Listing Fees:

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

Directors:

Mr. Atul C. Kirloskar resigned as Managing Director of the Company with effect from the close of business hours of 22 October 2010. However, he continues to be the Director and Chairman of the Company.

Mr. Nihal G. Kulkarni has been appointed as Managing Director of the Company for a period of 5 years with effect from 23 October 2010. A proposal for his appointment as Managing Director and remuneration payable to him is being placed before the members for their approval at the ensuing Annual General Meeting.

Mr. Atul C. Kirloskar and Mr. Vikram Kirloskar retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

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

Directors Responsibility Statement:

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

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

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

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

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

Corporate Governance:

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

Auditors:

The Statutory Audit of the accounts of the Company is currently carried out by M/s. Dalal & Shah, Chartered Accountants, Mumbai (Firm Registration Number 102021W).

You are requested to appoint M/s. G. D. Apte & Co., Chartered Accountants, Pune (Firm Registration Number 100515 W) in respect of whom the Company has received a Special Notice pursuant to Section 190 and 225 of the Companies Act, 1956, to hold office as such from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting.

The requisite certificate pursuant to Section 224 (1-B) of the Companies Act, 1956 has been received from M/s. G. D. Apte & Co., Chartered Accountants, Pune.

Fixed / Public Deposit:

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

Statutory Disclosures:

(A) Conservation of Energy and Technology Absorption

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

(B) Foreign Exchange Earnings and Outgo

i. Total Foreign exchange used Rs. 342,143/-

ii. Total Foreign exchange earned Rs. 392,380/-

Particulars of Employees:

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

Acknowledgments:

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

For and on behalf of the Board of Directors

ATUL C. KIRLOSKAR Chairman

Date : 26 April 2011 Place: Pune

Mar 31, 2010

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

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

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

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

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

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

Relisting on Stock Exchanges:

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

(Rupees in 000s) 2009-2010

Total Income 507,365

Total Expenditure 85,649

Profit before exceptional items & taxation 421,716

Profit before taxation 421,716

Provision for tax (including Deferred Tax) 34,789

Net Profit 386,927

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

Surplus available for appropriation 2,048,224

Appropriations:

Your Directors propose to appropriate the available surplus as follows:

(Rupees in 000s) Proposed Dividend

Interim Dividend 291,260

Corporate Tax on Dividend 49,500

Transferto Contingency Reserve

Transfer to General Reserve 38,693

Balance carried to Balance Sheet 1,668,771

Dividend:

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

Directors:

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

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

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

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

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

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

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

Directors Responsibility Statement:

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

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

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

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

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

Corporate Governance:

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

Auditors:

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

Statutory Disclosures:

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

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

Acknowledgements:

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

For and on behalf of the Board of Directors

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

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