Vikas Vohra

Transcription

1

2

3 Vikas Vohra

4 2 This page is intentionally left blank

5 Directors' Report To the Members, Your Directors have the privilege of presenting the First Annual Report with the Audited Annual Accounts of the Company for the period ending March 31, The Company was incorporated on April 16, 2009 as a wholly owned subsidiary of Kirloskar Brothers Limited and received the Certificate of Commencement of Business on May 29, SCHEME OF ARRANGEMENT During the period under review, the Hon ble High Court of Judicature at Bombay approved the Scheme of Arrangement between Kirloskar Brothers Limited (Transferor Company or KBL), Company and their respective shareholders vide its order dated January 22, 2010 (Scheme). The Appointed Date under the Scheme was the closing hours of business on April 16, Pursuant to the Scheme, certain investments held by Kirloskar Brothers Limited in the equity shares of (i) Kirloskar Oil Engines Limited (now known as Kirloskar Industries Limited), (ii) Kirloskar Pneumatic Company Limited, (iii) Kirloskar Kenya Limited, (iv) Kirsons Trading Pte. Limited, (v) Housing Development Finance Corporation Limited, (vi) ICICI Bank Limited, (vii) Kulkarni Power Tools Limited, (viii) Maharashtra State Co-operative Bank Limited, (ix) Kranti Sahakari Sakhar Karkhana Limited, (x) Kirloskar Toyoda Textile Machinery Private Limited (xi) Pooja Credits Private Limited and (xii) Kirloskar Silk Industries Limited stands vested in the Company with effect from the Appointed Date made effective from March 2, KBL sold the investments held in the equity shares of Kirloskar Toyoda Textile Machinery Private Limited which were held in trust on behalf of the Company as per the consent given by the Company. In terms of the Scheme, every shareholder of the Transferor Company holding 20 equity shares of Rs. 2/- each in the Transferor Company as on the Record Date i.e. March 10, 2010, was issued and allotted 1 new equity share of Rs. 10/- each in the Company credited as fully paid up. Consequently, the Board of Directors of the Company at its meeting held on March 19, 2010 and April 26, 2010 issued and allotted 52,88,218 and 500 equity shares of Rs. 10/- each respectively. LISTING ON STOCK EXCHANGES As on March 31, 2010, the equity shares of the Company were not listed on any of the stock exchanges. The Company has made applications for listing of its equity shares on the following stock exchanges: S. No. Name Address 1. Bombay Stock Exchange Limited (BSE) 1st Floor, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai National Stock Exchange of India Limited (NSE) Exchange Plaza, Bandra - Kurla Complex, Bandra (E), Mumbai FINANCIAL RESULTS (Rs. In lakhs) Particulars Period ended March 31, 2010 Total Income Total Expenditure Profit before exceptional items & taxation Profit / (Loss) on sale of investments Profit / (Loss) on sale of undertaking Profit before taxation Provision for tax (including Deferred Tax) Net Profit Surplus

6 DIVIDEND Your Directors do not recommend any dividend for the period under review. MANAGEMENT DISCUSSION AND ANALYSIS Kirloskar Brothers Investments Limited (KBIL) was originally incorporated as a wholly owned subsidiary of Kirloskar Brothers Limited on April 16, 2009 as an Investment Company with the purpose of transfer and vesting of certain investments of KBL on going concern basis pursuant to the Scheme of Arrangement which was approved by the Hon ble High Court of Judicature at Bombay vide its order dated January 22, This is the first Management Discussion and Analysis which gives a brief overview of the Company. STRUCTURE OF THE COMPANY The Company was incorporated with an object to carry on business as an investment Company and to buy, sell, invest, acquire by gift, transfer, allotment and hold in the name of the Company or its nominees, shares, stocks, papers, debenture stock, bonds, commercial papers, obligations and securities of any kind, issued and/or guaranteed by any of the Kirloskar Group Companies and/or their Affiliates subject to prior approval of Reserve Bank of India wherever necessary and to buy, sell, acquire other security investments of Kirloskar Brothers Limited, under any scheme of arrangement / merger / demerger or under any court order or by way of transfer, allotment. The Company has applied for the Certificate of Registration with Reserve Bank of India (RBI) as a Non-Banking Finance Company (NBFC). THRUST OF THE BUSINESS The Company will mainly hold investments in Kirloskar Group Companies. The Company may acquire Group Companies shares from secondary market but will not be dealing in day-to-day trading or speculation activities related to securities market. Company may at times, deploy funds in inter corporate deposits including Group Companies. The thrust of the business is to hold and continue to hold securities in Kirloskar Group Companies. As on date, out of the total investments held by the Company, a major portion of it belongs to the Kirloskar Group Companies. MARKET SEGMENT The Company will be substantially involved in holding securities of Kirloskar Group Companies. Also from the liquidity point of view, funds may be invested in Mutual Funds. In the foreseeable future, the Company will continue to invest in equity shares. The Company would provide a gateway for group level investments and facilitate raising of resources. RISKS The Company s performance is highly correlated to the performance of the economy and the financial markets which in turn depends on the domestic economic growth, state of the global economy, balance of payments and various other financial parameters, among other factors. Any event disturbing the dynamic balance of these diverse factors would directly or indirectly affect the performance of the Company. 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. 4

7 DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE Main operations of the Company are that of an Investment Company, majority of which is in the form of strategic investments in Kirloskar Group Companies; hence the source of income for the Company is in the form of dividend as declared by various companies. As on date, the Company has two subsidiaries viz. Pooja Credits Private Limited and Kirloskar Silk Industries Limited. A. Pooja Credits Private Limited (PCPL) PCPL was incorporated on March 1, 1988 as a wholly owned subsidiary of Kirloskar Brothers Limited. Pursuant to the Scheme of Arrangement, all the investments of KBL in PCPL have been transferred to KBIL on March 8, Whereupon, PCPL became 100% subsidiary of KBIL. PCPL has also applied to RBI for Registration as NBFC. PCPL is basically an investment Company with more than 90% of its investments in Kirloskar Group Companies. B. Kirloskar Silk Industries Limited (KSIL) KSIL was incorporated on May 5, 1992 as a wholly owned subsidiary of Kirloskar Brothers Limited. Pursuant to the Scheme of Arrangement, all the investments of KBL in KSIL have been transferred to KBIL on March 8, Whereupon, KSIL became 100% subsidiary of KBIL. KSIL was incorporated with the main object of manufacture, development and sale of raw silk. However, the said project could not be implemented. Kirloskar Silk Industries Limited has approached the Government Authorities seeking their approval for change of purpose of the land allotted to the Company. The application is pending with the Government Authorities. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED At present, KBIL has on its roll, the Executive Director and Secretarial and Compliance Officer. The Company is in the process of formulation of the organization structure and shall put in place, various human resource policies. Attracting experienced finance, investment and operating professionals to a newly formed Company and retaining them may pose a risk to the Company. 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 might differ materially from those either expressed or implied. SHIFTING OF REGISTERED OFFICE The Registered Office of the Company was shifted from Udyog Bhavan, Tilak Road, Pune to 13/A, Karve Road, Kothrud, Pune with effect from February 15, 2010 for operational and administrative convenience. REGISTRATION AS NON-BANKING FINANCE COMPANY (NBFC) The Company has made an application with Reserve Bank of India for Certificate of Registration as NBFC and the application is currently under process. OPERATIONS The Company has been vested with carrying on the business of an Investment Company and to buy, sell, invest, acquire by gift, transfer, allotment and hold in its name shares, stock, papers, debenture stocks, bonds, commercial papers, obligations and securities of any kind, issued and/or guaranteed by any of the Kirloskar Group Companies and/or their Affiliates subject to prior approval of RBI wherever necessary and to buy, sell, acquire other security investments of Kirloskar Brothers Limited under any Scheme of Arrangement / merger / demerger or under any court order or by way of transfer, allotment. The Company will start operations after getting NBFC approval from RBI. 5

8 STATUTORY DISCLOSURES The Company having become by and large an Investment Company pursuant to the Scheme of Arrangement, there are no particulars regarding technology absorption, conservation of energy, foreign exchange earning and outgo as required under section 217 (1) (e) of the Companies Act, 1956 and Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 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, particulars of employees are set out in Annexure 1 to the Directors Report. SUBSIDIARY COMPANIES Pursuant to the Scheme of Arrangement, Pooja Credits Private Limited & Kirloskar Silk Industries Limited have now become 100% subsidiaries of the Company. On March 12, 2010, the Company made an application to the Central Government under section 212 (8) of the Companies Act, 1956 for exemption from attaching the annual accounts of the Subsidiary Companies. However, since the approval is pending with the Central Government, the respective annual accounts and other documents of Subsidiary Companies form part of this Annual Report. CONSOLDIATED FINANCIAL STATEMENTS The Directors present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries and as prepared in compliance with the accounting standards and listing agreement as prescribed by SEBI. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of Directors report that: In the preparation of the annual accounts, the applicable accounting standards have been followed and there was no material departure from the accounting standards. Accounting policies have been selected and applied consistently and that the judgments and estimates made are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and of the profits of the Company for the period from April 16, 2009 to March 31, Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, and The annual accounts have been prepared on a going concern basis. CASH FLOW A cash flow statement for the period ended March 31, 2010 is attached to the Balance Sheet. CORPORATE GOVERNANCE Since the Company has already made listing applications with BSE and NSE, your Board is presenting its report on Corporate Governance in compliance with clause 49 of the Listing Agreement entered with the stock exchanges, which forms a separate section titled as Corporate Governance in this Annual Report. The Company has obtained the certificate from its statutory auditors regarding compliance with provisions relating to Corporate Governance as laid down in clause 49 of the Listing Agreement. The same is appearing elsewhere in this Annual Report. Declaration by the Executive Director regarding affirmations for compliance with the Company s Code of Conduct is annexed to this Report. 6

9 FIXED DEPOSITS Your Company has not accepted any fixed deposits during the year. DIRECTORS The Board of Directors appointed Mr. Sanjay C. Kirloskar, Mr. A. R. Sathe and Mr. G. P. Kulkarni as the First Directors of the Company with effect from April 16, 2009 (date of incorporation of the Company). Mr. A. R. Sathe and Mr. G. P. Kulkarni retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. Mr. A. C. Kulkarni was appointed as an Additional Director of the Company with effect from January 23, Mr. Atul C. Kirloskar, Mr. A. N. Alawani and Mr. Nihal Kulkarni were appointed as Additional Directors of the Company with effect from February 13, All these Directors hold office till the conclusion of this ensuing Annual General Meeting and are eligible for appointment. Mr. A. C. Kulkarni has been appointed as an Executive Director of the Company for a period of 5 years with effect from February 13, A proposal for his appointment as the Executive Director and remuneration payable to him is being placed before the members for their approval at the ensuing Annual General Meeting. Mr. Sanjay C. Kirloskar resigned from the Board with effect from January 23, He was associated with the Company since its incorporation. His expertise and guidance to the Board and the Company has been noteworthy. The Board wishes to place on record its gratitude for the guidance received from Mr. Sanjay C. Kirloskar during his tenure as Director of the Company. AUDITORS M/s. P. G. Bhagwat, Chartered Accountants (Firm s Registration No W), were appointed as First Auditors of the Company by the Board of Directors at its meeting on May 12, The Auditors 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 and the annual audit fees. ACKNOWLEDGEMENTS Your Directors wish to place on record, its appreciation for the unstinted support and co-operation given by the bank. Your Directors would further like to record their appreciation to the employees of the Company for their efforts in giving effect to the Scheme of Arrangement as aforesaid. For and on behalf of the Board of Directors Pune : June 5, 2010 ATUL C. KIRLOSKAR CHAIRMAN 7

10 ANNEXURE I TO THE DIRECTORS REPORT Information under Section 217(2A) read with Companies (Particulars of employees) Rules, 1975 and forming part of the Directors Report for the period ended March 31, Name & (Age) Qualifications Designation/ Date of Gross Last Nature of duties commencement Remuneration employment of employment Rs. & (Experience) A. C. Kulkarni* B.Com, ACA Executive 13/02/2010 4,13,346 Executive Director, (59) Director (32) Kirloskar Systems Limited, Pune * Employed for the part of the year. 8

11 Report on Corporate Governance 1. The Company's philosophy on Code of Corporate Governance The Company strongly believes that the system of Corporate Governance protects the interest of all the stakeholders by inculcating transparent business operations and accountability from management towards fulfilling the highest standards of Corporate Governance in all facets of the Company s operations. 2. Board of Directors The Board comprises of an optimal complement of independent professionals as well as Company executives with high business acumen. As on the date of this report, there are 6 directors of whom one is Executive Director, two are Non-Independent Non Executive Directors and three (50%) are Non Executive Independent Directors. During the financial year under review, 09 Board Meetings were held on the following dates: May 12, 2009, May 29, 2009, July 17, 2009, August 20, 2009, September 21, 2009, October 21, 2009, January 23, 2010, February 13, 2010 and March 19, None of the Directors on the Board holds the office of Director in more than 15 Companies or Membership of Committees of the Board in more than 10 Committees or Chairmanship of more than 5 Committees. The details are provided in the table below : Sr. Name of the Director Designation / Board No. of other No. of Committee No. Category of Meetings Directorships positions held as * Directorship attended Member Chairman 1. Mr. Atul C. Kirloskar Chairman (w.e.f ) & NED Mr. Nihal Kulkarni (w.e.f ) NED NIL 3. Mr. A. N. Alawani (w.e.f ) NED (I) Mr. A. R. Sathe NED (I) NIL 5. Mr. G. P. Kulkarni NED (I) 8 5 NIL 1 6. Mr. A. C. Kulkarni (w.e.f ) ED NIL 7. Mr. Sanjay C. Kirloskar Chairman (Upto ) & NED NIL None of the current directors are related to any other director within the meaning of section 6 of the Companies Act, ED Executive Director, NED Non Executive Director, I Independent. * Committee Membership of Audit Committee and Investors Grievance Committee is considered for this purpose. (1) Directorships in Private Limited Companies, Foreign Companies are included in the above table. (2) An independent director is a non-executive director who, apart from receiving director s remuneration, does not have any material pecuniary relationship or transactions with the Company, its promoters or its management or its subsidiaries and associates which in the judgement of the Board, may affect his independence of judgement and complying with other conditions as prescribed under Clause 49 of the listing agreement. (3) All the relevant information as applicable and as suggested under Annexure 1A of Clause 49 is furnished to the Board from time to time. 9

12 3. Code of Conduct The Company has introduced a Code of Conduct for Directors and Members of Senior Management. The Code is made effective from the effective date under the Scheme of Arrangement i.e. March 2, The same has been uploaded on the Company s website i.e. All Board Members and Senior Management Personnel have affirmed compliance with the Code. A declaration to that effect signed by Mr. A. C. Kulkarni, Executive Director is appearing elsewhere in the Annual Report. 4. Audit Committee The Audit Committee of the Board of Directors was constituted at its Board Meeting held on February 13, This Committee is constituted in line with the provisions of Clause 49 of the Listing Agreement read with section 292A of the Companies Act, The Committee consisted of the following members as on March 31, 2010: Mr. A. N. Alawani, Chairman Mr. A. R. Sathe, Member Mr. Nihal Kulkarni, Member The terms of reference of the Audit Committee include the matters specified in clause 49 (II) of the Listing Agreement with the Stock Exchanges. The terms of reference of the Audit Committee includes the following: 1. Supervision of the company s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. 2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees and also approval for payment of any other services. 3. Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to: a. Matters required to be included in the Director s Responsibility Statement to be included in the Board s Report in terms of clause (2AA) of section 217 of the Companies Act, b. Changes, if any, in accounting policies and practices and reasons for the same. c. Major accounting entries involving estimates based on the exercise of judgment by management. d. Significant adjustments made in the financial statements arising out of audit findings. e. Compliance with listing and other legal requirements relating to financial statements. f. Disclosure of any related party transactions. g. Qualifications in the draft Audit Report. h. The going concern assumption. i. Compliance with accounting standards. j. Any related party transactions i.e. transactions of the Company of material nature, with promoters or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of the Company at large. 4. Reviewing, with the management, the quarterly financial statements before submission to the Board for approval. 5. Reviewing, with the management, external and internal auditors, the adequacy of the internal control systems. 6. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. 7. Discussion with internal auditors about any significant findings and follow up there on. 10

13 8. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board. 9. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern. 10. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors. 11. Review of following information : a. Management discussion and analysis of financial condition and results of operations; b. Statement of significant related party transactions (as defined by the audit committee), submitted by management; c. Management letters / letters of internal control weaknesses issued by the statutory auditors; d. Internal audit reports relating to internal control weaknesses; and e. The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by the Audit Committee. f. Financial statements, in particular, the investment made by the unlisted subsidiary. g. Minutes of Board Meetings of the unlisted subsidiary company. h. A statement of significant transactions and arrangements entered into by the unlisted subsidiary. Powers of Audit Committee 1. To investigate any activity within its terms of reference. 2. To seek information from any employee. 3. To obtain outside legal or other professional advice. 4. To secure attendance of outsiders with relevant expertise, if it considers necessary. During the year, one Audit Committee Meeting of the Board of Directors was held on February 13, 2010 for considering the appointment of Internal Auditor of the Company. All the members named above were present during the meeting. 5. Remuneration of Directors Remuneration Committee The Remuneration Committee was constituted by the Board of Directors at its meeting held on February 13, The Committee consisted of the following members as on March 31, 2010: Mr. A. R. Sathe, Chairman Mr. A. N. Alawani, Member Mr. G. P. Kulkarni, Member During the year, one Remuneration Committee Meeting was held on February 13, 2010 for recommending the salary payable to Mr. A. C. Kulkarni, Executive Director of the Company. All the members named above were present during the meeting. 11

14 Remuneration to Directors The payment made to the Executive Director has been reviewed by the Remuneration Committee at its meeting held on February 13, 2010 and confirmed by the Board of Directors. The Board of Directors at its meeting held on February 13, 2010 decided to pay Rs. 5,000/- as sitting fees to the Non Executive Directors for attending every meeting of the Board and Committee thereof. The Company has not paid any sitting fee until February 13, No commission has been paid to any of the Directors since this is the first year of the company and there were no operations of the company till its effective date under the Scheme i.e. March 2, There are no pecuniary relationships or transactions of the Non-Executive Director vis-a-vis the Company. Except whatever is stated in the statement, there is no other fixed component or performance linked incentives paid to any Director. Details of remuneration paid/payable to Directors for the period ended March 31, 2010 are as follows : Amount in Rs. Name of the Director Sitting Fees Commission Salary Contribution Perquisites Others Total on Profits to Statutory Funds (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) Executive Director Mr. A. C. Kulkarni - - 3,22,446 90, ,13,346 Non Executive Directors Mr. Atul C. Kirloskar 5, ,000 Mr. Nihal Kulkarni 5, ,000 Mr. A. N. Alawani Mr. A. R. Sathe Mr. G. P. Kulkarni Directors Service Contracts Details : Executive Director Service Contract and Period * Severance Fees Mr. A. C. Kulkarni to Nil * Subject to the approval of shareholders. Statement showing number of equity shares of Rs. 10/- each of the Company held by the Non Executive Directors as on March 31, 2010 : Non Executive Directors No. of shares % to paid up capital Mr. Atul C. Kirloskar 1,34, % Mr. Nihal Kulkarni NIL - Mr. A. N. Alawani Mr. A. R. Sathe 30 - Mr. G. P. Kulkarni NIL - 12

15 6. Particulars of Directors to be appointed and re-appointed at the ensuing Annual General Meeting: Mr. A. R. Sathe Mr. A. R. Sathe (Age 57 years) did his CA and LLB. He has been working with Kirloskar Brothers Limited as Vice- President Corporate Finance and Accounts for last 5 years. He has extensive experience in Finance and Treasury of about 34 years. Before joining Kirloskar Brothers Limited, he was with Kirloskar Pneumatic Company Limited as Senior Vice President Finance. He is also holding directorships in a few Kirloskar Group companies. He is a Chairman of Remuneration Committee and a member of Audit and Investors Grievance Committee in the Company. Other Directorships Kirloskar Industries Limited (earlier known as Kirloskar Oil Engines Limited) Kirloskar Silk Industries Limited Kirloskar Constructions & Engineers Limited The Kolhapur Steel Limited Gondwana Engineers Limited Kirloskar Corrocoat Private Limited Pooja Credits Private Limited Other Committee positions Name of the Company Committee Chairman / Member Kirloskar Constructions & Engineers Limited Audit Committee Member Kirloskar Industries Limited Audit Committee Member Kirloskar Industries Limited Share Transfer cum Shareholders / Member Investors Grievance Committee The Kolhapur Steel Limited Share Transfer Committee Member He holds 30 equity shares of Rs. 10/- each in the Company. He is not related to any other Director on the Board of the Company. Mr. G. P. Kulkarni Mr. G. P. Kulkarni (Age 52 years) did his B.Com, LLM, FCS. He has also acquired membership as Chartered Secretary, London, UK. He was with Bajaj Auto Finance Limited, which is a NBFC for almost 8 years as a Company Secretary. He has wide experience in the Secretarial and related fields of about 23 years. Before joining Kirloskar Brothers Limited, he was with Kirloskar Pneumatic Company Limited and Thyssen Krupp Industries India Private Limited. He has been working with Kirloskar Brothers Limited as Vice-President and Head Legal and Company Secretary for last 5 years. Mr. G. P. Kulkarni is a Chairman of Investors Grievance Committee and a member of Remuneration Committee in the Company. Other Directorships Gondwana Engineers Limited The Kolhapur Steel Limited Kirloskar Silk Industries Limited Pratibha Communications Private Limited Pooja Credits Private Limited 13

16 Other Committee positions Nil His shareholding in the Company is Nil. He is not related to any other Director on the Board of the Company. Mr. Atul C. Kirloskar Mr. Atul C. Kirloskar (Age 54 years) began his career with the erstwhile Kirloskar Cummins Limited in the year 1978, where he started out as a trainee. In December 1981, he was appointed as the Chief Executive of Cummins Diesel Sales & Services. On 1 November 1984, he was appointed as the Executive Vice President of Kirloskar Oil Engines Limited (KOEL). He was co-opted on the Board of KOEL on 6 August 1985 wherein he took over as the Managing Director. In 1988, he was appointed Vice Chairman of KOEL and held the position till 25 July 1998 when he was elected Chairman of the Board of KOEL. He is a member of the World Economic Forum. He has served as President of MCCIA from September 2002 to September 2004, and is Chairman of CII National Committee of Defence since He is neither a Chairman nor a member of any of the Committees in the Company. Other Directorships Kirloskar Industries Limited (earlier known as Kirloskar Oil Engines Limited) Kirloskar Ferrous Industries Limited Kirloskar Oil Engines Limited (earlier known as Kirloskar Engines India Limited) G. G. Dandekar Machine Works Limited Kirloskar Proprietary Limited Five Star Bulkcarriers Private Limited Navsai Investments Private Limited Toyota Kirloskar Motor Private Limited Asara Sales and Investments Private Limited Kirloskar Kenya Limited, Kenya Other Committee positions Name of the Company Committee Chairman / Member Kirloskar Ferrous Industries Limited Share Transfer cum Shareholders / Investors Grievance Committee Kirloskar Industries Limited Share Transfer cum Shareholders / Investors Grievance Committee Chairman Member He holds 134,786 equity shares of Rs. 10/- each in the Company. He is not related to any other Director on the Board of the Company. Mr. Nihal Kulkarni Mr. Nihal G. Kulkarni (Age 28 years), A.B. in Economics from Brown University, has over four years of experience in the areas of finance and investments. He has undergone extensive training with the Kirloskar Group, Toyota Motor Sales, USA and DSP Merrill Lynch. He is currently Vice President in the Kirloskar Pneumatic Company Limited. He is the Vice Chairman and Director of G. G. Dandekar Machine Works Limited and is also a Director of Kirloskar Consultants Ltd. and G. G. Dandekar Investment Pte. Limited, a wholly owned subsidiary of G. G. Dandekar Machine Works Limited, incorporated in Singapore. Mr. Nihal Kulkarni is a member of Audit Committee in the Company. 14

17 Other Directorships G. G. Dandekar Machine Works Limited Kirloskar Consultants Limited Kirloskar Industries Limited (earlier known as Kirloskar Oil Engines Limited) G. G. Dandekar Investments Pte Limited, Singapore Kirloskar Oil Engines Limited (earlier known as Kirloskar Engines India Limited) Other Committee positions Name of the Company Committee Chairman / Member G. G. Dandekar Machine Works Limited Audit Committee Member G. G. Dandekar Machine Works Limited Share Transfer cum Shareholders Grievance Committee Member Kirloskar Industries Limited Audit Committee Member Kirloskar Engines India Limited Audit Committee Member His shareholding in the Company is Nil. He is not related to any other Director on the Board of the Company. Mr. A. N. Alawani Mr. A. N. Alawani (Age 65 years) is a Chartered Accountant by profession. He has work experience of over 30 years in Import, Export and Labour matters besides his core area of Finance, Taxation, Financial restructuring and Company Law. His abilities in Corporate Tax Planning and Finance helped various organisations in which he was employed. He has retired as Director (Finance) from Kirloskar Oil Engines Limited on 31 August He is a Chairman of Audit Committee and a member of Remuneration Committee in the Company. Other Directorships Kirloskar Integrated Technologies Limited Kirloskar Industries Limited (earlier known as Kirloskar Oil Engines Limited) Kirloskar Brothers Limited Kirloskar Ferrous Industries Limited Kirloskar Power Equipment Limited Kirloskar Oil Engines Limited (earlier known as Kirloskar Engines India Limited) Other Committee positions Name of the Company Committee Chairman / Member Kirloskar Ferrous Industries Limited Share Transfer cum Shareholders / Investors Grievance Committee Member Kirloskar Ferrous Industries Limited Audit Committee Member Kirloskar Brothers Limited Investors Grievance Committee Member Kirloskar Industries Limited Audit Committee Chairman Kirloskar Industries Limited Share Transfer cum Shareholders / Investors Grievance Committee Chairman He holds 500 equity shares of Rs. 10/- each in the Company. He is not related to any other Director on the Board of the Company. 15

18 Mr. A. C. Kulkarni Mr. A. C. Kulkarni (Age 59 years) is a Chartered Accountant with All India ranking in Final Examination. He is associated with Kirloskar Group in various capacities for last 32 years. He is on the boards of various Kirloskar Group Companies. He is a member of Investors Grievance Committee in the Company. Other Directorships Kirloskar Integrated Technologies Limited Kirloskar Proprietary Limited Achyut & Neeta Holdings & Finance Private Limited Alpak Investments Private Limited Asara Sales & Investments Private Limited Binaza Travels Private Limited Kirloskar Overseas Private Limited Kirloskar Sons & Company Private Limited Prakar Investments Private Limited Better Value Holdings Private Limited Pooja Credits Private Limited Other Committee positions Name of the Company Committee Chairman / Member Better Value Holdings Private Limited Audit Committee Member His shareholding in the Company is Nil. He is not related to any other Director on the Board of the Company. 7. Investors Grievance Committee The Company formed and constituted an Investors' Grievance Committee at the Board Meeting of the Company held on February 13, The Committee consisted of the following members as on March 31, 2010: Mr. G. P. Kulkarni, Chairman Mr. A. R. Sathe, Member Mr. A. C. Kulkarni, Member No Investors Grievance Committee Meeting was held during the year under review as the same was constituted on February 13, Name and designation of Compliance Officer: Mr. Vikas Vohra Secretarial and Compliance Officer No shareholders' complaints were received by the company as on March 31, With reference to clause 47(f) of the Listing Agreement, Company has designated exclusive ID for the investors as contact@kbil.co.in to register their grievances, if any. This has been initiated by the Company to resolve such investors grievances immediately. The Company has displayed the said ID on its website for the use of investors. 16

19 8. General Body Meetings The first Annual General Meeting of the Company is scheduled to be held on July 27, So far, the Company has not adopted postal ballot for passing any resolution at the General Meeting. 9. Disclosures i. Disclosures on materially significant related party transactions i.e. transactions of the Company of material nature, with its Promoters, Directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of the Company at large. There are no materially significant transactions made by the Company with its Promoters, Directors or the management, their subsidiaries or relatives etc. which have potential conflict with the interest of the Company at large. ii. Details of non compliance by the Company, penalties and strictures imposed on the Company by Stock Exchange or SEBI or any statutory authority on any matter related to capital markets during the last financial year. NIL iii. Whistle Blower Policy The Company has formulated and implemented the Whistle Blower Policy ( the Policy ) during the last financial year. This would inter alia provide a mechanism for 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. Thus any employee has direct access to the Audit Committee. The Policy has been communicated to all the employees of the Company and the same has also been uploaded on the company s website. iv. All mandatory requirements of Clause 49 of the Listing Agreement have been complied with by the Company and the extent of adoption of non-mandatory requirements is given hereunder : Non Mandatory requirements The Board The Company has a Non-Executive Chairman and the office with required facilities is provided and maintained at the Company s expenses for use by the Chairman. No policy has been fixed on tenure of Independent Directors. Remuneration Committee Remuneration Committee is already in place and complying with related non-mandatory requirements. Shareholders Rights The Annual Accounts are published in English and Vernacular language newspapers and are also displayed on the Company s website. Audit qualifications There are no qualifications on the financial statements of the Company for the period ended March 31,

20 Whistle Blower Policy The Company has a Whistle Blower Policy. It inter alia provides a mechanism for 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. It also provides for adequate safeguards against victimisation of such employees. Further, the existence of the mechanism has been appropriately communicated within the organisation. 10. Means of Communication The Annual Audited Accounts were published in English and Vernacular language newspapers and also displayed on Company s website. The shareholders of the Company were communicated about the information on Scheme of Arrangement from time to time. The Company has its own website which contains all important public domain information and matters concerning the shareholders and details of contact persons. Management Discussion and Analysis Report is included in the Directors Report of this Annual Report. 11. General Shareholder Information 1st Annual General Meeting Day & Date : Tuesday, July 27, 2010 Time : 1.30 p.m. Venue Financial Year : : Kirloskar Brothers Limited, Yamuna, Survey No. 98 (3 7), Baner, Pune st st 1 April to 31 March Book closure date : July 26, 2010 to July 27, 2010 Listing on Stock Exchanges : The Company has made Listing Applications with BSE and NSE for listing of its equity shares in terms of the Scheme of Arrangement. Listing fees payment : The Initial and Annual Listing fees have been paid to both the stock exchanges and there is no outstanding payment towards the stock exchanges, as on date of this Annual Report. Registrar and Share Transfer Agent The Company appointed M/s Link Intime India Private Limited, as its Registrar and Share Transfer Agent (R & T Agent) with effect from February 15, Share Transfers, dematerialisation of shares, dividend payment and all other investor related activities shall be attended and processed at the office of the Registrar and Share Transfer Agent at the following address:- Link Intime India Private Limited, (Unit: Kirloskar Brothers Investments Limited), nd Block No. 202, 2 Floor, Akshay Complex, Near Ganesh Temple, Off Dhole Patil Road, Pune Tel. No.: (020) Fax No.: (020) pune@linkintime.co.in Share transfer system Share transfers received by the Company would be transferred within 15 days from the date of receipt, provided the documents are complete in all respects. The process will become applicable from as the shares of the Company are not listed at present and the Company has filed listing applications with BSE and NSE for listing of its equity shares. 18

21 Distribution of Shareholding as on March 31, 2010 Nominal value of shares Number of % to total Total face % to total (In Rupees) holders holders value face value From To (In Rupees) Above TOTAL Shareholding Pattern as on March 31, 2010 Sr. No. Category No. of shares % of shareholding 1. Promoters Holding Indian Promoters Bodies Corporate Non Promoters Holding Mutual Funds Financial Institutions / Banks Insurance Companies Foreign Institutional Investors Private Corporate Bodies Indian Public Non Resident Indians Clearing Members TOTAL As on date, the Company has not issued any GDRs/ ADRs / warrants or any convertible instruments etc. Investor contacts Company Address : Registrar and Share Transfer Agent : Kirloskar Brothers Investments Limited, 13/A, Karve Road, Kothrud, Link Intime India Private Limited, (Unit: Kirloskar Brothers Investments Limited), Pune Block No. 202, 2nd Floor, Akshay Complex, Tel. No. (020) Near Ganesh Temple, Off Dhole Patil Road, Fax No. (020) Pune contact@kbil.co.in Tel. No. (020) Fax No. (020) pune@linkintime.co.in 19

22 Address of stock exchanges : (Where listing applications submitted) Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers, National Stock Exchange of India Limited Exchange Plaza, Bandra-Kurla Complex, Dalal Street, Bandra (East) Mumbai Mumbai Tel. No. (022) Tel. No. (022) Fax No. (022) Fax No. (022) Depositories for equity shares : National Securities Depository Limited Central Depository Services (India) Limited Trade World A Wing, Kamala Mills Compound, Phiroze Jeejeebhoy Towers, Lower Parel, 16th Floor, Mumbai Dalal Street, Tel. No. (022) Mumbai Fax No. (022) / 6351 Tel. No. (022) Fax No. (022) / 2072 The constituents of Group as prescribed in Regulation 3(1)(e)(i) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 comprises Better Value Holdings Private Limited, Kirloskar Industries Limited (earlier known as Kirloskar Oil Engines Limited), Kirloskar Oil Engines Limited (earlier known as Kirloskar Engines India Limited), Kirloskar Pneumatic Company Limited, Kirloskar Ferrous Industries Limited, Pooja Credits Private Limited, Kirloskar Silk Industries Limited, Kirloskar Constructions and Engineers Limited, Gondwana Engineers Limited, The Kolhapur Steel Limited, Kirloskar Corrocoat Private Limited, Kirloskar Systems Limited, Asara Sales & Investments Private Limited, Cees Investments and Consultants Private Limited, Navsai Investments Private Limited, Prakar Investments Private Limited, Alpak Investments Private Limited, Achyut & Neeta Holdings & Finance Private Limited, SriHarihareshwara Finance & Investments Private Limited, VikramGeet Investments and Holdings Private Limited, Kirloskar Integrated Technologies Limited, Kothrud Power Equipment Limited, Koppal Mines & Minerals Private Limited, Kirloskar Proprietary Limited, G. G. Dandekar Machine Works Limited, Mahila Udyog Limited, Kirloskar Chillers Private Limited, Kirloskar Roadrailer Limited, Hematic Motors Private Limited, Pressmatic Electro Stampings Private Limited, Quadromatic Engineering Private Limited, Kirloskar Brothers Limited, Kirloskar Consultants Limited, Suman Kirloskar, Mrinalini Kirloskar, Neeta A. Kulkarni, Atul C. Kirloskar, Arti Kirloskar, Gauri Kirloskar, Aditi Kirloskar, Sanjay C. Kirloskar, Pratima Kirloskar, Alok Kirloskar, Rama Kirloskar, Rahul C. Kirloskar, Alpana Kirloskar, Alika Kirloskar, Aman Kirloskar, Gautam A. Kulkarni, Jyotsna Kulkarni, Nihal Kulkarni, Gargi Nihal Kulkarni, Shruti Kulkarni, Ambar Kulkarni, Komal Kulkarni, Vikram S. Kirloskar, Geetanjali Kirloskar, Manasi Kirloskar, Roopa Gupta and Chandrashekhar H. Naniwadekar. 20

23 DECLARATION FOR COMPLIANCE WITH CODE OF CONDUCT To the members of KIRLOSKAR BROTHERS INVESTMENTS LIMITED Pursuant to clause 49 I (D) (ii) of the Listing Agreement, I hereby declare that all the Board and Senior Management Personnel are aware of the provisions of the Code of Conduct laid down by the Board as made effective from March 2, All Board Members and Senior Management Personnel have affirmed compliance with Code of Conduct. For Kirloskar Brothers Investments Limited Pune : June 5, 2010 A. C. Kulkarni Executive Director REPORT OF THE AUDITORS ON CORPORATE GOVERNANCE TO THE MEMBERS We have examined the compliance of conditions of Corporate Governance by KIRLOSKAR BROTHERS INVESTMENTS LIMITED for the period ended on 31 March 2010, as stipulated in clause 49 of the Listing Agreement of the said company with stock exchanges. As per the information and explanations given and read with clause 11 of the Report on Corporate Governance, the company has made Listing Applications with BSE and NSE for listing of its equity shares in terms of the Scheme of Arrangement. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the company has complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement. We further state that such compliance is neither an assurance as to the future viability of the company nor the efficiency or effectiveness with which the management has conducted the affairs of the company. For M/s P. G. BHAGWAT Chartered Accountants Pune : June 5, 2010 PANKAJA BHAGWAT Partner Membership No Firm s registration no: W 21

24 AUDITOR S REPORT TO THE MEMBERS OF KIRLOSKAR BROTHERS INVESTMENTS LIMITED 1. We have audited the attached balance sheet of KIRLOSKAR BROTHERS INVESTMENTS LIMITED as at 31st March 2010, the profit and loss account and also the cash flow statement of the company for the period ended on that date, annexed thereto. These financial statements are the responsibility of the company s management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor s Report) Order, 2003 [as amended by Companies (Auditor s Report) (Amendment) Order, 2004] issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: (i) (ii) (iii) (iv) (v) (vi) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; in our opinion proper books of account as required by law have been kept by the company so far as appears from our examination of those books; the balance sheet, the profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply, in all material aspects and read with clause B.5. of Schedule 5 to the financial statements in respect of accounting and disclosures under Accounting Standard 15 (revised) not being practicable, comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; on the basis of the written representations received from the directors as on 31st March, 2010, and taken on record by the board of directors, we report that none of the directors is disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; in our opinion and to the best of our information and according to the explanations given to us, the accounts, read together with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the balance sheet, of the state of affairs of the company as at 31st March, 2010 ; (b) in the case of the profit and loss account of the profit for the period ended on that date; and (c) in the case of the cash flow statement, of the cash flows for the period ended on that date. For M/s P. G. BHAGWAT Chartered Accountants Pune: April 26, 2010 PANKAJA BHAGWAT Partner Membership No.: Firm s Registration no.: W 22