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Kirloskar Electric Company Ltd.
Change Company : 
Chairman : Vijay R Kirloskar Industry : Electric Equipment
Last Price Today's Change Open Prev Close Day's Range 52 Week Range
29.40 -0.10 29.40 29.50 (30.65)   (28.55) (38.60)   (13.05)
BSE Code 533193
ISIN Demat INE134B01017
Book Value (Rs.) 32.51
Dividend Yield (%) 0.00
Market Cap (Rs Mn) 1490.38
P/E 0.00
EPS (Rs.) -5.09
Face Value (Rs.) 10
Volume 7453.00
March 2012

DIRECTORS' REPORT

To

The Shareholders

Your Directors present the Company's 65th Annual Report with the Audited Balance Sheet as at 31st March, 2012 and Profit and Loss Account for the year ended 31st March, 2012.

Company Performance

During the year under report, your Company has achieved a turnover (Gross) of Rs. 8.72 billion (previous year Rs. 8.24 billion). The operations have resulted in a net profit of Rs.95.7 million (previous year Rs. 21.1 million).

Industry Outlook

Indian Economy performed relatively well against the backdrop of weak global atmosphere. Global economies appear to be going through a phase which is having greater share of volatility than that of stability. There are signs of inertia in Indian Economy as well. Your Company has taken several steps to mitigate the impact of this, rather to have better results by stress upon actions oriented towards goals and performance which should enable the Company to do well, barring unforeseen circumstances.

Appropriations

Dividend

In order to conserve resources for Company's growth, your Directors regret their inability to declare any dividend for the year under report. The Company has not transferred any amount to its General Reserve.

Subsidiary - Kirsons B.V.

The operations of Kirsons B.V., your subsidiary have resulted in net loss of Euro 0.071 million.

Subsidiary Companies

The Company as of March 31, 2012 had one subsidiary, viz., Kirsons B.V., Netherlands (Kirsons). Kirsons is having two subsidiaries - Lloyd Dynamowerke GmbH & Co. KG, Germany and Lloyd Beteiligungs-GmbH, Germany. Pursuant to section 212 of the Companies Act, the annual accounts of subsidiary companies for the year ended 31st March, 2012 along with the statements referred to in the said section, are attached with Consolidated Financial Statements as required. Further, pursuant to Accounting Standard - 21 (AS-21) prescribed under the Companies (Accounting Standard) Rules, 2006, Consolidated Financial Statement presented by the Company includes financial information about its subsidiaries.

Environment, Safety and Energy Conservation

As required by the Companies (Disclosure of particulars in the Report of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and other details are given in the Annexure to this report.

Particulars of Employees

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of specified employees are set out in the Annexure to the Directors Report. However having regard to the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report is being sent to all members of the Company, excluding the aforesaid information. Any member interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company.

Corporate Governance

Pursuant to the requirements of the Listing Agreements with Stock Exchanges, your Directors are pleased to annex the following:

1. Management Discussion and Analysis Report

2. Report on Corporate Governance

3. Auditors Certificate regarding compliance of conditions of Corporate Governance

4. CEO & CFO Certificate

5. CEO Certificate regarding compliance with the Code of Conduct.

These annexures form part of this report.

Directors

Mr. Berthold Groeneveld, Mr. D. Devender Singh and Mrs. Meena Kirloskar retire by rotation and being eligible offer themselves for re-appointment.

Directors' Responsibility Statement

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

1. In the preparation of the annual accounts, the applicable accounting standards have been generally followed.

2. Appropriate accounting policies have been selected and applied consistently and Directors have made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 and of the Profit and Loss Account for the year ended 31st March, 2012.

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

4. The annual accounts have been prepared on a going concern basis.

Human Resources

The Company considers its employees as its most valuable asset. Employees at all levels have put in their best to the services of the Company and the Board puts on record the sincere appreciation of their dedication and loyalty. The Company focuses on building an organization through induction and development of talent to meet current and future needs. Various HR initiatives have been taken to align the HR Policies of the Company with the growth projections of the Company.

Segmentwise Operational Performance

Rotating Machines Group

During the year under review the sales under Rotating Machines Group amounted to Rs. 6356.60 million as against Rs. 6401.65 million in 2010-11.

Power Generation and Distribution Group

During the year under review the sales under Power Generation and Distribution Group amounted to Rs. 4636.97 million as against Rs. 4646.76 million in 2010-11.

Others

During the year under review the sale of other Electrical Products amounted to Rs.691.67 million as against Rs. 535.90 million in 2010-11.

Lloyd Dynamowerke GmbH & Co. KG, Germany (LDW)

As you are aware the Company holds approximately 95% stake in Lloyd Dynamowerke GmbH & Co. KG, Germany and the entire shareholding in Lloyd Beteiligungs-GmbH, Germany through its subsidiary in The Netherlands - Kirsons B.V. Lloyd Dynamowerke GmbH & Co. KG, Germany is a limited partnership existing in accordance with the laws of Germany which owns an electrical machine manufacturing plant at Bremen, which is being operated by the said limited liability firm. During the year ended 31st March, 2012 Lloyd Dynamowerke GmbH & Co. KG, had turnover of Euros 33.333 (Rs.222 crores){Previous year -Euros 43.509 million (Rs.263 crores)} with a net loss after tax of Euros 0.550 million (Rs.3.10 crores) {Previous year net profit Euros 1.270 million (Rs.9.06 crores)}.

AUDITORS' REPORT

The comments/observations of the Auditors are self-explanatory and the Company's explanations thereto have been given in relevant notes in the Notes to Accounts. Further explanations in regard to the reservations/qualifications in the Auditors Report are furnished below:-

Para 10(i) of the Auditors' Report

The Company has sought written confirmation from all its vendors to let us know if they are either micro, small or medium enterprises. Once these details are updated, particulars of dues to micro, small and medium enterprises could be ascertained.

Para 10 (ii) of the Auditors' Report

Confirmations have been received from some parties and from some they are expected. Confirmation is an ongoing process. However, this has no impact on financial results of the Company.

Para 8 and Para 10 (iii) of the Auditors' Report

This has no impact on the accounts. The Company has complied with Accounting Standard 2 in respect of valuation of raw materials, stores and components and in respect of work in progress and finished goods. The Company has from time to time initiated steps to bring the valuation of inventory at all units in line with Accounting Standard -2 (Valuation of Inventory). The relevant details of inventory are available for verification.

Para 10 (iv) of the Auditors' Report.

The Company has used and relied upon its market intelligence to judge the realizable value of assets held for sale. The estimated realizable value is judged to be in line with the market valuation.

Para 10 (v) of the Auditors' Report

The Company is confident of realising the amounts due from certain companies referred to therein.

Para 2 a of the Annexure to the Auditors' Report

Confirmations have been received from some parties and from some they are expected. Confirmation is an ongoing process.

Para 2 b of the Annexure to the Auditors' Report

The Company has already identified the key focus areas and has started taking the necessary steps to make the inventory verification reasonable and adequate.

Para 2 c and Para 8 of the Annexure to the Auditors' Report

During the year, the Company has completed implementation of SAP ECC 6 System at certain units and it will implement it at the remaining units in phased manner in the current year. SAP is an integrated software where all the inventory records are maintained. The company has from time to time taken physical inventory at all locations. Since the valuation of inventory was done on the basis of physical inventory count performed as at 31st March 2012, the discrepancies, if any, have been properly dealt with in the books of accounts. The discrepancies were not material in nature.

Para 5 a of the Annexure to the Auditors' Report

The Company is in the process of applying to the Central Government to seek its approval in respect of these contracts.

Para 7 of the Annexure to the Auditors' Report

The Company appointed an independent reputed professional agency to perform internal audit of operations of the Company. The scope of the internal audit is decided considering the risk assessment carried out by the Company. The internal audit work at several of its plants, branches and offices are at advanced stage of completion and the final report is expected soon.

Para 9 b of the Annexure to the Auditors' Report

The Company has made necessary arrangements to pay these dues.

Auditors

M/s. B. K. Ramadhyani & Co., Chartered Accountants and M/s. Sundar & Associates, Chartered Accountants, are the retiring Auditors in India and Malaysia respectively. They are eligible for re-appointment. The required certificates to the effect that the re-appointments, if made, will be within the limit specified in Section 224(1-B) of the Companies Act, have been received from M/s. B. K. Ramadhyani & Co., and M/s. Sundar & Associates.

Fixed Deposits

12 persons had not claimed repayment of their matured deposits amounting to Rs.5.94 lakhs as at 31st March, 2012.

Acknowledgements

The Directors takes this opportunity to express its sincere appreciation for the continued support and confidence received from the Company's Bankers, Financial Institutions, Customers, Suppliers, Depositors and Shareholders. Your Directors place on record their appreciation of the efforts of employees at all levels and look forward to their continued support in the future as well.

For and on behalf of the Board of Directors,

Vijay R Kirloskar

Chairman

Bangalore

Date: May 28, 2012