KIRLOSKAR BROTHERS INVESTMENTS LIMITED
ANNUAL REPORT 2011-2012
Your Directors have pleasure in presenting the Third Annual Report with the
Audited Annual Accounts of the Company for the year ending 31 March 2012.
AMALGAMATION OF POOJA CREDITS PRIVATE LIMITED WITH THE COMPANY:
The Hon`ble High Court of Judicature at Bombay vide its Order dated 18
November 2011 approved the Scheme of Amalgamation of Pooja Credits Private
Limited ("PCPL") with the Company. The certified true copy of the Order
received on 1 December 2011 has been filed with Registrar of Companies,
Pune on 5 December 2011 (Effective Date).
In terms of the said Scheme, all the assets and liabilities of the PCPL as
on 1 April 2011 (Appointed Date) were transferred to the Company. Also, the
investments of the Company in the shares of the PCPL, appearing in the
books of accounts of the Company were canceled. The authorized capital of
the Company is also increased by an amount of Rs. 4/- Crores and
resultantly stands at Rs. 14/- Crores.
(Rs. In lakhs)
Particulars Year ended Year ended
31 March 2012 31 March 2011
Total Income 15,620.48 3,057.02
Total Expenditure 171.23 92.74
Profit before taxation 15,449.25 2,964.28
Provision for tax (including Deferred Tax) 2,356.89 76.36
Net Profit 13,092.36 2,887.92
Balance of Profit/(Loss) from previous year 4,156.57 2,288.69
Balance of Profit of PCPL as
per Scheme of Amalgamation 2022.97 -
Balance available for appropriation 19,271.90 5,176.61
Transfer to Reserve Fund in terms of
Section 45-IC of the Reserve Bank of
India Act, 1934 2,618.47 577.58
Transfer to General Reserves 1,309.24 288.79
Proposed Dividend 211.55 132.22
Tax on Proposed Dividend - 21.45
Balance carried to Balance Sheet 15,132.64 4,156.57
Your Directors recommend 40% dividend i.e. Rs. 4/- per equity share
(previous year 25% i.e. Rs. 2.50 per equity share) for the financial year
ended 31 March 2012.
MANAGEMENT DISCUSSION AND ANALYSIS:
The Company commenced business in February 2011 after qualifying as a Core
Investment Company - Non Banking Financial Company (CIC-NBFC). Majority of
the investments of the Company is in the form of strategic investments in
Kirloskar Group Companies. During the year under review the Company has
formed an Investment Committee of the Board of Directors for considering
the options for investment of available surplus funds.
During the year under review, on account of acquisition of equity shares of
Kirloskar Oil Engines Limited (KOEL) and Kirloskar Pneumatic Company
Limited (KPC) and as a result of Amalgamation of Pooja Credits Private
Limited with the
Company, KOEL and KPC have become subsidiaries of the Company.
Consequently, the dividends declared by the Company, to the extent of
dividends received from KOEL and KPC are exempt from payment of Dividend
During the financial year under review, your Company achieved an income of
Rs. 156.20 Crores (previous year Rs. 30.57 Crores). The net profit after
tax is Rs. 130.92 Crores (previous year Rs. 28.88 Crores).
OPERATIONS OF THE COMPANY:
The main operations of the Company are that of an investment company, and
majority of the investments of the Company are in the nature of strategic
investments in Kirloskar Group Companies. The investment pattern of the
Company also complies with the requirement for the Company continuing to
qualify as a Core Investment Company - Non Banking Financial Company (CIC-
NBFC). The source of income for the Company is in the form of dividends as
declared by these companies.
As on 31 March 2012, the Company has 6 employees on its roll, including the
Executive Director and Assistant Company Secretary. During the year under
review, the organization structure and human resource policies have been
put in place.
CONCERNS AND THREATS:
* Fluctuations in the securities market and global economic scenario, may
pose a risk of devaluation of the investments made by the Company.
* Only source of income for the Company is dividend, mainly from its
* The risks and concerns associated with the businesses/operations of these
investee companies, which may impact the performance of these companies,
could result in variation in dividends declared by these companies.
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.
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.
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 COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS:
As on 31 March 2012, the Company has three subsidiaries viz. Nashik Silk
Industries Limited, Kirloskar Oil Engines Limited and Kirloskar Pneumatic
The Board presents 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 Securities and Exchange Board of India (SEBI).
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
24 May 2012 decided not to attach the Annual Accounts of its subsidiaries.
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
Companies 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 Companies shall also be kept open for inspection by any
shareholder at the Registered Office of the Company.
A. Nashik Silk Industries Limited (NSIL):
NSIL was incorporated on 5 May 1992 as Kirloskar Silk Industries Limited.
The name of the Company was changed to Nashik Silk Industries Limited.
NSIL was incorporated with the main object of manufacturing, development
and sale of raw silk. However, the said project was implemented but was
subsequently discontinued, as it was not financially feasible.
NSIL 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. The Board of Directors of NSIL
decided to pursue the said application and hence, deferred the decision of
disposal of land and existing business.
B. Kirloskar Oil Engines Limited (KOEL):
KOEL is in the business of manufacturing of Diesel Engines and is having
manufacturing facilities at Pune, Nashik, Kagal, and Rajkot.
The Company has a presence in international markets, with offices in UAE,
South Africa and Kenya, as well as representatives in Indonesia and Nigeria
and a strong distribution network throughout the Middle East and Africa.
Pune and Kagal plants received the prestigious `12th National Award for
Excellence in Energy Management 2011` from Confederation of Indian
The Board of Directors of KOEL has recommended a final dividend of Rs. 4/-
(200%) per equity share for the year ended March 31, 2012 as against Rs.4/-
(200%) per equity share paid last year.
On 30 September 2011, KOEL hived off its bearings business division, for a
purchase consideration of Rs. 87/- Crores, resulting in a profit of
The Board of Directors of KOEL in its meeting held on 25 January 2012, had
approved a buyback of fully paid up equity shares of the Company by way of
open market purchases through stock exchange route at a maximum price of
Rs. 170/- and the buyback amount not exceeding Rs. 73.63 Crores. This
represents 10% of total paid up capital and free reserves as per the latest
audited balance sheet as on 31 March 2011.
The buyback commenced on 5 March 2012 and will remain open till 24 January
2013 or any earlier date on which the buyback to the extent of Rs. 73.63
Crores is completed. However, in case Minimum Offer Shares (10,82,721 nos.)
are purchased under the buyback, the Board at its discretion may close the
buyback by giving appropriate notice in this regard.
KOEL has achieved sales of Rs. 2,276/- Crores (including sales of bearings
business of Rs. 62/- Crores) as against Rs. 2,364/-Crores in the previous
year, (including sales of bearings business of Rs. 123/- Crores). The
profit before tax is Rs. 281/- Crores (including profit on sale of bearings
business Rs. 48 Crores) in 2011-12 against Rs. 244/- Crores in the previous
C. Kirloskar Pneumatic Company Limited (KPC):
KPC is in the business of manufacturing of Air Compressors, Compressors for
Refrigeration and Air Conditioning, Gas Compressor packages, Hydraulic
power transmission products.
KPC has achieved a net sale of Rs. 666.61 Crores during the year as against
Rs. 491.73 in last year. This 36% increase in revenue growth over the
previous year has also contributed to a Profit before Tax growth of
The Board of Directors of the Company has recommended a final dividend of
Rs. 12/- (120%) per equity share for the year ended 31 March 2012 as
against Rs. 12/- (120%) per equity share paid last year.
KPC has successfully delivered its largest Centrifugal Compressor based
Refrigeration System for the first Coal Gasification Plant in India.
KPC`s exports grew from Rs. 12.9 Crores to Rs. 31.9 Crores over the
KPC has received National level award for Excellence in Energy Management
from CII on 1 December, 2011.
KPC has also received a State level award for Excellence in Energy
Conservation and Management from Maharashtra Energy Development Agency on
13 March 2012 for the year 2008-09.
During the year Kirloskar RoadRailer Limited (KRL) has become subsidiary of
KPC and the manufacturing facility has been set up at Nashik and the actual
production will commence in the current financial year.
The consolidated financial statement is prepared as per applicable
provisions, and duly audited by the statutory auditors, is presented
elsewhere in this Annual Report.
(a) Conservation of energy and technology absorption:
The Company being an Investment Company, there are no particulars regarding
conservation of energy and technology absorption, 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, 1988.
(b) Foreign exchange earnings and outgo:
Total foreign exchange used : Nil
Total foreign exchange earned : Rs. 0.24 Crores
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.
Mr. G. P. Kulkarni resigned as Director with effect from 22 May 2012. The
Board places on record its sincere appreciation for the valuable services
rendered by Mr. G. P. Kulkarni.
Mr. A. N. Alawani and Mr. Nihal G. Kulkarni retire by rotation at the
ensuing Annual General Meeting and being eligible, offer himself for re-
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
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 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 31 March
2012 and of the profits of the Company for such period.
* 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.
A cash flow statement for the year ended 31 March 2012 is attached to the
Your Company has not accepted any fixed deposits during the year.
Pursuant to Clause 49 of the Listing Agreement entered with the Stock
Exchanges, a report on Corporate Governance forms part of this Annual
Report. The Company has obtained the certificate from its Statutory
Auditors regarding compliance with the 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 affirmation for compliance
with the Company`s Code of Conduct is annexed to the Corporate Governance
M/s. P. G. Bhagwat, Chartered Accountants (Firm`s Registration No.
101118W), 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-
Your Directors wish to place on record, their appreciation for the
contribution made and support provided to the Company by the shareholders,
employees and bankers, during the year under the report.
For and on behalf of the Board of Directors
ATUL C. KIRLOSKAR
Date : 24 May 2012.