To the Members,
The Directors have pleasure in presenting this Report with audited annual accounts ofthe Company for the year ending 31 March 2011.
Issue of Shares pursuant to the Scheme of Arrangement of Demerger and Relisting onStock Exchanges:
Pursuant to the Scheme of Arrangement of Demerger between the Company and KirloskarEngines India Limited (now known as Kirloskar Oil Engines Limited) (KEIL), 97,08,650equity shares of Rs. 10/- each were issued on 30 April 2010 to all those members of theCompany, who were holding shares as on the Record Date i.e. 22 April 2010. The equityshares were issued to every member of the Company in the ratio, for example holding 20equity shares of Rs. 2/- each in the Company as on the Record Date, 15 new equity sharesof Rs. 2/- each in KEIL and 1 new equity share of Rs. 10/- each, credited as fully paid upin the Company.
The trading in the new equity shares of the Company recommenced on both the StockExchanges with effect from 24 June 2010.
Payment of Fractional Entitlements:
Pursuant to the Scheme of Arrangement for Demerger, the fractional entitlements arisingout of the issue of shares under the said Scheme were consolidated into 5,585 equityshares of Rs. 10/- each. These shares were sold in the open market at an average price ofRs. 348.20. The Company is in the process of distributing the net sale proceeds (afterdeduction of the expenses incurred) to the members respectively entitled to the same inproportion 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 411038 with effect from 1November 2010.
|Particulars ||2010-2011 ||2009-2010 |
| ||Rs. in 000's ||Rs. in 000's |
|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 |
Your Directors propose to appropriate the available surplus as follows:
| ||Rs. in 000's ||Rs. in 000's |
|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 |
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 thefinancial year ended 31 March 2011.
Classification of the Company as a Core Investment Company - Non Banking FinancialCompany (CIC NBFC):
Your Company is having financial assets which amount to more than 50 percent of itstotal assets and its financial income is also more than 50% of its gross income. In viewof this, the Company becomes a Non Banking Financial Company (NBFC) as per the guidelinesissued 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 fromregistration 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 ofwindmills is commented upon in this Management Discussion and Analysis.
Operations of the Company:
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 windmillshave generated net wind energy of 78.95 lakhs units of electricity in the year underreview as against 89.64 lakhs units of electricity in the previous year. The decline wasdue to machine performance issues with the service providers, unfavorable weatherconditions and shut-down of one windmill for repairs in August 2010. These units ofelectricity generated were captively consumed by the Company before the Scheme ofArrangement came into effect. On the coming into effect of the Scheme, in the year underreview, the Company approached Maharashtra State Electricity Distribution Company Ltd.(MSEDCL) requesting an amendment to the Wind Energy Wheeling and Banking Agreementpermitting sale of such units to Kirloskar Oil Engines Ltd. (KOEL) which has been enteredinto as on the date of this Report.
The Company owns land and buildings thereon in Pune, and apartments and offices inMumbai, Bangalore, New Delhi and Jaipur. The Company continues the leave and licensearrangements 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 equityshares of various companies, which are mainly Group companies.
During the year under review, your Company acquired equity shares of Kirloskar BrothersLimited (KBL). Pursuant to the said acquisition, the Company's holding in KBL has beenincreased 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 scheduledcommercial banks. The total amount placed as fixed deposits as on 31 March 2011 is Rs. 67crores.
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) afterproviding for depreciation of Rs. 3.1 crores (previous year Rs. 3.1 crores).
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 theCompany.
Natural calamities like cyclones, earth quake and fire or act of God may damagethe 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 DistributionCompany Limited grid.
Delay in registration of the Company's project for Voluntary Credit Schemeresulting in delay in obtaining the benefits from sale of such Voluntary EmissionReduction certificates.
Wind energy generation is largely dependent on natural factors such as velocity ofwind, continuity of the flow, etc. and therefore cannot be commented upon. However, inaddition to unit generation, the Company may also get the benefits of Renewable EnergyCertificate Mechanism and Clean Development Mechanism benefits under the Voluntary CarbonScheme (VCS). The Company has already made a detailed submission to authorised validatorfor 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 completedduring the year. Your Company expects to receive additional monetary benefits from thesale of such VER.
Internal Control Systems and their adequacy:
Renowned auditing firms continue to conduct the Internal Audits of the business of theCompany. The internal audit program is designed to ensure extensive review of the businessof 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 inthe areas covered during the audit.
Statements in this Report, particularly those which relate to Management Discussion andAnalysis, describing the Company's objectives, projections, estimates and expectations mayconstitute "forward looking statements" within the meaning of applicable lawsand regulations. Actual results might differ materially from those either expressed orimplied.
SEBI Regulations & Listing Fees:
The annual listing fees for the year under review have been paid to Bombay StockExchange Limited and National Stock Exchange of India Limited, where your Company's sharesare listed.
Mr. Atul C. Kirloskar resigned as Managing Director of the Company with effect from theclose of business hours of 22 October 2010. However, he continues to be the Director andChairman of the Company.
Mr. Nihal G. Kulkarni has been appointed as Managing Director of the Company for aperiod of 5 years with effect from 23 October 2010. A proposal for his appointment asManaging Director and remuneration payable to him is being placed before the members fortheir approval at the ensuing Annual General Meeting.
Mr. Atul C. Kirloskar and Mr. Vikram Kirloskar retire by rotation at the ensuing AnnualGeneral Meeting and being eligible, offer themselves for re-appointment.
The brief resumes and other details relating to the Directors who are proposed to beappointed/re-appointed, as required to be disclosed under Clause 49 of the ListingAgreement, 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 accountingstandards have been followed along with the proper explanation relating to materialdepartures;
That the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;
That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act, 1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; and
That the Directors have prepared the annual accounts on a going concern basis.
A report of the Corporate Governance, along with the certificate of compliance from theAuditors, forms part of the Annual Report.
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 SpecialNotice pursuant to Section 190 and 225 of the Companies Act, 1956, to hold office as suchfrom the conclusion of this Annual General Meeting until the conclusion of the next AnnualGeneral Meeting.
The requisite certificate pursuant to Section 224 (1-B) of the Companies Act, 1956 hasbeen 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.
(A) Conservation of Energy and Technology Absorption
The Company has no particulars to report regarding conservation of energy, technologyabsorption as required under Section 217 (1) (e) of the Companies Act, 1956 read with theRules 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 noparticulars as required under the provisions of sub-section (2A) of Section 217 of theCompanies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.
Your Directors would like to place on record their appreciation of the contributionmade 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 |
|Date: 26 April 2011 ||ATUL C. KIRLOSKAR |
|Place: Pune ||Chairman |