Kirloskar Electric Company Ltd

Industry

Your Company is engaged in Electrical Industry, which has various groups such asRotating Machines Group, Static Equipments Group, Switchgears Group, Transformers Group,Capacitors Group, Transmission Lines Group, etc., Each product group is having itsdifferent products within its broad range. The industry is further divided into OrganisedSector and Unorganised Sector. Your Company manufactures and deals in major products inthe industry.

Opportunities

The GDP growth expected in the current year is around 8.6%. With the expected capitalinvestments by the private sector as well as the public sector the demand for theElectrical Industry is expected to appreciate in the near future and as such the highgrowth exhibited a couple of years back is expected again and demand is expected to pickup. With consistent GDP growth the Country continues to require power on growing scale.There is considerable energy deficit. This provides significant opportunities for privatecompanies to share in the chain of power business. The infrastructure development isenabling developments in places away from cities where power availability is poor whichprovides good opportunity for genset business. The growth of Hospitality and Entertainmentindustries also augurs well for genset business. The strong brand image of theCompany’s products on account of our stress on quality puts us in an advantageousposition. It may be noted that the Company has no control over the external factors as aresult of which the actual performance may vary from the expected.

Threats

Delays in supply of raw materials and fluctuations in prices thereof are a matter ofconcern. Rising diesel prices could bear on genset business. The industry is becominghighly competitive. The long term outlook appears to be bright. The actual performance maydiffer, as it is dependent on several factors beyond control of the Company.

Performance Overview

During the year the Company has achieved a turnover of Rs 8.24 billion as against Rs8.41billion in the previous year. The profit after tax for the year is Rs 21.1million asagainst a profit of Rs 375.9 million in the previous year.

Segmentwise or productwise performance

The Company has identified the reportable segments as Rotating Machines Group, PowerGeneration and Distribution Group and Others, taking into account the nature of productsand services, the different risks and returns and the internal reporting systems.

The segmentwise turnover of the Company is as follows: -

Future Outlook

As has been mentioned earlier in the Report, the Indian Industry is set to performwell. It appears that the economy will have GDP growth of about 8.6% in 2011-12. Thevarious industries to which the Company caters to are expected to do well and demand fromthem is expected to be good. The power deficit provides opportunity to share in the chainof power business. The outlook appears to be good at this juncture.

Risks & Concerns

The rise in prices of raw materials, supply uncertainties and tighter monetaryconditions are a matter of concern.

Internal Control System

The Company has in place an adequate system of internal controls commensurate with thesize of the Company and the nature of its business. This ensures efficacy of operationsand safeguarding of assets against loss and compliance with applicable legislation. Thesystem involves appropriate and timely recording of all transactions and financialtracking. There exists an adequate management reporting system comprising managerialreporting and analysis on various performance indicators, for corrective action asnecessary. The Company has regular review systems to monitor the performance againstagreed financial parameters to assess the strengths and areas of improvement at all theUnits.

Human Resources

Employees at all levels have put in their best to the services of the Company.Industrial relations during the year were cordial and the Company continued to have goodsupport of all its employees at all levels. The Company is focusing on Employee Retention,Development, Recognition and Performance management.