YourDirectors present the 97th Annual Report and the Audited financial ? statements ofthe Company forthe year ended March 312017 together with the reports of the Auditors andBoard thereon.
The financial results of the Company for the year 2016-17 as compared with the previousFinancial Year are as under:
| ||Yearended March 312017 ||Year ended March 312016 |
| ||(Amounts in Million^) ||(Amounts in Million^) |
|Revenue from Operations ||18230.39 ||17212.23 |
|Other income ||182.38 ||207.86 |
|Total ||18412.77 ||17420.10 |
|Profit before tax ||532.89 ||74.44 |
|Tax Expense ||202.92 ||(33.34) |
|Profitforthe period ||329.97 ||107.77 |
|otherComprehensive Income ||(11.45) ||14.72 |
|Surplus in Profit & Loss Account brought forward from previous year ||1696.61 ||1663.88 |
|Interim Dividend forthe year 2015-16 ||- ||89.76 |
|Available surplus ||2015.13 ||1696.61 |
The Board of Directors have recommended a Dividend of 50%i.eH/- per equity shareforthe year 2016-17.
OPERATIONS OFTHE COMPANY
The revenue from operations forthe year under review is f 1823.04 croreswhich is morethan 6% compared to the previous year.
YourCompany continues to be the only Indian company manufacturing metallic volute pumpsin the country. We have become the world's largest concrete volutepumpmanufacturer.ourfocusedeffortsonHYPNsystems[PressureBoosting (Hydro Pneumatic)System] has crossed a landmark of 200 systems forthe year underreview.
Small Pump Business has registered an approximate growth of about 13% over the lastyear. The sales forthe small pump business were affected in the month of November 2016 dueto demonetisation but registered an increase in the month of December 2016.
Valves sector despatched 2000 mm size Multi DoorNon Returnable Valve (MDNRV)one of thelargest valve installed in India. BHIMA LIS Telangana project was successfullycommissioned.
During the yearCompany has received a 'Completion of Facilities Certificate1forDVCKoderma Project. A final 'Completion Certificate1 forJaypee Bina 2 x 250 MW ThermalPower Project (M.P) was also received. The preliminaryhandingoverorEITagen'pumpingstationsinEgypLwascompletedthisyear
Main focus of the Power sector during the year was on International projects along withthe development of business in the subcontinent.
Kirloskarvadi factory has designed developed and supplied Vertical Turbine Pumps(BHR34C(S)). These pumpscomplywithUL(UnderwritersLaboratories)standards.lthasalsodevelopedatrolleymountedAutoprimePumpset(APM200/24)with 19HP engine. During the yearit has manufactured largest split case pumpand also developed Glosed Coupled Magnetic Drive pump Type RMKG. This series of pumps areuseful in handling aggressive chemicals. In addition Kondhapuri and Kirloskarvadi plantsreceived Bronze and Silver awards respectivelyat GreenCo Summit: 2016 held by Cll atHyderabad.
Dewas plant implemented Green Projects (Bio-gas plant Solar LED street lighting LEDshopfloor lighting Solar water heating system etc.) toreduce carbon foot-print and cost.Five new improved series of pumps were launched at Sanand Plant.
During the yearSanand and Kaniyur plants received ISO 50001 certification forenergymanagement.
Aggressive marketing activities were conducted across the country by organising plumbermeets mechanics meets campaigning by wall painting andreach activitywith special focuson Maharashtra. In addition an intensive marketing campaign has been launched whichincludes radio and outdoor media covering public transport shelter. A mobile and Webapplication 'Storm II1 was launched forSmall Pump Business.
Kondhapuri plant was awarded a 'Certificate of Excellence1under small & mediumenterprise sector at the 11th state level awards forexcellence in Energy Conservation andManagement Competition organized by Maharashtra Energy Development AgencyGovernment ofMaharashtra. It has also received SA 8000 Certificate from Social AccountabilityAccreditationServices(SAAS).
The World Environment day was celebrated at corporate office 'Yamuna1Pune and at allmanufacturing units on June 5 2016. International Yoga Day was celebrated atKirloskarvadi on June 212016over500 employees participated in this event. Also 200trees were planted at Kirloskarvadi and 350 saplings were handed overto the students atKirloskarvadi School in support to Government of Maharashtra's plantation drive.
There were no material changes orcommitments to report which affect the financialposition of the Company that has occurred between the end of the Financial Year and thedate of this report.
1. EXTRACT OF ANNUAL RETURN
Extract of Annual Return in Form MGT-9 as per provisions of Section 134 read withSection 92(3) of the Companies Act2013 (the Act) is given in Annexure 11o this Report.
2. NUMBER OF MEETINGS OFTHE BOARD
During the Financial Year under review6 (Six) Board meetings were held the detailsare appearing in the Corporate Governance report.
3. DIRECTORS5 RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c)of the Actthe Board of Directors report that:
(a) in preparation of the annual accounts the applicable accounting standards havebeen followed;
(b) the directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the Financial Year and ofthe profit and loss of the Company forthat period;
(c) the directors had taken proper and sufficient care forthe maintenance of adequateaccounting records in accordance with the provisions of this Act forsafeguarding theassets of the Company and forpreventing and detecting fraud and other irregularities;
(d) the directors have prepared the annual accounts on a going concern basis; and
(e) the directors have laid down internal financial controls to be followed by theCompany and such internal financial controls are adequate and operating effectively;
(f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
4. INDEPENDENT DIRECTORS' DECLARATION
All Independent Directors of the Company have given declaration under Section 149 (7)of the Act that he /she meets the criteria laid down in Section 149 (6)of the Act.
5. DISCLOSURE REQUIRED UNDER SECTION 134(3)(e)
The Board has adopted a Board Diversity Policy which sets the criterion for appointmentas well as continuance of Directorsincluding Independent Directorsat the timeofre-appointment as directorin the Company. As per the policythe Board has an optimumcombination of members with appropriate balance of skill experience background genderand other qualities of directors required for the effective functioning of the Board.
The Nomination and Remuneration Committee recommends remuneration to the Directorssubject to the overall limits set under the Act as outlined in the Remuneration Policyapproved by the Board. As per the policy the Executive Director is entitled for a fixedsalaryother non-monetary benefits etc.and commission based on performance evaluation. Incase of Non-Executive Directors apart from receiving sitting fees they are entitled forcommission on the basis of criterion as per the policy.
The Remuneration policy is given in Annexure II.
6. REPORT OF AUDITORS
During the Financial Year under review there are no qualifications oradverse remarksordisclaimers made by the Statutory Auditors on the financial statements of the Companyand by the Secretarial Auditor in his Secretarial Audit Report which is annexed herewithas Annexure VII.
Pursuant to provisions of Section 139 of the Act read with applicable rules framedthereunder M/s. P G. BhagwatChartered Accountants (Firm Registration no. 101118W) thepresent Auditors would complete their term as Statutory Auditors of the Company at theensuing Annual General Meeting (AGM). The Board would like to place on record itsappreciation forthe long association of M/s P G. Bhagwat with the Company and theircontinued support.
M/s Sharp & Tannan Associates Chartered Accountants (Firm Registration No.109983W) have been recommended by the Board of Directors to be appointed as StatutoryAuditors of the Company fora period of 5 (Five) years from the conclusion of 97th AnnualGeneral Meeting till the conclusion of 102nd Annual General Meeting. The proposedStatutory Auditors have confirmed their eligibility and necessary certificates as requiredunderthe Act have been received from them.
Mr. M. J. RisbudPracticing Company Secretary (CP No.185) who was appointed as aSecretarial Auditor as per Section204oftheCompaniesAct2013fortheFinancial Year 2016-17tendered his resignation during the year
Mr. Shyamprasad LimayePracticing Company Secretary (CP No.572)has been appointed as aSecretarial Auditor of the Company as per Section 204 of the Companies Act 2013 fortheFinancial Year 2016-17. Mr. Shyamprasad Limaye has beenre-appointed as Secretarial Auditorforthe Financial Year 2017-18.
M/s Parkhi Limaye & Co. (Firm Registration No. 000191) have been appointed as CostAccountant as per Section 148 of the Act read with applicable rules made thereunderforthe Financial Year 2017-18. Their remuneration is subject to ratification by theMembers.
7. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
The details of loans guarantees orinvestments under Section 186 of the Act areavailable under note no.31(D) and 32 of notes to accounts attached to the StandaloneFinancial Statements.
The full particulars are available in the Register maintained under Section 186 of theAct which is available for inspection during business hours on all working days (exceptSaturday and Sunday).
8. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts/arrangements /transactions entered by the Company during the FinancialYear 2016-17 with the related parties were in the ordinary course of business and at arm'slength basis. Hence no particulars are being provided in Form AoC-2. During the yeartheCompany has not entered into contract/arrangement/transactions withrelated parties whichcould be considered material in accordance with the Company's 'Policy on Materiality ofRelated Party Transactions and Dealing with Related Party Transactions'. The said policyis uploaded on the website of the Company.
Furtherwe drawyourattention to Note no. C-31 of the Standalone Financial Statements ofthe Company.
9. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
Details of energy conservation technology absorption research and development andforeign exchange earnings as required under Section 134(3)(m) of the Act read withapplicable rules are given in Annexure III to this Report.
10. RISK MANAGEMENT
The Risk Management Committee identifies and prioritises the risks forthe Company. Theprogress and review statusof those identified risks are presented to the Audit and FinanceCommittee and Board. In the opinion of the Board there are no risks identified that maythreaten the existence of the Company.
11. CORPORATE SOCIAL RESPONSIBILITY REPORT
The Company has formulated a Corporate Social Responsibility Policy as per therequirements of the Act and the same is available on the website of the Company.
The Corporate Social Responsibility Report in the required format is given in AnnexureIV.
12. BOARD EVALUATION
The Board has formulated a Board Evaluation Policy forevaluation of individualdirectors as well as the entire Board and individual Committees thereof. The evaluationframework is divided into parameters based on the various performance criteria. Theevaluation forthe year ended March 312017 has been completed.
In compliance with the requirements under Regulation 25(3) of Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 (SEBIListing Regulations 2015) a meeting of Independent Directors was held on October 262016primarily to discuss the matters mentioned under Schedule IV of the Companies Act 2013.All the Independent Directors of the Company attended the same.
13. PERFORMANCE AND FINANCIAL POSITION OFSUBSIDIARIES AND JOINT VENTURES
During the yearHon'ble High Court of Judicature at Bombayvide its order datedSeptember 292016 approved the Scheme of Amalgamation of KirloskarSystech Limited withKirloskarBrothers Limited.
I. Karad Projects and Motors Limited
The revenue forthe year under review is f 3373.97 Min which is 14% more as compared tothe previous year
ii. The Kolhapur Steel Limited
The revenue forthe year under review is f 363.19 Min which is 19% less as compared tothe previous year.
iii. KJrloskarCorrocoat Private Limited
The revenue forthe year under review is 5300.85 Min which is 38% less as compared tothe previous year
iv. KJrloskarBrothers International B.V. (consolidated)
Therevenuefortheyearunderreviewis f 7858.59Mlnwhichis10%lessascomparedtothepreviousyear.
v. KirloskarEbara Pumps Limited (Joint Venture)
The financial position of the subsidiaries and joint venture companies is given inAOC-1 elsewhere in the Annual Report.
14. OTHER STATUTORY DISCLOSURES AS REQUIRED UNDER RULE 8(5) OF THE COMPANIES (ACCOUNTS)RULES2014
(i) Financial summary/highlights are included elsewhere in this report;
(ii) Change in the nature of the business during the year under review:
During the yearKirloskarSystech Limited (KSL)a wholly owned subsidiary of the Companymerged with the Company pursuant to the Scheme of Amalgamation which was approved by theHon'ble High Court of Judicature of Bombay on September 29 2016. All the activitiescarried on by erstwhile KSL are now undertaken by the Company.
(iii) Directors and Key Managerial Personnel:
At the 96th AGM of the Company Members confirmedre-appointment of Mr. Sanjay C.Kirloskaras Managing Director with effect from November 19 2015 fora period of 5 (Five)years. In terms of the provisions of Section 152(6) of the Act read with the Articles ofAssociation of the Company the Managing Director of the Company shall be consideredforretirement by rotation in case the number of directors liable to retire by rotation isless than 2/3rd of total directors liable to retire by rotation.
Mr. Sanjay C. KirloskarChairman and Managing Directorbeing longest in the office isliable to retire by rotation and being eligible offers himself forre-appointment as aDirector at the ensuing Annual General Meeting.
(iv) Companies which have become or ceased to be subsidiaries joint ventures orassociate companies during theyear:
The Company in association with Synerge Overseas Pte. Limited incorporated KBL SynergeLLP with effect from September 12016. KBL Synerge LLP is in the business of manufacturesupply and installation of solarpower plants and distribution and transitions ofelectricity generated from solarpower plants dealing in solar pumps and pumping systemsLED lighting and ESCo projects.
During the yearSPP Pumps (Asia) Limited SPP Pumps (Singapore) Pte. Limited andKirloskarBrothers International Zambia Limited have been incorporated as step downsubsidiaries of the Company with the objective to engage in pumps business.
(v) Details relating to Deposits:
The Company neither accepts norrenews matured deposits since January 2003 and therewere no deposits accepted by the Company as covered under Chapter V of the Act read withRules made thereunder.
(vi) No Significant and material orders were passed by the Regulators orcourtortribunals impacting the going concern status and Company's operations in future.
(vii) Details in respect of adequacy of internal financial controls with reference tothe financial statements:
The Company has adequate internal financial control systems in place. The controlsystems are regularly reviewed by the external auditors and their reports are presented tothe Audit and Finance Committee.
The Company has an Internal Audit Charter specifying mission scope of workindependence accountabilityresponsibility and authority of Internal Audit Department.The internal audit reports are reported to Audit and Finance Committee along withmanagement response.
(viii) Other disclosures required under Companies Act 2013 as may be applicable:
- Establishment of vigil mechanism: The Company has already in place a 'WhistleBlowerPolicy1 as a vigil mechanism since 2008. The details of the same are reported inCorporate Governance Report;
- Disclosures as required under Section 197(12) of the Act read with applicable rulesand details as per Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are given in Annexure V & Annexure VI.
15. CASH FLOW
Statement of Cash flowfor the period ended March 312017 is attached to the BalanceSheet.
SAFETY; HEALTH AND ENVIRONMENT Safety and Health
All ourmanufacturing plants are certified forOccupational Health and Safety AssessmentSeries (OHSAS) standards ISO 18001 and Environment Management System (ISO 14001) andSA8000. Periodic internal audits of all ourmanufacturing units are being conducted toensure legal compliances OHSAS 18001ISO 14001 requirements and standard industrialpractices.
Incident tracking system is fully utilizing forcapturing unsafe acts / conditions andaccidents Corrective Action and Preventive Action (CAPAs) are tracked through thissystem. Almost 500 incidents were logged which is more than 150% compare to last year. Ithelped to control the accidentrate.
All manufacturing units and subsidiaries are brought under one Umbrella of corporatesafety which helps to implement common safety programs and strategy.
Company strives for100% compliance with Environment Health and Safety (EHS)requirements. To verify that ourfacilities are meeting regulatory compliance requirementsall the project sites and manufacturing plants are inspectedfrequently.
Safety week and Environment day are celebrated at manufacturing plants offices andproject sites with number of activities competitions and awareness programs. As a part ofit online Safety quiz organised along with other safety activities to increase the safetyawareness. More than 700 employees participated in this quiz from KBL and subsidiaries.
BBS on line and classroom training provided to staff employees in SanandDewas andCoimbatore plants. A2 (Two)day Safety meet of all persons looking after safety wasorganised at Kirloskarwadiplant.
Safety internal audit team formed and training provided forcarrying out safety audits.All manufacturing plants and subsidiaries -
Environment and Energy
Manufacturing plants of the Company at KirloskarvadiDewasSanandKaniyur andKondhapuri are certified for the Environment Management System (IS014001). We continuouslymonitor ourenvironmental impact through measurement of important parametersrelated to theuse of resources such as energywater and materials. We ensure compliance withenvironmental norms and established systems to initiate timely actions to improve theenvironmental performance.
ourplants at KirloskarvadiKondhapuriDewasSanand and Kaniyur have also receivedcertification for implementingEnergyManagementSystem(ISo50001).
We monitor ourdirect and indirect energy consumption which is reported in ourannualsustainability report. A Company level Energy Conservation (ENCON) competition encouragesall ourmanufacturing plants to implement energy conservation projects.
The Company has initiated many actions toreduce energy consumption and conserve energywhich includes installation of Roof Top Solar Plants at the Corporate Office andmanufacturing plants replacing streetlights with LED lights installing screw compressorsat Foundry.
Pursuant to SEBI Listing Regulations 2015Management Discussion and Analysis ReportReport on CorporateGovemanchAuditors'CertificateonCorporateGovemanchDisclosureofunclaimedsharesandthedeclarationbythe Chairman and Managing Director regarding affirmations forcompliance with the Company'sCode of Conduct are annexed to this report.
EMPLOYEE STOCK OPTION SCHEME (ESOS)
As you are aware during the year 2007-08 the Company launched the Employees'"Share a Vision" Stock Option Scheme 2007 (ESOS-2007).
The Management has formulated under ESOS - 2007 a proposal of providing stock optionsat f 2/- per option to award employees for their outstanding exemplary performance ingetting sustainable results.
During theyearno allotments were made under ESOS -2007 scheme.
DISCLOSURE UNDER THE SEXUAL HARASSMENTOF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
In terms of Section 22 of the above mentioned Act read with Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Rule 2013 we report as followsforthe year ended on March 312017:
|1 No. of Complaints received in the year ||Nil |
|2 No. of Complaints disposed off in the year ||Nil |
|3 Cases pending for more than 90 days ||Nil |
|4 No. of workshops and awareness programmes conduced in the year ||23 |
|5 Nature of action by employer or District Officer if any ||NA |
YourDirectors wish to place on record their appreciation of the unstinted support andco-operation given by banks and financial institutions. YourDirectors would further liketo record their appreciation of the efforts by the employees of the Company.
|Sanjay C. Kirloskar |
|Chairman & Managing Director |
|DIN 00007885 |
Pune: May 172017