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Kirloskar Industries Ltd.

BSE: 500243 Sector: Financials
NSE: KIRLOSIND ISIN Code: INE250A01039
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OPEN 625.50
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VOLUME 4099
52-Week high 799.80
52-Week low 355.00
P/E 10.81
Mkt Cap.(Rs cr) 626
Buy Price 633.00
Buy Qty 3.00
Sell Price 645.00
Sell Qty 5.00
OPEN 625.50
CLOSE 639.50
VOLUME 4099
52-Week high 799.80
52-Week low 355.00
P/E 10.81
Mkt Cap.(Rs cr) 626
Buy Price 633.00
Buy Qty 3.00
Sell Price 645.00
Sell Qty 5.00

Kirloskar Industries Ltd. (KIRLOSIND) - Director Report

Company director report

KIRLOSKAR INDUSTRIES LIMITED

To The Members

The Directors have pleasure in presenting this 26th Annual Report with the AuditedAnnual Accounts of the Company for the year ended 31 March 2020.

I. FINANCIAL PERFORMANCE (STANDALONE):

Particulars 2019-2020 2018-2019
Total Income 8609 7792
Total Expenditure 2117 2112
Profi t before exceptional items and taxation 6492 5680
Profi t before taxation 6492 5680
Provision for tax (including Deferred Tax) 547 729
Net Profi t 5945 4951
Balance of Profi t / (Loss) from previous year 48646 45964
Add: Lapse of ESOP outstanding - 14
Less: Re-measurement of defi ned benefi t plans (22) (7)
(net of Taxes)
Dividend paid on equity shares:
For the Financial Year 2017-2018 - 2039
For the Financial Year 2018-2019 2039 -
For the Financial Year 2019-2020 971 -
Tax on fi nal / interim dividend:
For the Financial Year 2017-2018 - 237
For the Financial Year 2018-2019 129 -
For the Financial Year 2019-2020 - -
Profi t available for appropriation 51430 48646
Balance carried to Surplus in Statement of Profi t and Loss 51430 48646

II. DIVIDEND:

The Directors have declared an interim dividend of 100% (Rs. 10 per share) for the yearended 31 March 2020. In view of the same your Directors do not recommend a fi naldividend for the Financial Year 2019-2020. (Previous year fi nal dividend 210% i.e. Rs.21 per equity share of Rs. 10 each) and the payment of interim dividend shall be the final dividend for the Financial Year 2019-2020.

III. CLASSIFICATION OF THE COMPANY AS A CORE INVESTMENT COMPANY (CIC):

The Company is a CIC regulated by the Reserve Bank of India (RBI) and is complying withall the regulations required for a CIC.

The Company submitted an application to the RBI for seeking approval to raise funds forits real estate business. In reply to the aforesaid letter RBI advised the Company tomake an application for registration as an NBFC-CIC if it wants to access public funds.

IV. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

A. OPERATIONS OF THE COMPANY:

WINDMILLS:

The Company has seven Wind Energy Generators (WEGs) in Maharashtra with total installedcapacity of 5.6 Megawatt (MW). The WEGs are located at Tirade Village Tal. Akole Dist.Ahmednagar. The WEGs have generated net wind energy of close to one crore units ofelectricity in the year under review as against 85 lakh units of electricity in theprevious year showing increase of 16% over the previous year.

The Company had Open Access Permission from Maharashtra State Electricity DistributionCompany Limited (MSEDCL) and was selling the wind power units generated to a leadingglobal IT company. However the said company terminated the arrangement with effect from 1October 2019. In view of the same the Company reviewed the generation and utilisationpattern and to avoid non-utilisation of wind generated units the Company had obtainedShort Term Open Access (STOA) Permissions to sell brown energy to third party consumer forthe period from 1 October 2019 to 31 March 2020. During the year the Company has alsosold 1117 RECs which has resulted in revenue of Rs. 25 lakhs. The Company is holding 528unsold RECs as on 31 March 2020.

REAL ESTATE ACTIVITIES:

The Company owns some land parcels in Pune. During the year under review the Companyhas taken various measures for the development of the land parcels at Kothrud.Accordingly the Company has appointed various consultants / sub-consultants for obtainingnecessary permissions / No Objection Certifi cates (NOCs) from various RegulatoryAuthorities and rendering master planning and architectural design consultancy servicesetc. During the year under review the Company has also received certain statutoryapprovals / permissions. During the year the Company has spent Rs. 1782 lakhs on realestate activities in addition to

Rs. 4091 lakhs spent upto the previous year thus aggregating a spend of Rs. 5873lakhs on real estate business till 31 March 2020. The Company has dedicated staff strengthof in addition to the common resources and various consultants to manage the real estatebusiness.

OTHERS:

The Company owns lands and buildings thereon and apartments and offi ces in Pune NewDelhi and Jaipur. The Company has given most of these lands and buildings and offi ces onleave and license basis to group and other companies which generated revenue of Rs. 2774lakhs (Rs. 3060 lakhs as on 31 March 2019).

The Company has disposed off the vacant apartment at Bangalore during the FinancialYear 2019-2020. Consequently the Company has realised revenue of Rs. 231 lakhs and profit on sale of property is Rs. 202 lakhs. The Company being a CIC continues to invest thesurplus funds in fi xed deposits and liquid funds. These investments stand at Rs. 8101lakhs (previous year Rs. 7053 lakhs). These surplus funds will be used for the businessoperations of the Company as and when required. During the year under review your Companymade investments of Rs. 17.50 lakhs in the equity shares of Kirloskar Management ServicesPrivate Limited (KMSPL). Pursuant to the said investment the Company's holding in KMSPLis 7.00 % as on 31 March 2020.

B. COMPANY PERFORMANCE:

During the year under review your Company earned an income of Rs. 8609 lakhs(previous year

Rs. 7792 lakhs).

In the year under review the Company received dividend of Rs. 2540 lakhs (previousyear Rs. 2774 lakhs) declared by the investee companies for the Financial Year 2018-2019as fi nal dividend. The Company also received interim dividend of Rs. 2294 lakhs(previous year Rs. 976 lakhs) declared by some of the investee companies in the year2019-2020. Consequently the total dividend infl ow during the year was Rs. 4834 lakhs(previous year Rs. 3750 lakhs) . The Profi t Before Tax is at Rs. 6492 lakhs (previousyear Rs. 5680 lakhs) mainly due to the receipt of additional dividend.

C. HUMAN RESOURCES:

As on 31 March 2020 the Company has 23 employees (previous year 18 employees) on itsroll including the Managing Director and the Executive Director. These include 7employees dedicated to the real estate business.

D. EMPLOYEES STOCK OPTIONS SCHEMES:

i) KIRLOSKAR INDUSTRIES LIMITED – EMPLOYEE STOCK OPTION PLAN 2017 (KIL ESOP 2017)

The Company had implemented the "Kirloskar Industries Limited – EmployeeStock Option Plan 2017" ("KIL ESOP 2017"). The total number of options thatcould be granted under the KIL ESOP 2017 was limited to 485000 (Four Lakhs Eighty-FiveThousand) stock options convertible into equivalent number of shares of Rs. 10 each fullypaid equity share capital of the Company.

The Nomination and Remuneration Committee had granted 281898 stock options at anexercise price of Rs. 900 per stock option under the KIL ESOP 2017 from time to time toidentifi ed employees. These identifi ed employees had voluntarily surrendered the stockoptions granted under the KIL ESOP 2017 due to the options being underwater. These stockoptions were cancelled and brought back to the aggregate options pool of 485000 (FourLakhs Eighty-Five Thousand) stock options.

In view of the above the members of the Company had passed Special Resolution throughPostal Ballot and approved the amendment / modifi cations in the KIL ESOP 2017 by way ofreduction the total number of stock options and total number of shares under the KIL ESOP2017 from 485000 (Four Lakhs Eighty-Five Thousand) to nil without any retrospectiveeffect on existing stock options granted under the KIL ESOP 2017. A certifi cate from G.D.Apte & Co. Chartered Accountants Statutory Auditors of the Company comfi rming thatthe KIL ESOP 2017 has been implemented in accordance with the SEBI (Share Based EmployeeBenefi ts) Regulations 2014 and in accordance with the resolution passed by the Companyat its Annual General Meeting held on 28 August 2017 would be placed before the member atthe ensuing Annual General Meeting. A copy of the same will also be available for theinspection at the Company's Registered Offi ce.

ii) KIRLOSKAR INDUSTRIES LIMITED – EMPLOYEES STOCK APPRECIATION RIGHTS PLAN 2019

The Members of the Company had passed Special Resolution through Postal Ballot andapproved ‘Kirloskar Industries Limited – Employees Stock Appreciation RightsPlan 2019' (‘KIL ESARP 2019') and authorised the Board to create offer and grantfrom time to time in one or more tranches such number of Equity Settled StockAppreciation Rights

(ESARs) to employees of the Company and its subsidiary company(ies) 485000 (FourLakhs Eighty-Five Thousand) equity shares of face value of Rs. 10 (Rupees Ten only) eachfully paid-up where one ESAR upon exercise shall entitle for lesser than one equity shareof the Company to be issued on such terms and conditions as may be determined inaccordance with the provisions of the KIL ESARP 2019 and in due compliance with theapplicable laws and regulations including SEBI (Share Based Employee Benefi ts)Regulations 2014 (Employees Benefi ts Regulations).

During the year under review the Company granted an aggregate of 470898 ESARsexercisable into not more than 485000 (Four Lakhs Eighty-Five Thousand) equity shares ofthe Company at face value of Rs. 10 (Rupees Ten only) each fully paid-up under the KILESARP 2019 to the employees of the Company. The KIL ESARP 2019 was administered by theNomination and Remuneration Committee of the Board of Directors. KIL ESARP 2019 is incompliance with the applicable provisions of the Companies Act 2013 and its RulesEmployees Benefi ts Regulations and other applicable Regulations if any. A certifi catefrom G. D. Apte & Co. Chartered Accountants Statutory Auditors of the Company confirming that the KIL ESARP 2019 has been implemented in accordance with Employees Benefi tsRegulations and in accordance with the Special Resolution passed by the Company throughPostal Ballot on 29 December 2019 would be placed before the members at the ensuingAnnual General Meeting. A copy of the same will also be available for the inspection atthe Company's Registered Offi ce.

Details of KIL ESOP 2017 and KIL ESARP 2019 as required under Rule 12 (9) of theCompanies (Share Capital and Debentures) Rules 2014 read with Regulation 14 of EmployeesBenefi ts Regulations as on 31 March 2020 are set out in ‘Annexure I' tothis Report and are available on the Company's website at www.kil.net.in.

E. CONCERNS AND THREATS:

As a practice of good corporate governance the Board of Directors has voluntarilyconstituted a Risk Management Committee (the Committee) to identify the risks mitigatethe same and monitor the development and deployment of risk mitigation action plans forthe businesses of the Company. The Company has deployed risk management process whichincludes risk identifi cation its assessment and its treatment mitigation monitoringand reviewing actions. The Company prioritises and manages the risks identifi ed throughits Risk Registers. The Committee regularly presents the risk assessment and mitigationprocedures adopted to assess the reliability of the risk management structure and efficiency of the process before the Audit Committee and the Board of Directors of the Companyat their respective Meetings. The Committee regularly meets every quarter discusses allthe mapped risks evaluates future risks and reviews the mitigation plan for the identified risks for all business segments.

F. PROSPECTS:

In the last month of Financial Year 2019-2020 the coronavirus (‘COVID-19')Pandemic developed rapidly into a global crisis forcing the State and Central Governmentsto enforce lock downs which may have uncertainties in the economic and business scenarioduring the current year.

IMPACT ON THE PERFORMANCE OF THE COMPANY DUE TO OUTBREAK OF COVID-19

The business of the Company during the Financial Year 2019-2020 was not affected. Incompliance with directives issued by the State and Central Governments from time to timethe offi ces of the Company remain closed from 23 March 2020.

To ensure safety and wellbeing of the employees the Company took adequate precautionsagainst COVID-19 which include work from home policy regular communication withemployees sharing on online learning programs online meetings travel restrictions andhealth advisories. Pursuant to the guidelines issued by the Governments our offi ces haveresumed with limited staff with effect from 8 June 2020. The following necessaryprecautions are being taken to ensure safety of the employees:

• Thermal screening at entry points.

• Sanitation materials at entry point.

• Masks for employees and visitors.

• Heightened cleaning and sanitisation of the offi ce premises at regularintervals.

• Ban on all but critical travel.

• Maintain social distancing at offi ce.

The Company expects to earn a lower revenue in the Financial Year 2020-2021. Howeverthe Company considers that the robust business processes in place and its rigorousmanagement of operating costs will enable it to emerge from the current environment in apositive position while protecting its employees' health its sound fi nancial balancesand the potential of its economic activities.

The analysis of the liquidity over the next 12 months has not identifi ed elements thatcould affect the going concern of the Company.

In the short term the Company is reducing discretionary expenditure and reallocatingresources. As part of these mitigation measures the Company is stopping or deferringvarious expenditures that will not be effective in the current environment.

WINDMILL OPERATIONS

Wind energy generation is largely depending on natural factors such as velocity ofwind continuity of the fl ow etc. and are unpredictable and beyond control. The businessis also largely impacted adversely by changes made by the Regulatory Authorities in theopen access policies. The Company had identifi ed third party consumer to sell brownenergy for the period from 1 April 2020 to 30 June 2020. However due to the outbreak ofCOVID-19 plants of the identifi ed third party consumer were shut down. To avoid lossesthe Company has decided to sell wind generated units for a period of 3 months from 1 April2020 to 30 June 2020 to Maharashtra State Electricity Distribution Company Limited.

REAL ESTATE BUSINESS

Various activities have been undertaken and completed and approvals obtained forfurther development of land parcels at Kothrud. We are currently assessing impact ofCOVID-19 on the real estate business and further gathering information about the realestate landscape ecosystem demand tenancy mix along with assessment of the capital costof the business.

G. INTERNAL CONTROLS SYSTEM AND THEIR ADEQUACY:

The Company has adequate internal controls system to ensure operational effi ciencyaccuracy and promptness in fi nancial reporting and compliance of various laws andregulations. The internal controls system is supported by the internal audit process. AnInternal Auditor has been appointed for this purpose. The Audit Committee of the Boardreviews the Internal Audit Report and the adequacy and effectiveness of internal controlsperiodically.

H. CAUTIONARY STATEMENT:

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 laws andregulations. Actual results may differ materially from those either expressed or implied.

I. SEBI REGULATIONS AND LISTING FEES:

The annual listing fees for the year under review have been paid to BSE Limited andNational Stock Exchange of India Limited where your Company's shares are listed.

J. DETAILS OF MATERIAL SUBSIDIARY:

In terms of the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 Kirloskar Ferrous Industries Limited(KFIL) is a material subsidiary of the Company in which the Company holds 51.26% of itstotal shareholding.

During the year under review KFIL has not sold / disposed off and leased assets morethan 20% of its assets.

K. SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS:

As on 31 March 2020 the Company has one subsidiary i.e. Kirloskar Ferrous IndustriesLimited (KFIL).

The Consolidated Financial Statements of the Company and its subsidiary prepared inaccordance with IND AS 110 issued by the Institute of Chartered Accountants of Indiaforms part of this Annual Report. A statement containing the salient features of theFinancial Statement of the subsidiary company is attached to the Financial Statements ofthe Company in Form AOC-1. Pursuant to the provisions of Section 136 of the Companies Act2013 the Financial Statements along with relevant documents of the Company and itssubsidiary are available on the Company's website viz. www.kil.net.in.

The Financial Statements of the subsidiary and related detailed information will bekept for inspection by any member at the Registered Offi ce of the Company and will alsobe made available to the members on demand at any point of time.

BRIEF HIGHLIGHTS OF BUSINESSES OF SUBSIDIARY COMPANY:

KIRLOSKAR FERROUS INDUSTRIES LIMITED:

Kirloskar Ferrous Industries Limited (KFIL) is in the business of manufacturing of ironcastings and has its manufacturing facilities at Bevinahalli village in Karnataka andSolapur in Maharashtra.

The Board of Directors of KFIL declared an interim dividend of Rs. 2 (40%) per equityshare at its meeting held on 5 March 2020. The Board has not proposed any further dividendand the payment of interim dividend shall be the fi nal dividend for the Financial Year2019-2020. During the year under review KFIL achieved net sales of Rs. 184966 lakhs(previous year 215915 lakhs).

Profi t Before Tax (PBT) for the year under review was higher stood at Rs. 15618lakhs as compared to Rs. 14671 lakhs of previous year after providing for depreciationand amortisation. KFIL sold 358146 MT of Pig Iron valued at Rs. 107000 lakhs duringthe Financial Year 2019-2020 as compared to 358558 MT of Pig Iron valued at Rs.117572 lakhs in the previous year.

KFIL sold 78663 MT castings aggregating to Rs. 73421 lakhs during the Financial Year2019-2020 as compared to 97268 MT castings aggregating to Rs. 92311 lakhs in theprevious year.

The demand for Pig Iron during the fi rst half of FY 2019-2020 was low from Auto andPump sector in Southern and Western region and KFIL took a strategic decision to sell thePig Iron in the markets where the demand for the product was good. Though the demand forthe Pig Iron was low in the fi rst half of FY 2019-2020 it improved in the second half ofFY 2019-2020. Even though the prices of input materials increased in the last quarter ofFY 2019-2020 the Company was able to pass on the increasing costs to the customers andthereby improve the performance.

During the year under review KFIL took steps towards reducing the coke consumption andimproving the power generation to bring the reduction in the manufacturing cost of PigIron. Sale of castings were on low till end of October 2019 due to weak demand both inTractor and Auto Industry (i.e. both in utility vehicles and commercial vehicles). FromNovember 2019 onwards there was a gradual improvement in the demand for the castings fromboth Tractor Industry and Auto Industry. During the period of sluggishness KFIL workedwith all its customers to increase the share of business from the existing products andalso to develop new parts. From January 2020 onwards demand for castings furtherincreased from all the customers. All the castings of Cylinder Block and Head supplied toAuto Industry were smoothly migrated to BS-VI variant. KFIL commissioned 2 lakhs MT cokeoven project on 31 March 2020. Operation of this coke oven at its full capacity willenable KFIL in reducing the cost of coke. KFIL has commissioned 20 MW power plant (usingwaste gas generated from the coke oven plant) in June 2020. Upon commissioning of the saidpower plant generated power would be captively used at Koppal Plant and this facilitywould achieve the self-suffi ciency in power requirement resulting in reduction of powercost. In view of Global nature of the pandemic COVID-19 and the uncertainties arround itsseverity and duration of the impact it is diffi cult to determine the potentian impact onthe performance of the Company in the future as a part of mitigation measure the Companyhas stopped and deffered spends that will not be essentials in the current environment andhas been managing working capital effectively.

L. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

There are no signifi cant changes i.e. change of 25% or more as compared to theimmediately previous Financial Year in key fi nancial ratios.

M. RETURN ON NET WORTH:

Details of change in Return on Net Worth as compared to the immediately previousFinancial Year as follows:

Sr. No. Particulars Ratio as on 31 March 2020 Ratio as on 31 March 2019 % of Change Explanations
1 Net worth 7.10 4.11 72 Refer Note No. 1

Note:

1. Return on net worth has increased from 4.11 to 7.10 on account of diminution inmarket value of investment from Rs. 93335 lakhs as on 31 March 2019 to Rs. 54039 lakhsas on 31 March 2020.

V. PARTICULARS OF INFORMATION FORMING PART OF THE BOARD'S REPORT PURSUANT TO SECTION134 OF THE COMPANIES ACT 2013 RULE 8 OF THE COMPANIES (ACCOUNTS) RULES 2014 AND RULE 5OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014:

1. EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT-9 are annexedas ‘Annexure II ' to this Report.

The Annual Return fi led with the Ministry of Corporate Affairs (MCA) for theFinancial Year 2018-2019 is available on the website of the Company viz. www.kil.net.inand the Annual Return for the Financial Year 2019-2020 will be made available on thewebsite of the Company once it is fi led with the MCA.

2. NUMBER OF MEETINGS OF THE BOARD:

During the year under review 6 Board Meetings were convened and held the details ofwhich form part of the Report on Corporate Governance. The intervening gap between theMeetings was within the period prescribed under the Act.

3. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirements under Section 134 (5) of the Companies Act 2013 inrespect of Directors' Responsibility Statement your Directors state that: a) in thepreparation of the Annual Financial Statements for the year ended 31 March 2020 theapplicable accounting standards had been followed and there were no material departures;b) accounting policies as mentioned in Note No. 4 of the Notes forming part of theFinancial Statements have been selected and applied consistently. Further judgments andestimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31 March 2020 and of the Profi t of theCompany for the year ended on that date; c) proper and suffi cient care has been taken forthe maintenance of adequate accounting records in accordance with the provisions of theAct for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; d) the Annual Financial Statements have been prepared on a goingconcern basis; e) proper internal fi nancial controls were in place and that the internalfi nancial controls were adequate and were operating effectively; and f) proper systems toensure compliance with the provisions of all applicable laws were in place and wereadequate and operating effectively.

4. A STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS:

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149 (6) of the Companies Act 2013 and Rulesthereunder including amendments thereto and Regulation 16 (1) (b) and 25 (8) of SEBI(Listing Obligations and Disclosure Requirements) Regulation 2015 including amendmentsthereto and also confi rmed that they have complied with the Code for IndependentDirectors prescribed in Schedule IV to the Act. Further pursuant to Sub-rule (1) and (2)of Rule 6 of the Companies (Appointment and Qualifi cations of Directors) Rules 2014 andamendments thereto all Independent Directors confi rmed that they have enrolled theirname in the data bank with the Institute of Corporate Affairs New Delhi India withinprescribed time period.

The Company has laid down a Code for the Board of Directors and Senior Management ofthe Company (Code of Conduct). The Code of Conduct is available on the Company's websiteviz. www.kil.net.in.

All the Board Members and Senior Management Personnel of the Company have affi rmedcompliance with the Code of Conduct.

5. A STATEMENT REGARDING OPINION OF THE BOARD WITH REGARD TO INTEGRITYEXPERTISE AND EXPERIENCE (INCLUDING THE PROFICIENCY) OF THE INDEPENDENT DIRECTORSAPPOINTED / RE-APPOINTED DURING THE YEAR:

The Board of Directors considered the valuable contribution made by Mr. TejasDeshpande Independent Director and that he possesses the requisite expertise andexperience (including the profi ciency) and he is a person of integrity and repute.Accordingly the Board approved his reappointment as an Independent Director for thesecond term of 5 years subject to approval of the members of the Company.

6. COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:

The Board has on the recommendation of the Nomination and Remuneration Committeeadopted a policy for selection and appointment of Directors Key Managerial Personnel andSenior Management Personnel and their remuneration. The Nomination and Remuneration Policyis available on the website of the Company viz. www.kil.net.in.

7. AUDITORS: a. Statutory Auditors:

G. D. Apte & Co. Chartered Accountants (Firm Registration Number 100515W) Punewere appointed as the Statutory Auditors of the Company under Section 139 of the CompaniesAct 2013 to hold the offi ce for a second term of fi ve years from the conclusion of theAnnual General Meeting (AGM) held on 11 August 2016 till the conclusion of the AGM of theCompany to be held in the year 2021.

The Company has received a certifi cate from the Statutory Auditors to the effect thatthey are fulfi lling requirements prescribed under the provisions of Section 141 of theCompanies Act 2013.

b. Cost Auditors:

Pursuant to the Companies (Cost Records and Audit) Rules 2014 dated 31 December 2014the Company was not required to audit cost records relating to Electricity Industry(Windmills) for the Financial Year 2019-2020.

c. Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and Regulation 24A ofthe SEBI (Listing Obligation and Disclosure Requirements) the Regulations 2015 theCompany had appointed Mr. Mahesh J. Risbud Practicing Company Secretary (FCS 810 CP185) Pune to undertake the Secretarial Audit of the Company. The Report of theSecretarial Audit is annexed as ‘Annexure III' to this Report.

Mr. Mahesh J. Risbud Practising Company Secretary Pune has submitted SecretarialCompliance Report as laid down in SEBI Circular CIR/CFD/CMD1/27/2019 dated 8 February2019 and has also confi rmed that the Company has complied with all applicable SEBIRegulations and circulars / guidelines issued thereunder for the Financial Year2019-2020.

8. MAINTENANCE OF COST RECORDS:

Pursuant to the Companies (Cost Records and Audit) Rules 2014 dated 31 December 2014the Company was not required to maintain cost records relating to Electricity Industry(Windmill) in Form CRA - 1 for the Financial Year 2019-2020. However the Company hasvoluntarily maintained cost records relating to Windmills in Form CRA – 1 for theFinancial Year 2019-2020.

9. EXPLANATION OR COMMENTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS:

There are no qualifi cations reservations or adverse remarks or disclaimer made by theStatutory Auditor in their Audit Report or by the Practising Company Secretary in theSecretarial Audit Report for the year ended 31 March 2020.

10. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013:

Your Company has not granted any loan or guarantee during the year.

During the year under review the Company has invested of Rs. 17.50 lakhs in equitycapital of Kirloskar Management Services Private Limited.

11. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO INSUB-SECTION (1) OF SECTION 188 OF THE COMPANIES ACT 2013:

Pursuant to the provisions of Section 134 of the Companies Act 2013 read with Rule 8(2) of the Companies (Accounts) Rules 2014 the particulars of all contracts orarrangements entered into by the Company with related parties have been done at arm'slength and are in the ordinary course of business. Hence no particulars are beingprovided in Form AOC – 2. Related party disclosures as per the Indian AccountingStandard 24 (Ind AS 24) have been provided in Note No. 43 to the Financial Statements.

12. STATE OF COMPANY'S AFFAIRS:

Discussion on state of Company's affairs has been covered in the Management Discussionand Analysis Report.

13. AMOUNTS PROPOSED TO BE CARRIED TO RESERVES:

The particulars of the amounts proposed to be carried to reserves have been covered aspart of the fi nancial performance of the Company.

14. MATERIAL CHANGES AND COMMITMENTS BETWEEN THE DATE OF BALANCE SHEET AND THE DATE OFREPORT:

There have been no material changes and commitments affecting the fi nancial positionof the Company which have occurred between the end of the Financial Year of the Company towhich the Financial Statements relate and the date of this Report.

15. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:A. Conservation of Energy and Technology Absorption:

The Company has no particulars to report regarding conservation of energy andtechnology absorption as required under Section 134 (3) (m) of the Companies Act 2013read with Rules thereunder.

B. Foreign exchange earnings and outgo:

(Rs. in lakhs)
Particulars Amount
Foreign exchange earnings Nil
Foreign exchange Outgo Nil

16. RISK MANAGEMENT POLICY:

The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identifi ed are systematically addressedthrough risk mitigating actions on a continuing basis. These are discussed at the meetingsof the Audit Committee and the Board of Directors of the Company from time to time.

17. CORPORATE SOCIAL RESPONSIBILITY:

The Company has been carrying out Corporate Social Responsibility (CSR) activities.These activities carried out in terms of Section 135 read with Schedule VII of theCompanies Act 2013 and the Companies (CSR Policy) Rules 2014. Annual Report on CSRactivities includes details about the CSR policy developed and implemented by the Company.CSR initiatives taken during the year is annexed as ‘Annexure IV' to thisReport.

18. BOARD EVALUATION:

Pursuant to the provisions of the Companies Act 2013 and Regulation 17 (10) of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout performance evaluation of its own performance and that of its committees andindividual Directors. Performance evaluation has been carried out as per the criteriaprescribed by the Nomination and Remuneration Committee.

19. PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES ASSOCIATES ANDJOINT VENTURE COMPANIES:

Name and % Holding Particulars 2019-2020
Registered Offi ce of the Subsidiary Amount
Rs. ( in lakhs)
Company
Kirloskar Ferrous 51.26 Total income 186530
Industries Profi t before tax 15618
Limited 13
Tax expenses 4381
Laxmanrao
Kirloskar Road Profi t for the year 11237
Khadki Other comprehensive income for the year (125)
Pune 411 003
Total comprehensive income for the period 11112
Profi t brought forward from previous year 33463
Final Dividend (2018-2019) paid on equity shares (1377)
Tax on above Dividend (283)
Interim dividend paid on equity shares (2756)
Tax on above Dividend (567)
Profi t available for appropriation 39592
Transfer to General Reserves (500)
Balance carried to surplus in the 39092
Statement of Profi t and Loss
Name and % Holding Particulars 2019-2020
Registered Offi ce of the Associate Amount
Rs. ( in millions)
Company
# Kirloskar 23.91 Total income 21224
Brothers Limited Total expenditure 19960
Yamuna Survey
No. 98/3 to 7 Profi t before exceptional items and tax- 1264
Plot No. 3 Baner ation
Pune 411 045 Profi t before taxation 1200
Provision for tax (including Deferred Tax) 408
Net profi t 792
Other comprehensive income (7)
Balance of Profi t / (Loss) from previous year Not available
Dividend paid on equity shares Not available
Tax on above dividend Not available
Profi t available for appropriation Not available
Transfer to General Reserve Not available
Balance carried to surplus in the State- Not available
ment of Profi t and Loss

Note:

# The Company does not have signifi cant infl uence on Kirloskar Brothers Limited (KBL)as it does not participate in the management and / or fi nancial decisions of KBL. As suchKBL is not an Associate Company of the Company under the IND AS 24 and as such its financials are not included in the Consolidated Financial Statements of the Company. Hencethe aforesaid information is obtained from the website of the KBL for quarter and yearended on 31 March 2020 approved by its Board on 5 June 2020 and published on the websiteof the stock exchanges on 5 June 2020.

20. CHANGE IN THE NATURE OF BUSINESS IF ANY:

In Financial Year 2019-2020 there was no change in the nature of business of theCompany.

21. DETAILS OF APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:Directors appointed / re-appointed during the year:

Name of Director Designation Terms of Appointment
Mr. Atul Kirloskar * Non-Executive Director Re-appointed w.e.f. 8 August 2019 subject to retirement by rotation.
Mr. Anil Alawani * Non-Executive Director Re-appointed w.e.f. 8 August 2019 subject to retirement by rotation.

* Mr. Atul Kirloskar and Mr. Anil Alawani retired by rotation and were re-appointed inthe Annual General Meeting held on 8 August 2019.

Key Managerial Personnel appointed during the year:

During the year under review Mr. Umesh Shastry Chief Financial Offi cer of theCompany has been appointed as Key Managerial Personnel of the Company.

22. DIRECTORS AND KEY MANAGERIAL PERSONNEL RESIGNED DURING THE YEAR 2019-2020:

During the year under review there has been no change in Directors of the Company.

Mrs. Jasvandi Deosthale resigned as Chief Financial Offi cer of the Company witheffect from 16 May 2019.

23. DIRECTORS PROPOSED TO BE APPOINTED / RE-APPOINTED AT THE ENSUING ANNUAL GENERALMEETING:

Mr. Mahesh Chhabria and Mr. Nihal Kulkarni who retire by rotation at the ensuing AnnualGeneral Meeting and being eligible offer themselves for re-appointment.

The Company has also received the requisite disclosures / declarations from Mr. MaheshChhabria and Mr. Nihal Kulkarni.

Upon the recommendation of the Nomination and Remuneration Committee the Board ofDirectors has sought the approval of the Members for the re-appointment of Mr. TejasDeshpande as an Independent Director to hold offi ce for a second term of 5 (fi ve)consecutive years with effect from 28 August 2020. In the opinion of the Board ofDirectors Mr. Tejas Deshpande fulfi lls the conditions specifi ed in the Companies Act2013 and Rules thereunder and also possess requisite expertise and experience (includingthe profi ciency) and he is a person of high integrity and repute so as to enable theBoard to discharge its functions and duties effectively and he is independent of themanagement.

Pursuant to Regulation 17 (1A) of the SEBI (Listing Obligations and DisclosureRequirements Regulations 2015 and upon the recommendation of the Nomination andRemuneration Committee the Board of Directors has sought the approval of the Members forcontinuation of directorship of Mr. Anil Alawani as a Non-Executive Non-IndependentDirector after attainment of age of seventy fi ve years.

The brief resumes and other details relating to Directors who are proposed to bere-appointed as required to be disclosed under Regulation 36 (3) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 form part of the Statementsetting out material facts annexed to the Notice of the Annual General Meeting. Theresolutions seeking approval of members for the re-appointment of these Directors havebeen incorporated in the Notice of the forthcoming Annual General Meeting of the Company.

24. NAMES OF THE COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES JOINTVENTURES OR ASSOCIATE COMPANIES DURING THE YEAR:

None

25. DETAILS RELATING TO DEPOSITS COVERED UNDER CHAPTER V OF THE COMPANIES ACT 2013:

None

26. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:

To the best of our knowledge the Company has not received any such order from theRegulators Courts or Tribunals during the year which may impact the going concern statusor the Company's operation in future.

27. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THEFINANCIAL STATEMENTS:

The Company has developed a strong two-tier internal control framework comprisingentity level controls and process level controls. The entity level controls of the Companyinclude elements such as defi ned Code of Conduct Whistle Blower Policy / VigilMechanism rigorous management review and Management Information System (MIS) and stronginternal audit mechanism. The process level controls have been ensured by implementingappropriate checks and balances to ensure adherence to Company policies and procedureseffi ciency in operations and also reduce the risk of frauds. During the year underreview the Company appointed Ernst & Young (EY) to prepare Standard OperatingProcedures (SOPs) and Chart of Authority (COA) for ensuring internal controls andreporting mechanism with respect to real estate business. These SOPs have been put inplace in order to ensure a robust internal control mechanism.

Regular management oversight and rigorous periodic testing of internal controls makesthe internal controls environment strong at the Company. The Audit Committee along withthe Management oversees results of the internal audit and reviews implementation on aregular basis.

28. COMPOSITION OF THE AUDIT COMMITTEE:

The composition of the Audit Committee has been reported in the Report on CorporateGovernance annexed to this Report.

VI. INFORMATION FORMING PART OF THE BOARD'S REPORT PURSUANT TO RULE 5 OF THE COMPANIES(APPOINTMENT AND REMUENRATION OF MANAGERIAL PERSONNEL) RULES 2014:

The relevant information pursuant to Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed as ‘Annexure V'to this Report.

The particulars of top ten employees pursuant to the aforesaid Rules form part of thisReport. In terms of Section 136 (1) of the Companies Act 2013 the Board's Report isbeing sent to the members without this Annexure. The members interested in obtaining acopy of this Annexure may write to the Company Secretary at the Company's Registered Office.

VII. VIGIL MECHANISM:

The Company has a Whistle Blower Policy / Vigil Mechanism (the Policy) to deal withinstances of fraud unethical behavior etc. The Policy provides a mechanism for Directorsand employees of the Company and other persons dealing with the Company to report genuineconcerns including but not limited to unethical behavior actual or suspected fraud orviolation of the Company's Code of Conduct for Board of Directors and Senior Management orethics policy or leakage of Unpublished Price Sensitive Information (UPSI) by any personwho is in possession of UPSI to any other person in any manner whatsoever except asotherwise permitted under the SEBI (Prohibition of Insider Trading) Regulations 2015 orany other instance to the Chairman of the Audit Committee of the Board of Directors of theCompany. The Policy is placed on the Company's website viz. www.kil.net.in.

VIII. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013:

During the year under review the Company has complied with the provisions relating tothe constitution of Internal Committee (the Committee) under the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013. The Committeecomprises four members including one external member. During the year under review fourmeetings of the Committee were held on 7 May 2019 29 July 2019 16 October 2019 and 20January 2020.

The Company has in place a Policy for Prevention of Sexual Harassment at workplace.This would inter alia provide a mechanism for the resolution settlements orprosecution of acts or instances of sexual harassment at workplace and to ensure that allemployees are treated with respect and dignity. The details of complaints fi led disposedoff and pending during the Financial Year pertaining to sexual harassment is provided inthe Business Responsibility Report of this Report.

IX. CASH FLOW:

A Cash Flow Statement for the year ended 31 March 2020 is attached to the BalanceSheet as a part of the Financial Statements.

X. COMPLIANCES WITH RESPECT TO APPLICABLE SECRETARIAL STANDARDS:

During the year under review the Company has complied with all the applicablesecretarial standards.

XI. CORPORATE GOVERNANCE:

In terms of Regulation 34 (3) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a Report on the Corporate Governance along with theCompliance Certifi cate issued by the Statutory Auditors of the Company is attached andforms part of the Annual Report.

XII. REMUNERATION RECEIVED BY THE MANAGING DIRECTOR / EXECUTIVE DIRECTOR FROMSUBSIDIARY COMPANY:

Sr. No. Name of Director Designation Remuneration received from Kirloskar Ferrous Industries Limited Subsidiary
Company in Rs.
1 Mr. Mahesh Chhabria Managing Director 7.50 lakhs
2 Ms. Aditi Chirmule Executive Director Nil

XIII. BUSINESS RESPONSIBILITY REPORT (BRR):

The Regulations mandate the inclusion of the BRR as part of the Annual Report for top1000 listed entities based on market capitalisation. In compliance with the Regulationsthe Company has integrated BRR disclosures into the Annual Report.

ACKNOWLEDGEMENTS:

Your Directors would like to place on record their appreciation of the contributionmade and support provided to the Company by the members employees and bankers during theyear under Report.

ANNEXURE I TO THE BOARD'S REPORT

DISCLOSURES PURSUANT TO RULE 12 (9) OF THE COMPANIES (SHARE CAPITAL AND DEBENTURES)RULES 2014 READ WITH REGULATION 14 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)(SHARE BASED EMPLOYEE BENEFITS) REGULATIONS 2014 READ WITH SEBI CIRCULAR DATED 16 JUNE2015 ON ESOP / ESAR DISCLOSURS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2020

A. Relevant disclosures in terms of the ‘IND AS 102 – Share - Based Payments'notifi ed under Section 133 of the Companies Act 2013 (the Act) read with the Companies(Indian Accounting Standards) Rules 2015 as amended:

All the relevant disclosures in terms of the ‘IND AS 102 – Share – BasedPayments' notifi ed under Section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 are made in the Financial Statements.

B. Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of optionscalculated in accordance with ‘IND AS 33 - Earnings Per Share':

Diluted EPS of the Company is Rs. 61.23.

C. Details related to Employees Stock Options Schemes (ESOSs) of the Company:

i. Description of ESOSs that existed at any time during the year:

Sr. No. Particulars Kirloskar Industries Limited - Employee Stock Option Plan 2017 (KIL ESOP 2017) Kirloskar Industries Limited – Employees Stock Appreciation Rights Plan 2019 (KIL ESARP 2019)
a. Date of members' approval 20 August 2017 and further amended on 11 August 2018. The members of the Company had passed Special Resolution through Postal Ballot on 29 December 2019.
b. c. Date of grant Total number of ESOPS / ESARs approved • 1 November 2017 • 25 October 2018 485000 (Four Lakhs Eighty- Five Thousand). 30 January 2020 485000 (Four Lakhs Eighty-Five Thousand) ESARs where one ESAR upon exercise shall entitle for lesser than one equity share of the Company.
d. Vesting Requirement a. For vesting of options a. For vesting of ESARs
There shall be a minimum period of one (1) year between grant of options and vesting of options. The options would vest over a maximum period of three (3) years. The ESARs granted under the KIL ESARP 2019 would vest after a minimum period of one (1) year but not later than a maximum period of four (4) years from the Grant Date of such ESARs.
Based on being in continued employment with the Company and if the Nomination and Remuneration Committee feels necessary in certain or in all cases specify certain performance parameters i.e. corporate individual or combination subject to which options will vest. Based on being in continued employment with the Company or subsidiary company(ies).
b. For exercise of options b. For exercise of ESARs
Three (3) years from the Five (5) years from the date of
date of vesting. vesting.
e. Exercise price or pricing formula Rs. 900 per option Rs. 500 per ESAR
f. Source of shares Primary Primary
g. Variation in terms of options Nil Nil

ii. Methods to account for KIL ESOP 2017 and KIL ESARP 2019:

The Company uses Fair Value Method of accounting for ESOPs and ESARs which is inaccordance with IND AS 102.

iii. The difference between the employee compensation cost computed using the intrinsicvalue of options and the employee compensation cost that shall have been recognised if ithad used the fair value of the options:

Not applicable. iv. Options movement during the year:

Particulars KIL ESOP 2017 KIL ESARP 2019
Number of ESOPs / ESARs outstanding at the beginning of the period (Nos.) 320730 Nil
Number of ESOPs / ESARs granted during the year Nil 470898
Number of ESOPs / ESARs cancelled during the year during year 2 81898 Nil
Number of ESOPs / ESARs forfeited / lapsed during year 38832 Nil
Number of ESOPs / ESARs vested during the year Nil Nil
Number of ESOPs / ESARs exercised during the year Nil Nil
Number of shares arising as a result of exercise of ESOPs Nil Nil
/ ESARs
Money realised by exercise of ESOPs / ESARs (INR) if Nil Nil
scheme is implemented directly by the Company
Number of ESOPs / ESARs outstanding at the end of the Nil 470898
year
Number of ESOPs / ESARs exercisable at the end of the Nil Nil
year

v. Weighted-average exercise price and weighted-average fair value of ESOPs / ESARsgranted during the year where exercise price is less than the market price on the date ofgrant:

Particulars KIL ESOP 2017 in Rs. KIL ESARP 2019 in Rs.
Weighted-average exercise price NA 500
Weighted-average Fair Value NA 263.68

vi. Employee wise details (name of employee designation number of ESOPs / ESARsgranted) during the Financial Year 2019-2020 to: a) Senior Managerial Personnel:

Sr. No. Name of Employee Designation No. of ESOPs Granted During the Year No. of ESARs Granted During the Year
1. Mr. Mahesh Chhabria Managing Director Nil 231000
2. Ms. Aditi Chirmule Executive Director Nil 48540
3. Mr. Umesh Shastry Chief Financial Offi cer Nil 36000
4. Mrs. Ashwini Mali Company Secretary Nil 24270
5. Mr. Lokesh Gupta Vice President – Projects Nil 36000
6. Mr. Chandrahas Charekar Vice President – Strategy and Coordination Nil 36000
7. Mr. Jagdish Purandare Head – Human Resource Nil 18000
Total Nil 429810

Non-Executive Director:

Sr. No. Name of Employee Designation No. of ESOPs Granted During the Year No. of ESARs Granted During the Year
1. Mr. Vinesh Kumar Jairath Non-Executive Director Nil 33000
Total Nil 33000

b) Any other employee / Non – Executive Director who receives a grant in any oneyear of ESARs amounting to 5% or more of ESARs granted during that year:

Sr. No. Name of Employee / Non-Executive Director Designation No. of ESOPs Granted During the Year No. of ESARs Granted During the Year
1. Mr. Mahesh Chhabria Managing Director Nil 231000
2. Mr. Aditi Chirmule Executive Director Nil 48540
3. Mr. Umesh Shastry Chief Financial Offi cer Nil 36000
4. Mr. Ashwini Mali Company Secretary Nil 24270
5. Mr. Lokesh Gupta Vice President – Projects Nil 36000
6. Mr. Chandrahas Charekar Vice President – Strategy and Coordination Nil 36000
7. Mr. Vinesh Kumar Jairath Non-Executive Director Nil 33000

c) Identifi ed employees who were granted ESARs during any one year equal to orexceeding 1% of the issued capital (excluding outstanding warrants and conversions) of theCompany at the time of grant:

Sr. No. Name of Employee / Non-Executive Director Designation No. of ESOPs Granted During the Year No. of ESARs Granted During the Year
1. Mr. Mahesh Chhabria Managing Director Nil 231000
(2.38%)

vii. Description of the method and signifi cant assumption used during the year toestimate the fair value of ESARs including the following information: a) Theweighted-average values of share price exercise price expected volatility expectedoption life expected dividends the risk-free interest rate and any other inputs to themodel; b) The method used and the assumptions made to incorporate the effects of expectedearly exercise; c) How expected volatility was determined including an explanation of theextent to which expected volatility was based on historical volatility; and d) Whether andhow any other features of the ESARs grant were incorporated into the measurement of fairvalue such as market condition.

Please refer Note No. 44 forming parts of the Financial Statements.

FORM NO. MGT – 9 EXTRACT OF ANNUAL RETURN

AS AT FINANCIAL YEAR ENDED 31 MARCH 2020

[Pursuant to Section 92 (3) of the Companies Act 2013 and Rule 12 (1) of the Companies(Management and Administration) Rules 2014]

I. REGISTRATION AND OTHER DETAILS:

i CIN L70100PN1978PLC088972
ii Registration date 13 June 1978
iii Name of the Company Kirloskar Industries Limited
iv Category / Sub-Category of the Company Public Company / limited by shares
v Address of the Registered Offi ce and contact details Offi ce No. 801 8th Floor Cello Platina Fergusson College Road Shivajinagar
Pune 411 005
Tel.: +91(20) 2970 4374
Fax: +91(20) 2970 4374
E mail: investorrelations@kirloskar.com
Website: www.kil.net.in
vi Whether listed Company Yes
vii Name address and contact details of the Registrar and Share Transfer Agent if any Link Intime India Private Limited ‘Akshay' Complex Block No. 202 2nd Floor Near Ganesh Temple Off. Dhole Patil Road
Pune 411 001
Tel.: +91(20) 2616 1629 / 2616 0084
Fax: +91(20) 2616 3503
E mail: pune@linkintime.co.in

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY:

All the business activities contributing 10% or more of the total turnover of theCompany stated below:

Sr. No. Name and Description of Main Products / Services NIC Code of the Product / Service % to Total Turnover of the Company
1 Windmill 400 4%

III. PARTICULARS OF HOLDING SUBSIDIARY AND ASSOCIATE COMPANIES:

Sr. No. Name and Address of the Company CIN / GLN Holding / Subsidiary / Associate % of Shares Held Applicable Section
1. Kirloskar Ferrous Industries L27101PN1991PLC063223 Subsidiary 51.26 2 (87) (ii)
Limited 13 Laxmanrao
Kirloskar Road Khadki
Pune 411 003
2. Kirloskar Brothers Limited L29113PN1920PLC000670 Associate 23.91 2 (6)
Yamuna Survey No. 98 / 3
to 7 Plot No. 3 Baner
Pune 411045

IV. SHAREHOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity):i) Category-wise Share Holding:

Category of Shareholders

No. of Shares Held at the Beginning of the Year

No. of Shares Held at the End of the Year

Demat Physical Total % of Total Shares Demat Physical Total % of Total Shares % Change During the Year
A. Promoters
(1) Indian
a. Individual / Hindu 7051534 Nil 7051534 72.63 7051534 Nil 7051534 72.63 Nil
Undivided Family
b. Central Government Nil Nil Nil Nil Nil Nil Nil Nil Nil
c. State Government(s) Nil Nil Nil Nil Nil Nil Nil Nil Nil
d. Bodies Corporates 46644 Nil 46644 0.48 46644 Nil 46644 0.48 Nil
e. Bank / Financial Nil Nil Nil Nil Nil Nil Nil Nil Nil
Institutions
f. Any Other Nil Nil Nil Nil Nil Nil Nil Nil Nil
Sub-total (A)(1):- 7098178 Nil 7098178 73.11 7098178 Nil 7098178 73.11 Nil
a. Non Resident Indians – Nil Nil Nil Nil Nil Nil Nil Nil Nil
Individuals
b. Other – Individuals Nil Nil Nil Nil Nil Nil Nil Nil Nil
c. Bodies Corporates Nil Nil Nil Nil Nil Nil Nil Nil Nil
d. Banks / Financial Nil Nil Nil Nil Nil Nil Nil Nil Nil
Institutions
e. Any Other Nil Nil Nil Nil Nil Nil Nil Nil Nil
Sub-total (A)(2):- Nil Nil Nil Nil Nil Nil Nil Nil Nil
Total Shareholding of 7098178 Nil 7098178 73.11 7098178 Nil 7098178 73.11 Nil
Promoter (A) = (A)(1) + (A)(2)
B. Public Shareholding
1. Institutions
a. Mutual Funds 125 2600 2725 0.03 125 Nil 125 0.00 (0.03)
b. Banks / Financial 318358 2862 321220 3.31 318376 2862 321238 3.31 Nil
Institutions
c. Central Government Nil Nil Nil Nil Nil Nil Nil Nil Nil
d. State Government(s) Nil Nil Nil Nil Nil Nil Nil Nil Nil
e. Venture Capital Funds Nil Nil Nil Nil Nil Nil Nil Nil Nil
f. Insurance Companies 118176 Nil 118176 1.22 118176 Nil 118176 1.22 Nil
g. Foreign Institutional 961205 125 961330 9.90 961205 125 961330 9.90 Nil
Investors
h. Foreign Venture Capital Nil Nil Nil Nil Nil Nil Nil Nil Nil
Funds
i. Others (Specify) Nil Nil Nil Nil Nil Nil Nil Nil Nil
Sub-total (B) (1):- 1397919 5587 1403506 14.46 1397882 2987 1400869 14.43 (0.03)
2. Central Govt. / State Govt. 55 Nil 55 0.00 Nil Nil Nil Nil Nil
/ President of India
Sub-total (B) (2):- 55 Nil 55 0.00 Nil Nil Nil Nil Nil
3. Non – Institutions
a. Body Corporates
i._ Indian 73209 958 74167 0.76 71247 713 71960 0.74 (0.02)
ii. Overseas Nil Nil Nil Nil Nil Nil Nil Nil Nil
b. Individuals
i. Individual shareholders holding nominal share capital up to Rs. 1 Lakh 809237 123232 932469 9.60 810061 108499 918560 9.46 (0.14)
ii. Individual shareholders holding nominal share capital in excess of Rs. 1 Lakh 80524 Nil 80524 0.83 91548 Nil 91548 0.94 0.11
c. NBFC registered with RBI 1260 Nil 1260 0.01 860 Nil 860 0.01 Nil
d. Others (Specify)
i. IEPF 38738 Nil 38738 0.40 45246 Nil 45246 0.47 0.07
ii. Clearing members 3430 Nil 3430 0.04 931 Nil 931 0.01 (0.03)
iii. NRI (Repatriate) 8233 2869 11102 0.11 11238 2869 14107 0.14 0.03
iv. NRI (Non –Repatriate) 12399 Nil 12399 0.13 13872 Nil 13872 0.14 0.01
v. Trusts 2236 Nil 2236 0.02 1524 Nil 1524 0.02 Nil
vi. Foreign Nationals 88 Nil 88 0.00 88 Nil 88 0.00 0.00
vii. HUF 50522 Nil 50522 0.52 50876 Nil 50876 0.52 Nil
Sub-total (B)(3):- 1079876 127059 1206935 12.43 1097491 112081 1209572 12.46 0.03
Total Public Shareholding (B) = 2477795 132646 2610441 26.89 2495373 115068 2610441 26.89 Nil
(B)(1) + (B)(2) + (B)(3)
C. Shares held by custodian for GDRs and ADRs Nil Nil Nil Nil Nil Nil Nil Nil Nil
Grand Total (A+B+C) 9575973 132646 9708619 100.00 9593551 115068 9708619 100.00 Nil

(ii) Shareholding of Promoters:

Shareholding at the beginning of the year

Shareholding at the end of the year

Sr. No. Shareholder's Name No. of Shares % of Total Shares of the Company % of Shares Pledged / Encumbered to Total Shares No. of Shares % of Total Shares of the Company % of Shares Pledged / Encumbered to Total Shares % Change in Shareholding During the Year
1. Mr. Atul Kirloskar 1635300 16.84 0.00 1635300 16.84 0.00 0.00
2. Mr. Rahul Kirloskar 1621688 16.70 0.00 1621688 16.70 0.00 0.00
3. Mr. Sanjay Kirloskar 2626 0.03 0.00 2626 0.03 0.00 0.00
4. Mr. Vikram Kirloskar 4632 0.05 0.00 4632 0.05 0.00 0.00
5. Mrs. Mrinalini Kirloskar 5856 0.06 0.00 5856 0.06 0.00 0.00
6. Mrs. Suman Kirloskar 3558 0.04 0.00 3558 0.04 0.00 0.00
7. Mrs. Roopa Gupta 1392 0.01 0.00 1392 0.01 0.00 0.00
8. Mrs. Geetanjali Kirloskar 2 0.00 0.00 2 0.00 0.00 0.00
9. Mrs. Jyotsna Kulkarni 1178592 12.14 0.00 1178592 12.14 0.00 0.00
10. Mrs. Arti Kirloskar 709648 7.31 0.00 709648 7.31 0.00 0.00
11. Mrs. Alpana Kirloskar 709648 7.31 0.00 709648 7.31 0.00 0.00
12. Mr. Nihal Kulkarni 589296 6.07 0.00 589296 6.07 0.00 0.00
13. Mr. Ambar Kulkarni 589296 6.07 0.00 589296 6.07 0.00 0.00
14. Navsai Investments Private Limited 100 0.00 0.00 100 0.00 0.00 0.00
15. Alpak Investments Private Limited 100 0.00 0.00 100 0.00 0.00 0.00
16. Achyut & Neeta Holdings & Finance Private Limited 100 0.00 0.00 100 0.00 0.00 0.00
17. Kirloskar Chillers Private Limited 46144 0.48 0.00 46144 0.48 0.00 0.00
18. Kirloskar Pneumatic Co. Limited 200 0.00 0.00 200 0.00 0.00 0.00

Notes:

1. In case of joint holdings the name of fi rst holder is considered.

2. No shares of promoters have been pledged or encumbered as on 1 April 2019 or 31March 2020 or during the year ended 31 March 2020.

(iii) Change in Promoters' Shareholding (please specify if there is no change):

Name of Shareholder

Shareholding

Cumulative Shareholding During the Year

Sr. No. No. of Shares % of Total Shares of the Company No. of Shares % of total Shares of the Company
1. Mr. Atul Kirloskar
At the beginning of the year (01.04.2019) 1635300 16.84 - -
Increase / Decrease in shareholding

No change during the year

At the end of the year (31.03.2020) - - 1635300 16.84
2. Mr. Rahul Kirloskar
At the beginning of the year (01.04.2019) 1621688 16.70 - -
Increase / Decrease in shareholding

No change during the year

At the end of the year (31.03.2020) - - 1621688 16.70
3. Mr. Sanjay Kirloskar
At the beginning of the year (01.04.2019) 2626 0.03 - -
Increase / Decrease in shareholding

No change during the year

At the end of the year (31.03.2020) - - 2626 0.03
4. Mr. Vikram Kirloskar
At the beginning of the year (01.04.2019) 4632 0.05 - -
Increase / Decrease in shareholding

No change during the year

At the end of the year (31.03.2020) - - 4632 0.05
5. Mrs. Mrinalini Kirloskar
At the beginning of the year (01.04.2019) 5856 0.06 - -
Increase / Decrease in shareholding

No change during the year

At the end of the year (31.03.2020) - - 5856 0.06
6. Mrs. Suman Kirloskar
At the beginning of the year (01.04.2019) 3558 0.04 - -
Increase / Decrease in shareholding

No change during the year

At the end of the year (31.03.2020) - - 3558 0.04
7. Mrs. Roopa Gupta
At the beginning of the year (01.04.2019) 1392 0.01 - -
Increase / Decrease in shareholding

No change during the year

At the end of the year (31.03.2020) - - 1392 0.01
8. Mrs. Geetanjali Kirloskar
At the beginning of the year (01.04.2019) 2 0.00 - -
Increase / Decrease in shareholding

No change during the year

At the end of the year (31.03.2020) - - 2 0.00
9. Mrs. Arti Kirloskar
At the beginning of the year (01.04.2019) 709648 7.31 - -
Increase / Decrease in shareholding No change during the year
At the end of the year (31.03.2020) - - 709648 7.31
10. Mrs. Jyotsna Kulkarni
At the beginning of the year (01.04.2019) 1178592 12.14 - -
Increase / Decrease in shareholding No change during the year
At the end of the year (31.03.2020) - - 1178592 12.14
11. Mrs. Alpana Kirloskar
At the beginning of the year (01.04.2019) 709648 7.31 - -
Increase / Decrease in shareholding No change during the year
At the end of the year (31.03.2020) - - 709648 7.31
12. Navsai Investments Private Limited
At the beginning of the year (01.04.2019) 100 0.00 - -
Increase / Decrease in shareholding No change during the year
At the end of the year (31.03.2020) - - 100 0.00
13. Alpak Investments Private Limited
At the beginning of the year (01.04.2019) 100 0.00 - -
Increase / Decrease in shareholding No change during the year
At the end of the year (31.03.2020) - - 100 0.00
14. Achyut and Neeta Holdings and Finance Private Limited
At the beginning of the year (01.04.2019) 100 0.00 - -
Increase / Decrease in shareholding No change during the year
At the end of the year (31.03.2020) - - 100 0.00
15. Kirloskar Chillers Private Limited
At the beginning of the year (01.04.2019) 46144 0.48 - -
Increase / Decrease in shareholding No change during the year
At the end of the year (31.03.2020) - - 46144 0.48
16. Kirloskar Pneumatic Co. Limited
At the beginning of the year (01.04.2019) 200 0.00 - -
Increase / Decrease in shareholding No change during the year
At the end of the year (31.03.2020) - - 200 0.00
17. Mr. Nihal Kulkarni
At the beginning of the year (01.04.2019) 589296 6.07 - -
Increase / Decrease in shareholding No change during the year
At the end of the year (31.03.2020) - - 589296 6.07
18. Mr. Ambar Kulkarni
At the beginning of the year (01.04.2019) 589296 6.07 - -
Increase / Decrease in shareholding No change during the year
At the end of the year (31.03.2020) - - 589296 6.07

(iv) Shareholding Pattern of top ten shareholders (other than Directors Promoters andHolders of GDRs and ADRs):

Sr. No. For each of top ten shareholders Reason

Shareholding

Cumulative Shareholding During the Year

No. of Shares % of Total Shares of the Company No. of Shares % of total Shares of the Company
1. India Capital Fund Limited
At the beginning of the year 961205 9.90 - -
(01.04.2019)
Increase / Decrease in shareholding

No change during the year

At the end of the year (31.03.2020) - - 961205 9.90
2. The Oriental Insurance Company Limited
At the beginning of the year 142251 1.47 - -
(01.04.2019)
Increase / Decrease in shareholding

No change during the year

At the end of the year (31.03.2020) - - 142251 1.47
3. The New India Assurance Company Limited
At the beginning of the year 119997 1.24 - -
(01.04.2019)
Increase / Decrease in shareholding

No change during the year

At the end of the year (31.03.2020) - - 119997 1.24
4. General Insurance Corporation of India
At the beginning of the year 118176 1.22 - -
(01.04.2019)
Increase / Decrease in shareholding

No change during the year

At the end of the year (31.03.2020) - - 118176 1.22
5. National Insurance Company Limited
At the beginning of the year 55862 0.58 - -
(01.04.2019)
Increase / Decrease in shareholding

No change during the year

At the end of the year (31.03.2020) - - 55862 0.58
6. Mr. Jagdish Amritlal Shah jointly with Mr. Shaunak Jagdish Shah and Mrs. Jagruti Shaunak Shah
At the beginning of the year 40065 0.41 - -
(01.04.2019)
Increase / Decrease in shareholding No change during the year
At the end of the year (31.03.2020) - - 40065 0.41
7. Investor Education and Protection Fund Authority Ministry of Corporate Affairs
At the beginning of the year (01.04.2019) 38738 0.40 - -
Decrease as on 19.07.2019 Transfer (13) (0.00) 38725 0.40
Decrease as on 06.09.2019 Transfer (250) (0.00) 38475 0.40
Increase as on 20.09.2019 Transfer 6839 0.07 45314 0.47
Increase as on 27.09.2019 Transfer 2 0.00 45316 0.47
Decrease as on 10.01.2020 Transfer (70) (0.00) 45246 0.47
At the end of the year (31.03.2020) - - 45246 0.47
8. Antique Stock Broking Limited
At the beginning of the year (01.04.2019) 30974 0.32 - -
Decrease as on 17.05.2019 Transfer (10974) (0.11) 20000 0.21
Decrease as on 29.06.2019 Transfer (20000) (0.21) - -
Increase as on 09.08.2019 Transfer 10000 0.10 10000 0.10
Increase as on 06.09.2019 Transfer 10000 0.10 20000 0.21
Decrease as on 04.10.2019 Transfer (7000) (0.08) 13000 0.13
Increase as on 25.10.2019 Transfer 7000 0.08 20000 0.21
Decrease as on 03.01.2020 Transfer (7500) (0.08) 12500 0.13
Increase as on 27.03.2020 Transfer 7500 0.08 20000 0.21
At the end of the year (31.03.2020) - - 20000 0.21
9. Mr. Arun Nahar
At the beginning of the year (01.04.2019) 19312 0.20 - -
Increase / Decrease in the shareholding No change during the year
At the end of the year (31.03.2020) - - 19312 0.20
10. Shree Stockvision Securities Limited
At the beginning of the year 11888 0.12 - -
(01.04.2019)
Increase / Decrease in the shareholding No change during the year
At the end of the year (31.03.2020) - - 11888 0.12
11. Antique Securities Private Limited
At the beginning of the year (01.04.2019) - - - -
Increase as on 29.06.2019 Transfer 20000 0.21 20000 0.21
Decrease as on 09.08.2019 Transfer (10000) (0.10) 10000 0.10
Decrease as on 06.09.2019 Transfer (10000) (0.10) - -
Increase as on 04.10.2019 Transfer 7000 0.07 7000 0.07
Decrease as on 25.10.2019 Transfer (7000) (0.07) - -
Increase as on 03.01.2020 Transfer 7500 0.07 7500 0.07
Decrease as on 27.03.2020 Transfer (7500) (0.07) - -
At the end of the year (31.03.2020) - - - -

Notes: a. In cases of joint holding the name of the fi rst holder is considered.b. The shareholding details given above are based on the legal ownership and not beneficial ownership and are derived on the folio number listing provided by the Registrar andShare Transfer Agent of the Company.

(v) Shareholding of Directors and Key Managerial Personnel:

Shareholding of Directors:

Sr. No. For each of the Directors

Shareholding at the Beginning of the Year (01.04.2019)

Shareholding at the End of the Year (31.03.2020)

No. of Shares % of Total Shares of the Company No. of Shares % of total Shares of the
Company
1. Mr. Atul Kirloskar Chairman 1635300 16.84 1635300 16.84
2. Mr. Mahesh Chhabria 21907 0.23 21907 0.23
Managing Director
3. Ms. Aditi Chirmule Nil Nil Nil Nil
Executive Director
4. Mr. Nihal Kulkarni 589296 6.07 589296 6.07
5. Mr. Anil Alawani 2285 0.02 2285 0.02
6. Mr. Tejas Deshpande Nil Nil Nil Nil
7. Mr. Sunil Shah Singh Nil Nil Nil Nil
8. Mr. D. Sivanandhan Nil Nil Nil Nil
9. Mr. Vinesh Kumar Jairath Nil Nil Nil Nil
10. Mr. Ashit Parekh Nil Nil Nil Nil
11. Mr. Satish Jamdar Nil Nil Nil Nil
12. Mrs. Mrunalini Deshmukh Nil Nil Nil Nil

Notes:

1. There is no purchase or sale of shares by Directors during the year.

2. NA represents Not Applicable.

Shareholding of Key Managerial Personnel:

Sr. No. For each of the Key Managerial Personnel

Shareholding at the Beginning of the Year (01.04.2019)

Shareholding at the End of the Year (31.03.2020)

No. of Shares % of Total Shares of the Company No. of Shares % of total Shares of the
Company
1. Mr. Mahesh Chhabria Managing Director 21907 0.23 21907 0.23
2. Ms. Aditi Chirmule Executive Director Nil Nil Nil Nil
3. Mr. Umesh Shastry Chief Financial Offi cer (with effect from 17 May 2019) NA NA Nil Nil
4. Mrs. Jasvandi Deosthale Chief Financial Offi cer (up to 16 May 2019) Nil Nil NA NA
5. Mrs. Ashwini Mali Company Secretary Nil Nil Nil Nil

V. INDEBTEDNESS:

Indebtedness of the Company including interest outstanding / accrued but not due forpayment: None

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

A. REMUNERATION OF MANAGING DIRECTOR WHOLE-TIME DIRECTOR AND / OR MANAGER:

Amount in (Rs.)
Sr. No. Particulars of Remuneration

Name of Managing Director / Whole-Time Director / Manager

Total Amount
Mr. Mahesh Chhabria Managing Director Ms. Aditi Chirmule Executive Director
1. Gross Salary
a) Salary as per provisions contained in Section 17 (1) of the Income Tax Act 1961 18150000 4386774 22536774
b) Value of perquisites under 8751116 8320624 17071740
Section 17 (2) of the Income
Tax Act 1961
c) Profi ts in lieu of salary under Nil Nil Nil
Section 17 (3) of the Income
Tax Act 1961
2. Stock Option Refer Note No. 1 Refer Note No. 1 -
3. Sweat Equity Nil Nil Nil
4. Commission 11000000 2000000 13000000
- as % of profi t
- others specify …..
5. Others please specify Nil Nil Nil
Total (A) 37901116 14707398 52608514
Ceiling as per the Companies 62910657
Act 2013 excluding remuneration

Note:

1. The aforesaid identifi ed employees had voluntarily surrendered the stock optionsgranted under the ‘Kirloskar Industries Limited – Employee Stock Option Plan2017' (‘KIL ESOP 2017') due to the options being underwater. These stock optionswere cancelled and brought back to the aggregate options pool of 485000 (Four LakhsEighty-Five Thousand) stock options. The members of the Company had passed SpecialResolution through Postal Ballot and approved the amendment / modifi cations in the KILESOP 2017 by way of reduction the total number of stock options and total number ofshares under the KIL ESOP 2017 from 485000 (Four Lakhs Eighty Five Thousand) to nilwithout any retrospective effect on existing stock options granted under the KIL ESOP2017.

Pursuant to ‘Kirloskar Industries Limited – Employees Stock AppreciationRights Plan 2019' (‘KIL ESARP 2019') 231000 Equity Settled Stock AppreciationRights (ESARs) and 48540 ESARs have been granted to Mr. Mahesh Chhabria ManagingDirector and Ms. Aditi Chirmule Executive Director of the Company respectively withvesting period of one year and the same are exercisable by them according to the terms ofthe KIL ESARP 2019.

B. REMUNERATION TO OTHER DIRECTORS:

Name of Director

Particulars of Remuneration

Sr. No. Fees for Attending Board / Committee Meetings Commission Others Please Specify Total Amount
1. Independent Director
Mr. Tejas Deshpande 440000 440000 - 880000
Mr. Sunil Shah Singh 480000 480000 - 960000
Mr. D. Sivanandhan 275000 475000 - 750000
Mr. Ashit Parekh 340000 540000 - 880000
Mr. Satish Jamdar 540000 640000 - 1180000
Mrs. Mrunalini Deshmukh 200000 200000 - 400000
Total (1) 2275000 2775000 - 5050000
2. Non-Executive Directors
Mr. Atul Kirloskar 340000 340000 - 680000
Mr. Anil Alawani 480000 675000 - 1155000
Mr. Nihal Kulkarni 200000 200000 - 400000
Mr. Vinesh Kumar Jairath 340000 540000 - 880000
Total (2) 1360000 1755000 - 3115000
Total (1+2) 3635000 4530000 - 8165000
Total Remuneration to Directors 8165000
Total Managerial Remuneration excluding sitting fees 4530000
Overall Ceiling as per the Companies Act 2013 excluding sitting fees 6291066

C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MANAGING DIRECTOR / MANAGER /WHOLE TIME DIRECTOR:

Amount in (Rs.)

Sr. No. Particulars of Remuneration Mrs. Jasvandi Deosthale Chief Financial Offi cer up to 16 May 2019 Mr. Umesh Shastry Chief Financial Offi cer with effect from 17 May 2019 Mrs. Ashwini Mali Company Secretary Total Amount
1. Gross Salary
a)__ Salary as per provisions contained 1853882 7009258 2350143

11213283

in Section 17 (1) of the Income Tax
Act 1961
b)__ Value of perquisites under Section Nil Nil Nil Nil
17 (2) of the Income Tax Act 1961
c)__ Profi ts in lieu of salary under Nil Nil Nil Nil
Section 17 (3) of the Income Tax
Act 1961
2 Stock Option - Refer Note Refer Note Nil
No. 2 No. 1 and 2
3 Sweat Equity Nil Nil Nil Nil
4 Commission Nil Nil Nil Nil
- as % of profi t
- others specify …..
5 Others please specify Nil Nil Nil Nil
Total 1853882 7009258 2350143 11213283

Notes:

1. Mrs. Ashwini Mali had voluntarily surrendered the stock options granted under theKIL ESOP 2017 due to the options being underwater. These stock options were cancelled andbrought back to the aggregate options pool of 485000 (Four Lakhs Eighty-Five Thousand)stock options.

2. Pursuant to the KIL ESARP 2019 36000 ESARs and 24270 ESARs have been granted toMr. Umesh Shastry Chief Financial Offi cer and Mrs. Ashwini Mali Company Secretary ofthe Company respectively with vesting period of one year and the same are exercisable bythem according to the terms of the KIL ESARP 2019.

VII. PENALTIES / PUNISHMENT / COMPOUNDING OF OFFENCES:

During the year under review there is no instance of any penalty / punishment /compounding of offence under the Companies Act 2013 against any Director Key ManagerialPersonnel and other Offi cers in default.

SECRETARIAL AUDIT REPORT

 

[Pursuant to Section 204(1) of the Companies Act 2013 and Rule No.9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 read with Regulation24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015]

FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2020 To The Members of Kirloskar IndustriesLimited Offi ce No. 801 8th Floor Cello Platina Fergusson College Road ShivajinagarPune- 411005

I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by KIRLOSKAR INDUSTRIESLIMITED (CIN L70100PN1978PLC088972) (hereinafter called the Company). SecretarialAudit was conducted in a manner that provided me a reasonable basis for evaluating thecorporate conducts / statutory compliances and expressing my opinion thereon.

Based on my verifi cation of the Company's books papers minute books forms andreturns fi led and other records maintained by the Company and also the informationprovided by the Company its Offi cers Agents and Authorized Representatives during theconduct of Secretarial Audit I hereby report that in my opinion the Company has duringthe audit period covering the fi nancial year ended on 31st March 2020 complied with thestatutory provisions listed hereunder and also that the Company has proper Board-processesand compliance-mechanism in place to the extent in the manner and subject to thereporting made hereinafter: I have examined the books papers minute books forms andreturns fi led and other records maintained by the Company for the fi nancial year endedon 31st March 2020 according to the provisions of: (i) The Companies Act 2013 (the Act)and the Rules made thereunder; (ii) The Securities Contracts (Regulation) Act 1956(‘SCRA') and the Rules made thereunder; (iii) The Depositories Act 1996 and theRegulations and Bye-laws framed thereunder; (iv) Foreign Exchange Management Act 1999 andthe Rules and Regulations made thereunder to the extent of Foreign Direct InvestmentOverseas Direct Investment and External Commercial Borrowings; [No incidence during theaudit period hence not applicable]

(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (‘SEBI Act') -(a) The Securities and ExchangeBoard of India (Substantial Acquisition of Shares and Takeovers) Regulations 2011; (b)The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations2015 (c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009; - [No incidence during the audit period hence notapplicable] (d) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014; (e) The Securities and Exchange Board of India (Issue and Listingof Debt Securities) Regulations 2008; - [No incidence during the audit period hence notapplicable] (f) The Securities and Exchange Board of India (Registrars to Issue and ShareTransfer Agents) Regulations 1993 regarding the compliance of the Act and dealing withclient; (g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009; - [No incidence during the audit period hence not applicable] (h) TheSecurities and Exchange Board of India (Buyback of Securities) Regulations 1998; - [Noincidence during the audit period hence not applicable] (vi) No other law is applicablespecifi cally to the Company.

I have also examined compliance with the applicable clauses of the following: (i)Secretarial Standards issued by The Institute of Company Secretaries of India;

(ii) The agreement entered into by the Company with the BSE Limited and National StockExchange of India Limited as per the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015; During the period under review the Company has compliedwith the provisions of the Act Rules Regulations Guidelines Standards etc. mentionedabove.

I further report that

The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent at least seven days in advance and a system exists forseeking and obtaining further information and clarifi cations on the agenda items beforethe meeting and for meaningful participation at the meeting.

All the decisions in the Board Meetings were taken unanimously during the audit period.

I further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the Company to monitor and ensure compliancewith applicable Laws Rules Regulations and Guidelines.

I further report that during the audit period there is no event / action having amajor bearing on the Company's affairs.

My report should be read along with the annexed Disclaimer letter of even date formingpart of this report.

Date: 22 June 2020 Place: Pune PR – 208/2015

UDIN: F000810B000365559

Sd/-

Mahesh J. Risbud

Practicing Company Secretary FCS No.: 810 C P No.: 185 UCN: S1981MH000400

To

The Members

Kirloskar Industries Limited Pune

My report of even date is to be read along with this annexure:

1. Maintenance of record is the responsibility of the management of the Company. Myresponsibility is to express my opinion on these records based on my audit.

2. The compliance of the provisions of Corporate and other applicable laws RulesRegulations standards is the responsibility of the management. My examination waslimited to the verifi cation of procedures on test basis.

3. I have followed the audit practices and process as were appropriate to obtainreasonable assurance about the correctness of the contents of the records. The verification was done on test basis / check lists basis to ensure that correct facts are reflected in records. I believe that the processes and practices I followed provide areasonable basis for my opinion.

4. I have not verifi ed the correctness and appropriateness of fi nancial records andBooks of Accounts of the Company.

5. Where ever required I have obtained the Management representation about thecompliance of Laws Rules and Regulations and happening of events etc.

6. The Secretarial Audit report is neither an assurance as to the future viability ofthe Company nor of the effi cacy or effectiveness with which the management has conductedthe affairs of the Company.

Note: In view of nationwide lock-down declared by the Government of India with effectfrom 25 March 2020 to contain spread of pandemic COVID-19; I was unable to visit the office of the Company for physical verifi cation of documents after 31 March 2020. Howeverthis report has been given on the basis of visit to the offi ce of the Company for interimaudit in 2019 and on the basis of records and documents received from the Company fromtime to time through electronic means.

Place: Pune Date: 22 June 2020 FCS No.: 810 C. P. No.: 185 UCN: S1981MH000400

Sd/-

Mahesh J. Risbud