Vikas Vohra
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2 Directors' Report
To the Members,
Your Directors have the privilege of presenting the First Annual Report with the Audited Annual Accounts of the Company for the period ending March 31, 2010.
The Company was incorporated on April 16, 2009 as a wholly owned subsidiary of Kirloskar Brothers Limited and received the Certificate of Commencement of Business on May 29, 2009.
SCHEME OF ARRANGEMENT
During the period under review, the Hon’ble High Court of Judicature at Bombay approved the Scheme of Arrangement between Kirloskar Brothers Limited (Transferor Company or KBL), Company and their respective shareholders vide its order dated January 22, 2010 (Scheme). The Appointed Date under the Scheme was the closing hours of business on April 16, 2009.
Pursuant to the Scheme, certain investments held by Kirloskar Brothers Limited in the equity shares of (i) Kirloskar Oil Engines Limited (now known as Kirloskar Industries Limited), (ii) Kirloskar Pneumatic Company Limited, (iii) Kirloskar Kenya Limited, (iv) Kirsons Trading Pte. Limited, (v) Housing Development Finance Corporation Limited, (vi) ICICI Bank Limited, (vii) Kulkarni Power Tools Limited, (viii) Maharashtra State Co-operative Bank Limited, (ix) Kranti Sahakari Sakhar Karkhana Limited, (x) Kirloskar Toyoda Textile Machinery Private Limited (xi) Pooja Credits Private Limited and (xii) Kirloskar Silk Industries Limited stands vested in the Company with effect from the Appointed Date made effective from March 2, 2010.
KBL sold the investments held in the equity shares of Kirloskar Toyoda Textile Machinery Private Limited which were held in trust on behalf of the Company as per the consent given by the Company.
In terms of the Scheme, every shareholder of the Transferor Company holding 20 equity shares of Rs. 2/- each in the Transferor Company as on the Record Date i.e. March 10, 2010, was issued and allotted 1 new equity share of Rs. 10/- each in the Company credited as fully paid up. Consequently, the Board of Directors of the Company at its meeting held on March 19, 2010 and April 26, 2010 issued and allotted 52,88,218 and 500 equity shares of Rs. 10/- each respectively.
LISTING ON STOCK EXCHANGES
As on March 31, 2010, the equity shares of the Company were not listed on any of the stock exchanges.
The Company has made applications for listing of its equity shares on the following stock exchanges:
S. No. Name Address 1. Bombay Stock Exchange Limited (BSE) 1st Floor, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001 2. National Stock Exchange of India Limited (NSE) Exchange Plaza, Bandra - Kurla Complex, Bandra (E), Mumbai - 400 051
FINANCIAL RESULTS (Rs. In lakhs) Particulars Period ended March 31, 2010 Total Income 2309.96 Total Expenditure 21.28 Profit before exceptional items & taxation 2288.69 Profit / (Loss) on sale of investments — Profit / (Loss) on sale of undertaking — Profit before taxation 2288.69 Provision for tax (including Deferred Tax) — Net Profit 2288.69 Surplus 2288.69
3 DIVIDEND
Your Directors do not recommend any dividend for the period under review.
MANAGEMENT DISCUSSION AND ANALYSIS
Kirloskar Brothers Investments Limited (KBIL) was originally incorporated as a wholly owned subsidiary of Kirloskar Brothers Limited on April 16, 2009 as an Investment Company with the purpose of transfer and vesting of certain investments of KBL on going concern basis pursuant to the Scheme of Arrangement which was approved by the Hon’ble High Court of Judicature at Bombay vide its order dated January 22, 2010.
This is the first Management Discussion and Analysis which gives a brief overview of the Company.
STRUCTURE OF THE COMPANY
The Company was incorporated with an object to carry on business as an investment Company and to buy, sell, invest, acquire by gift, transfer, allotment and hold in the name of the Company or its nominees, shares, stocks, papers, debenture stock, bonds, commercial papers, obligations and securities of any kind, issued and/or guaranteed by any of the Kirloskar Group Companies and/or their Affiliates subject to prior approval of Reserve Bank of India wherever necessary and to buy, sell, acquire other security investments of Kirloskar Brothers Limited, under any scheme of arrangement / merger / de- merger or under any court order or by way of transfer, allotment.
The Company has applied for the Certificate of Registration with Reserve Bank of India (RBI) as a Non-Banking Finance Company (NBFC).
THRUST OF THE BUSINESS
The Company will mainly hold investments in Kirloskar Group Companies.
The Company may acquire Group Companies’ shares from secondary market but will not be dealing in day-to-day trading or speculation activities related to securities market. Company may at times, deploy funds in inter corporate deposits including Group Companies.
The thrust of the business is to hold and continue to hold securities in Kirloskar Group Companies.
As on date, out of the total investments held by the Company, a major portion of it belongs to the Kirloskar Group Companies.
MARKET SEGMENT
The Company will be substantially involved in holding securities of Kirloskar Group Companies. Also from the liquidity point of view, funds may be invested in Mutual Funds. In the foreseeable future, the Company will continue to invest in equity shares.
The Company would provide a gateway for group level investments and facilitate raising of resources.
RISKS
The Company’s performance is highly correlated to the performance of the economy and the financial markets which in turn depends on the domestic economic growth, state of the global economy, balance of payments and various other financial parameters, among other factors. Any event disturbing the dynamic balance of these diverse factors would directly or indirectly affect the performance of the Company.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has adequate internal control systems to ensure operational efficiency, accuracy and promptness in financial reporting and compliance of various laws and regulations.
The internal control system is supported by the internal audit process. An Internal Auditor has been appointed for this purpose. The Audit Committee of the Board reviews the Internal Audit Report and the adequacy and effectiveness of internal controls.
4 DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
Main operations of the Company are that of an Investment Company, majority of which is in the form of strategic investments in Kirloskar Group Companies; hence the source of income for the Company is in the form of dividend as declared by various companies.
As on date, the Company has two subsidiaries viz. Pooja Credits Private Limited and Kirloskar Silk Industries Limited.
A. Pooja Credits Private Limited (PCPL)
PCPL was incorporated on March 1, 1988 as a wholly owned subsidiary of Kirloskar Brothers Limited. Pursuant to the Scheme of Arrangement, all the investments of KBL in PCPL have been transferred to KBIL on March 8, 2010. Whereupon, PCPL became 100% subsidiary of KBIL. PCPL has also applied to RBI for Registration as NBFC.
PCPL is basically an investment Company with more than 90% of its investments in Kirloskar Group Companies.
B. Kirloskar Silk Industries Limited (KSIL)
KSIL was incorporated on May 5, 1992 as a wholly owned subsidiary of Kirloskar Brothers Limited. Pursuant to the Scheme of Arrangement, all the investments of KBL in KSIL have been transferred to KBIL on March 8, 2010. Whereupon, KSIL became 100% subsidiary of KBIL.
KSIL was incorporated with the main object of manufacture, development and sale of raw silk. However, the said project could not be implemented.
Kirloskar Silk Industries Limited has approached the Government Authorities seeking their approval for change of purpose of the land allotted to the Company. The application is pending with the Government Authorities.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED
At present, KBIL has on its roll, the Executive Director and Secretarial and Compliance Officer. The Company is in the process of formulation of the organization structure and shall put in place, various human resource policies. Attracting experienced finance, investment and operating professionals to a newly formed Company and retaining them may pose a risk to the Company.
CAUTIONARY STATEMENT
Statements in this Report, particularly those which relate to Management Discussion and Analysis, describing the Company’s objectives, projections, estimates and expectations may constitute “forward looking statements” within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.
SHIFTING OF REGISTERED OFFICE
The Registered Office of the Company was shifted from Udyog Bhavan, Tilak Road, Pune 411 002 to 13/A, Karve Road, Kothrud, Pune 411 038 with effect from February 15, 2010 for operational and administrative convenience.
REGISTRATION AS NON-BANKING FINANCE COMPANY (NBFC)
The Company has made an application with Reserve Bank of India for Certificate of Registration as NBFC and the application is currently under process.
OPERATIONS
The Company has been vested with carrying on the business of an Investment Company and to buy, sell, invest, acquire by gift, transfer, allotment and hold in its name shares, stock, papers, debenture stocks, bonds, commercial papers, obligations and securities of any kind, issued and/or guaranteed by any of the Kirloskar Group Companies and/or their Affiliates subject to prior approval of RBI wherever necessary and to buy, sell, acquire other security investments of Kirloskar Brothers Limited under any Scheme of Arrangement / merger / demerger or under any court order or by way of transfer, allotment.
The Company will start operations after getting NBFC approval from RBI.
5 STATUTORY DISCLOSURES
The Company having become by and large an Investment Company pursuant to the Scheme of Arrangement, there are no particulars regarding technology absorption, conservation of energy, foreign exchange earning and outgo as required under section 217 (1) (e) of the Companies Act, 1956 and Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.
As required under the provisions of sub-section (2A) of section 217 of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, particulars of employees are set out in Annexure 1 to the Directors Report.
SUBSIDIARY COMPANIES
Pursuant to the Scheme of Arrangement, Pooja Credits Private Limited & Kirloskar Silk Industries Limited have now become 100% subsidiaries of the Company.
On March 12, 2010, the Company made an application to the Central Government under section 212 (8) of the Companies Act, 1956 for exemption from attaching the annual accounts of the Subsidiary Companies. However, since the approval is pending with the Central Government, the respective annual accounts and other documents of Subsidiary Companies form part of this Annual Report.
CONSOLDIATED FINANCIAL STATEMENTS
The Directors present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries and as prepared in compliance with the accounting standards and listing agreement as prescribed by SEBI.
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of Directors report that:
• In the preparation of the annual accounts, the applicable accounting standards have been followed and there was no material departure from the accounting standards.
• Accounting policies have been selected and applied consistently and that the judgments and estimates made are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and of the profits of the Company for the period from April 16, 2009 to March 31, 2010.
• Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, and
• The annual accounts have been prepared on a going concern basis.
CASH FLOW
A cash flow statement for the period ended March 31, 2010 is attached to the Balance Sheet.
CORPORATE GOVERNANCE
Since the Company has already made listing applications with BSE and NSE, your Board is presenting its report on Corporate Governance in compliance with clause 49 of the Listing Agreement entered with the stock exchanges, which forms a separate section titled as ‘Corporate Governance’ in this Annual Report.
The Company has obtained the certificate from its statutory auditors regarding compliance with provisions relating to Corporate Governance as laid down in clause 49 of the Listing Agreement. The same is appearing elsewhere in this Annual Report.
Declaration by the Executive Director regarding affirmations for compliance with the Company’s Code of Conduct is annexed to this Report.
6 FIXED DEPOSITS
Your Company has not accepted any fixed deposits during the year.
DIRECTORS
The Board of Directors appointed Mr. Sanjay C. Kirloskar, Mr. A. R. Sathe and Mr. G. P. Kulkarni as the First Directors of the Company with effect from April 16, 2009 (date of incorporation of the Company). Mr. A. R. Sathe and Mr. G. P. Kulkarni retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.
Mr. A. C. Kulkarni was appointed as an Additional Director of the Company with effect from January 23, 2010. Mr. Atul C. Kirloskar, Mr. A. N. Alawani and Mr. Nihal Kulkarni were appointed as Additional Directors of the Company with effect from February 13, 2010. All these Directors hold office till the conclusion of this ensuing Annual General Meeting and are eligible for appointment.
Mr. A. C. Kulkarni has been appointed as an Executive Director of the Company for a period of 5 years with effect from February 13, 2010. A proposal for his appointment as the Executive Director and remuneration payable to him is being placed before the members for their approval at the ensuing Annual General Meeting.
Mr. Sanjay C. Kirloskar resigned from the Board with effect from January 23, 2010. He was associated with the Company since its incorporation. His expertise and guidance to the Board and the Company has been noteworthy. The Board wishes to place on record its gratitude for the guidance received from Mr. Sanjay C. Kirloskar during his tenure as Director of the Company.
AUDITORS
M/s. P. G. Bhagwat, Chartered Accountants (Firm’s Registration No. 101118W), were appointed as First Auditors of the Company by the Board of Directors at its meeting on May 12, 2009. The Auditors retire at the ensuing Annual General Meeting and are eligible for re-appointment. The requisite certificate as per section 224 (1B) of the Companies Act, 1956 has been received by the Company. The Audit Committee has recommended their re-appointment and the annual audit fees.
ACKNOWLEDGEMENTS
Your Directors wish to place on record, its appreciation for the unstinted support and co-operation given by the bank. Your Directors would further like to record their appreciation to the employees of the Company for their efforts in giving effect to the Scheme of Arrangement as aforesaid.
For and on behalf of the Board of Directors
ATUL C. KIRLOSKAR CHAIRMAN Pune : June 5, 2010
7 ANNEXURE – I TO THE DIRECTORS’ REPORT
Information under Section 217(2A) read with Companies (Particulars of employees) Rules, 1975 and forming part of the Directors’ Report for the period ended March 31, 2010.
Name & (Age) Qualifications Designation/ Date of Gross Last Nature of duties commencement Remuneration employment of employment Rs. & (Experience)
A. C. Kulkarni* B.Com, ACA Executive 13/02/2010 4,13,346 Executive Director, (59) Director (32) Kirloskar Systems Limited, Pune
* Employed for the part of the year.
8 Report on Corporate Governance
1. The Company's philosophy on Code of Corporate Governance
The Company strongly believes that the system of Corporate Governance protects the interest of all the stakeholders by inculcating transparent business operations and accountability from management towards fulfilling the highest standards of Corporate Governance in all facets of the Company’s operations.
2. Board of Directors
The Board comprises of an optimal complement of independent professionals as well as Company executives with high business acumen. As on the date of this report, there are 6 directors of whom one is Executive Director, two are Non-Independent Non Executive Directors and three (50%) are Non Executive Independent Directors.
During the financial year under review, 09 Board Meetings were held on the following dates: May 12, 2009, May 29, 2009, July 17, 2009, August 20, 2009, September 21, 2009, October 21, 2009, January 23, 2010, February 13, 2010 and March 19, 2010.
None of the Directors on the Board holds the office of Director in more than 15 Companies or Membership of Committees of the Board in more than 10 Committees or Chairmanship of more than 5 Committees.
The details are provided in the table below :
Sr. Name of the Director Designation / Board No. of other No. of Committee No. Category of Meetings Directorships positions held as * Directorship attended held @ Member Chairman
1. Mr. Atul C. Kirloskar Chairman (w.e.f. 13.02.10) & NED 2 10 2 1
2. Mr. Nihal Kulkarni (w.e.f. 13.02.10) NED 2 5 5 NIL
3. Mr. A. N. Alawani (w.e.f. 13.02.10) NED (I) 1 6 3 3
4. Mr. A. R. Sathe NED (I) 8 7 6 NIL
5. Mr. G. P. Kulkarni NED (I) 8 5 NIL 1
6. Mr. A. C. Kulkarni (w.e.f. 23.01.10) ED 3 11 2 NIL
7. Mr. Sanjay C. Kirloskar Chairman (Upto 23.01.10) & NED 7 13 1 NIL
None of the current directors are related to any other director within the meaning of section 6 of the Companies Act, 1956.
@ ED – Executive Director, NED – Non Executive Director, I – Independent. * Committee Membership of Audit Committee and Investors’ Grievance Committee is considered for this purpose.
(1) Directorships in Private Limited Companies, Foreign Companies are included in the above table.
(2) An independent director is a non-executive director who, apart from receiving director’s remuneration, does not have any material pecuniary relationship or transactions with the Company, its promoters or its management or its subsidiaries and associates which in the judgement of the Board, may affect his independence of judgement and complying with other conditions as prescribed under Clause 49 of the listing agreement.
(3) All the relevant information as applicable and as suggested under Annexure 1A of Clause 49 is furnished to the Board from time to time.
9 3. Code of Conduct
The Company has introduced a Code of Conduct for Directors and Members of Senior Management. The Code is made effective from the effective date under the Scheme of Arrangement i.e. March 2, 2010. The same has been uploaded on the Company’s website i.e. www.kbil.co.in. All Board Members and Senior Management Personnel have affirmed compliance with the Code. A declaration to that effect signed by Mr. A. C. Kulkarni, Executive Director is appearing elsewhere in the Annual Report.
4. Audit Committee
The Audit Committee of the Board of Directors was constituted at its Board Meeting held on February 13, 2010. This Committee is constituted in line with the provisions of Clause 49 of the Listing Agreement read with section 292A of the Companies Act, 1956. The Committee consisted of the following members as on March 31, 2010:
Mr. A. N. Alawani, Chairman Mr. A. R. Sathe, Member Mr. Nihal Kulkarni, Member
The terms of reference of the Audit Committee include the matters specified in clause 49 (II) of the Listing Agreement with the Stock Exchanges. The terms of reference of the Audit Committee includes the following:
1. Supervision of the company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees and also approval for payment of any other services.
3. Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to:
a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s Report in terms of clause (2AA) of section 217 of the Companies Act, 1956. b. Changes, if any, in accounting policies and practices and reasons for the same. c. Major accounting entries involving estimates based on the exercise of judgment by management. d. Significant adjustments made in the financial statements arising out of audit findings. e. Compliance with listing and other legal requirements relating to financial statements. f. Disclosure of any related party transactions. g. Qualifications in the draft Audit Report. h. The going concern assumption. i. Compliance with accounting standards. j. Any related party transactions i.e. transactions of the Company of material nature, with promoters or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of the Company at large.
4. Reviewing, with the management, the quarterly financial statements before submission to the Board for approval.
5. Reviewing, with the management, external and internal auditors, the adequacy of the internal control systems.
6. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.
7. Discussion with internal auditors about any significant findings and follow up there on.
10 8. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.
9. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.
10. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors.
11. Review of following information : a. Management discussion and analysis of financial condition and results of operations; b. Statement of significant related party transactions (as defined by the audit committee), submitted by management; c. Management letters / letters of internal control weaknesses issued by the statutory auditors; d. Internal audit reports relating to internal control weaknesses; and e. The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by the Audit Committee. f. Financial statements, in particular, the investment made by the unlisted subsidiary. g. Minutes of Board Meetings of the unlisted subsidiary company. h. A statement of significant transactions and arrangements entered into by the unlisted subsidiary.
Powers of Audit Committee
1. To investigate any activity within its terms of reference. 2. To seek information from any employee. 3. To obtain outside legal or other professional advice. 4. To secure attendance of outsiders with relevant expertise, if it considers necessary.
During the year, one Audit Committee Meeting of the Board of Directors was held on February 13, 2010 for considering the appointment of Internal Auditor of the Company.
All the members named above were present during the meeting.
5. Remuneration of Directors
Remuneration Committee
The Remuneration Committee was constituted by the Board of Directors at its meeting held on February 13, 2010. The Committee consisted of the following members as on March 31, 2010:
Mr. A. R. Sathe, Chairman Mr. A. N. Alawani, Member Mr. G. P. Kulkarni, Member
During the year, one Remuneration Committee Meeting was held on February 13, 2010 for recommending the salary payable to Mr. A. C. Kulkarni, Executive Director of the Company.
All the members named above were present during the meeting.
11 Remuneration to Directors
• The payment made to the Executive Director has been reviewed by the Remuneration Committee at its meeting held on February 13, 2010 and confirmed by the Board of Directors.
• The Board of Directors at its meeting held on February 13, 2010 decided to pay Rs. 5,000/- as sitting fees to the Non Executive Directors for attending every meeting of the Board and Committee thereof. The Company has not paid any sitting fee until February 13, 2010. No commission has been paid to any of the Directors since this is the first year of the company and there were no operations of the company till its effective date under the Scheme i.e. March 2, 2010.
• There are no pecuniary relationships or transactions of the Non-Executive Director vis-a-vis the Company.
• Except whatever is stated in the statement, there is no other fixed component or performance linked incentives paid to any Director.
Details of remuneration paid/payable to Directors for the period ended March 31, 2010 are as follows : Amount in Rs. Name of the Director Sitting Fees Commission Salary Contribution Perquisites Others Total on Profits to Statutory Funds (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)
Executive Director Mr. A. C. Kulkarni - - 3,22,446 90,900 - - 4,13,346 Non–Executive Directors Mr. Atul C. Kirloskar 5,000 - - - - - 5,000 Mr. Nihal Kulkarni 5,000 - - - - - 5,000 Mr. A. N. Alawani ------Mr. A. R. Sathe ------Mr. G. P. Kulkarni ------
Directors’ Service Contracts’ Details :
Executive Director Service Contract and Period * Severance Fees Mr. A. C. Kulkarni 13.02.10 to 12.02.15 Nil
* Subject to the approval of shareholders.
Statement showing number of equity shares of Rs. 10/- each of the Company held by the Non Executive Directors as on March 31, 2010 :
Non–Executive Directors No. of shares % to paid up capital Mr. Atul C. Kirloskar 1,34,786 2.54% Mr. Nihal Kulkarni NIL - Mr. A. N. Alawani 500 - Mr. A. R. Sathe 30 - Mr. G. P. Kulkarni NIL -
12 6. Particulars of Directors to be appointed and re-appointed at the ensuing Annual General Meeting:
Mr. A. R. Sathe
Mr. A. R. Sathe (Age 57 years) did his CA and LLB. He has been working with Kirloskar Brothers Limited as Vice- President – Corporate Finance and Accounts for last 5 years. He has extensive experience in Finance and Treasury of about 34 years. Before joining Kirloskar Brothers Limited, he was with Kirloskar Pneumatic Company Limited as Senior Vice President – Finance. He is also holding directorships in a few Kirloskar Group companies.
He is a Chairman of Remuneration Committee and a member of Audit and Investors Grievance Committee in the Company.
Other Directorships
Kirloskar Industries Limited (earlier known as Kirloskar Oil Engines Limited) Kirloskar Silk Industries Limited Kirloskar Constructions & Engineers Limited The Kolhapur Steel Limited Gondwana Engineers Limited Kirloskar Corrocoat Private Limited Pooja Credits Private Limited
Other Committee positions
Name of the Company Committee Chairman / Member Kirloskar Constructions & Engineers Limited Audit Committee Member Kirloskar Industries Limited Audit Committee Member Kirloskar Industries Limited Share Transfer cum Shareholders / Member Investors Grievance Committee The Kolhapur Steel Limited Share Transfer Committee Member
He holds 30 equity shares of Rs. 10/- each in the Company. He is not related to any other Director on the Board of the Company.
Mr. G. P. Kulkarni
Mr. G. P. Kulkarni (Age 52 years) did his B.Com, LLM, FCS. He has also acquired membership as Chartered Secretary, London, UK. He was with Bajaj Auto Finance Limited, which is a NBFC for almost 8 years as a Company Secretary. He has wide experience in the Secretarial and related fields of about 23 years. Before joining Kirloskar Brothers Limited, he was with Kirloskar Pneumatic Company Limited and Thyssen Krupp Industries India Private Limited. He has been working with Kirloskar Brothers Limited as Vice-President and Head Legal and Company Secretary for last 5 years.
Mr. G. P. Kulkarni is a Chairman of Investors Grievance Committee and a member of Remuneration Committee in the Company.
Other Directorships
Gondwana Engineers Limited The Kolhapur Steel Limited Kirloskar Silk Industries Limited Pratibha Communications Private Limited Pooja Credits Private Limited
13 Other Committee positions
Nil
His shareholding in the Company is Nil. He is not related to any other Director on the Board of the Company.
Mr. Atul C. Kirloskar
Mr. Atul C. Kirloskar (Age 54 years) began his career with the erstwhile Kirloskar Cummins Limited in the year 1978, where he started out as a trainee. In December 1981, he was appointed as the Chief Executive of Cummins Diesel Sales & Services. On 1 November 1984, he was appointed as the Executive Vice President of Kirloskar Oil Engines Limited (KOEL). He was co-opted on the Board of KOEL on 6 August 1985 wherein he took over as the Managing Director. In 1988, he was appointed Vice Chairman of KOEL and held the position till 25 July 1998 when he was elected Chairman of the Board of KOEL. He is a member of the World Economic Forum. He has served as President of MCCIA from September 2002 to September 2004, and is Chairman of CII National Committee of Defence since 2000.
He is neither a Chairman nor a member of any of the Committees in the Company.
Other Directorships
Kirloskar Industries Limited (earlier known as Kirloskar Oil Engines Limited) Kirloskar Ferrous Industries Limited Kirloskar Oil Engines Limited (earlier known as Kirloskar Engines India Limited) G. G. Dandekar Machine Works Limited Kirloskar Proprietary Limited Five Star Bulkcarriers Private Limited Navsai Investments Private Limited Toyota Kirloskar Motor Private Limited Asara Sales and Investments Private Limited Kirloskar Kenya Limited, Kenya
Other Committee positions
Name of the Company Committee Chairman / Member Kirloskar Ferrous Industries Limited Share Transfer cum Shareholders / Investors Grievance Committee Chairman Kirloskar Industries Limited Share Transfer cum Shareholders / Investors Grievance Committee Member
He holds 134,786 equity shares of Rs. 10/- each in the Company. He is not related to any other Director on the Board of the Company.
Mr. Nihal Kulkarni
Mr. Nihal G. Kulkarni (Age 28 years), A.B. in Economics from Brown University, has over four years of experience in the areas of finance and investments. He has undergone extensive training with the Kirloskar Group, Toyota Motor Sales, USA and DSP Merrill Lynch. He is currently Vice President in the Kirloskar Pneumatic Company Limited. He is the Vice Chairman and Director of G. G. Dandekar Machine Works Limited and is also a Director of Kirloskar Consultants Ltd. and G. G. Dandekar Investment Pte. Limited, a wholly owned subsidiary of G. G. Dandekar Machine Works Limited, incorporated in Singapore.
Mr. Nihal Kulkarni is a member of Audit Committee in the Company.
14 Other Directorships
G. G. Dandekar Machine Works Limited Kirloskar Consultants Limited Kirloskar Industries Limited (earlier known as Kirloskar Oil Engines Limited) G. G. Dandekar Investments Pte Limited, Singapore Kirloskar Oil Engines Limited (earlier known as Kirloskar Engines India Limited)
Other Committee positions
Name of the Company Committee Chairman / Member G. G. Dandekar Machine Works Limited Audit Committee Member G. G. Dandekar Machine Works Limited Share Transfer cum Shareholders Grievance Committee Member Kirloskar Industries Limited Audit Committee Member Kirloskar Engines India Limited Audit Committee Member
His shareholding in the Company is Nil. He is not related to any other Director on the Board of the Company.
Mr. A. N. Alawani
Mr. A. N. Alawani (Age 65 years) is a Chartered Accountant by profession. He has work experience of over 30 years in Import, Export and Labour matters besides his core area of Finance, Taxation, Financial restructuring and Company Law. His abilities in Corporate Tax Planning and Finance helped various organisations in which he was employed. He has retired as Director (Finance) from Kirloskar Oil Engines Limited on 31 August 2005.
He is a Chairman of Audit Committee and a member of Remuneration Committee in the Company.
Other Directorships
Kirloskar Integrated Technologies Limited Kirloskar Industries Limited (earlier known as Kirloskar Oil Engines Limited) Kirloskar Brothers Limited Kirloskar Ferrous Industries Limited Kirloskar Power Equipment Limited Kirloskar Oil Engines Limited (earlier known as Kirloskar Engines India Limited)
Other Committee positions
Name of the Company Committee Chairman / Member Kirloskar Ferrous Industries Limited Share Transfer cum Shareholders’/ Investors’ Grievance Committee Member Kirloskar Ferrous Industries Limited Audit Committee Member Kirloskar Brothers Limited Investors’ Grievance Committee Member Kirloskar Industries Limited Audit Committee Chairman Kirloskar Industries Limited Share Transfer cum Shareholders’/ Investors’ Grievance Committee Chairman
He holds 500 equity shares of Rs. 10/- each in the Company. He is not related to any other Director on the Board of the Company.
15 Mr. A. C. Kulkarni
Mr. A. C. Kulkarni (Age 59 years) is a Chartered Accountant with All India ranking in Final Examination. He is associated with Kirloskar Group in various capacities for last 32 years. He is on the boards of various Kirloskar Group Companies.
He is a member of Investors Grievance Committee in the Company.
Other Directorships
Kirloskar Integrated Technologies Limited Kirloskar Proprietary Limited Achyut & Neeta Holdings & Finance Private Limited Alpak Investments Private Limited Asara Sales & Investments Private Limited Binaza Travels Private Limited Kirloskar Overseas Private Limited Kirloskar Sons & Company Private Limited Prakar Investments Private Limited Better Value Holdings Private Limited Pooja Credits Private Limited
Other Committee positions
Name of the Company Committee Chairman / Member Better Value Holdings Private Limited Audit Committee Member
His shareholding in the Company is Nil. He is not related to any other Director on the Board of the Company.
7. Investors’ Grievance Committee
The Company formed and constituted an Investors' Grievance Committee at the Board Meeting of the Company held on February 13, 2010. The Committee consisted of the following members as on March 31, 2010:
Mr. G. P. Kulkarni, Chairman Mr. A. R. Sathe, Member Mr. A. C. Kulkarni, Member
No Investors Grievance Committee Meeting was held during the year under review as the same was constituted on February 13, 2010.
Name and designation of Compliance Officer: Mr. Vikas Vohra – Secretarial and Compliance Officer
No shareholders' complaints were received by the company as on March 31, 2010.
With reference to clause 47(f) of the Listing Agreement, Company has designated exclusive e-mail ID for the investors as [email protected] to register their grievances, if any. This has been initiated by the Company to resolve such investors’ grievances immediately. The Company has displayed the said e-mail ID on its website for the use of investors.
16 8. General Body Meetings
The first Annual General Meeting of the Company is scheduled to be held on July 27, 2010.
So far, the Company has not adopted postal ballot for passing any resolution at the General Meeting.
9. Disclosures
i. Disclosures on materially significant related party transactions i.e. transactions of the Company of material nature, with its Promoters, Directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of the Company at large.
There are no materially significant transactions made by the Company with its Promoters, Directors or the management, their subsidiaries or relatives etc. which have potential conflict with the interest of the Company at large.
ii. Details of non compliance by the Company, penalties and strictures imposed on the Company by Stock Exchange or SEBI or any statutory authority on any matter related to capital markets during the last financial year.
NIL
iii. Whistle Blower Policy
The Company has formulated and implemented the Whistle Blower Policy (“the Policy”) during the last financial year. This would inter alia provide a mechanism for employees of the Company and other persons dealing with the Company to report to the Chairman of the Audit Committee; any instance of unethical behaviour, actual or suspected fraud or violation of the Company’s Code of Conduct. Thus any employee has direct access to the Audit Committee.
The Policy has been communicated to all the employees of the Company and the same has also been uploaded on the company’s website.
iv. All mandatory requirements of Clause 49 of the Listing Agreement have been complied with by the Company and the extent of adoption of non-mandatory requirements is given hereunder :
Non–Mandatory requirements
The Board –
The Company has a Non-Executive Chairman and the office with required facilities is provided and maintained at the Company’s expenses for use by the Chairman. No policy has been fixed on tenure of Independent Directors.
Remuneration Committee –
Remuneration Committee is already in place and complying with related non-mandatory requirements.
Shareholders’ Rights –
The Annual Accounts are published in English and Vernacular language newspapers and are also displayed on the Company’s website.
Audit qualifications –
There are no qualifications on the financial statements of the Company for the period ended March 31, 2010
17 Whistle Blower Policy –
The Company has a Whistle Blower Policy. It inter alia provides a mechanism for employees of the Company and other persons dealing with the Company to report to the Chairman of the Audit Committee; any instance of unethical behaviour, actual or suspected fraud or violation of the Company’s code of conduct. It also provides for adequate safeguards against victimisation of such employees. Further, the existence of the mechanism has been appropriately communicated within the organisation.
10. Means of Communication
The Annual Audited Accounts were published in English and Vernacular language newspapers and also displayed on Company’s website. The shareholders of the Company were communicated about the information on Scheme of Arrangement from time to time. The Company has its own website which contains all important public domain information and matters concerning the shareholders and details of contact persons.
Management Discussion and Analysis Report is included in the Directors’ Report of this Annual Report.
11. General Shareholder Information
1st Annual General Meeting Day & Date : Tuesday, July 27, 2010 Time : 1.30 p.m. Venue : Kirloskar Brothers Limited, “Yamuna”, Survey No. 98 (3 – 7), Baner, Pune – 411 045 Financial Year : 1st April to 31st March Book closure date : July 26, 2010 to July 27, 2010
Listing on Stock Exchanges :
The Company has made Listing Applications with BSE and NSE for listing of its equity shares in terms of the Scheme of Arrangement.
Listing fees payment :
The Initial and Annual Listing fees have been paid to both the stock exchanges and there is no outstanding payment towards the stock exchanges, as on date of this Annual Report.
Registrar and Share Transfer Agent
The Company appointed M/s Link Intime India Private Limited, as its Registrar and Share Transfer Agent (R & T Agent) with effect from February 15, 2010. Share Transfers, dematerialisation of shares, dividend payment and all other investor related activities shall be attended and processed at the office of the Registrar and Share Transfer Agent at the following address:-
Link Intime India Private Limited, (Unit: Kirloskar Brothers Investments Limited), Block No. 202, 2nd Floor, Akshay Complex, Near Ganesh Temple, Off Dhole Patil Road, Pune – 411 001 Tel. No.: (020) 26053503 Fax No.: (020) 26051629 Email : [email protected]
Share transfer system
Share transfers received by the Company would be transferred within 15 days from the date of receipt, provided the documents are complete in all respects. The process will become applicable from 2010-11 as the shares of the Company are not listed at present and the Company has filed listing applications with BSE and NSE for listing of its equity shares.
18 Distribution of Shareholding as on March 31, 2010
Nominal value of shares Number of % to total Total face % to total (In Rupees) holders holders value face value From To (In Rupees) 1 5000 15661 97.7590 6102870 11.5410 5001 10000 178 1.1110 1215080 2.2980 10001 20000 82 0.5120 1157040 2.1880 20001 30000 22 0.1370 544440 1.0300 30001 40000 9 0.0560 321710 0.6080 40001 50000 12 0.0750 556240 1.0520 50001 100000 25 0.1560 1606810 3.0380 100001 Above 31 0.1940 41377990 78.2460 TOTAL 16020 100.0000 52882180 100.0000
Shareholding Pattern as on March 31, 2010
Sr. No. Category No. of shares % of shareholding 1. Promoters’ Holding Indian Promoters 2734397 51.71 Bodies Corporate 556125 10.52 2. Non Promoters’ Holding Mutual Funds 374975 7.09 Financial Institutions / Banks 6073 0.11 Insurance Companies 267489 5.06 Foreign Institutional Investors 65674 1.24 Private Corporate Bodies 218742 4.14 Indian Public 1049564 19.84 Non Resident Indians 13764 0.26 Clearing Members 1415 0.03 TOTAL 5288218 100
As on date, the Company has not issued any GDRs/ ADRs / warrants or any convertible instruments etc.
Investor contacts
Company Address : Registrar and Share Transfer Agent : Kirloskar Brothers Investments Limited, Link Intime India Private Limited, 13/A, Karve Road, Kothrud, (Unit: Kirloskar Brothers Investments Limited), Pune – 411 038 Block No. 202, 2nd Floor, Akshay Complex, Tel. No. (020) 2545 3002 Near Ganesh Temple, Off Dhole Patil Road, Fax No. (020) 2543 4262 Pune – 411 001 Email : [email protected] Tel. No. (020) 2605 3503 Fax No. (020) 2605 1629 Email : [email protected]
19 Address of stock exchanges : (Where listing applications submitted)
Bombay Stock Exchange Limited National Stock Exchange of India Limited Phiroze Jeejeebhoy Towers, Exchange Plaza, Bandra-Kurla Complex, Dalal Street, Bandra (East) Mumbai – 400 001 Mumbai – 400 051 Tel. No. (022) 2272 1233 Tel. No. (022) 2659 8236 Fax No. (022) 2272 2061 Fax No. (022) 2659 8237
Depositories for equity shares :
National Securities Depository Limited Central Depository Services (India) Limited Trade World – A Wing, Kamala Mills Compound, Phiroze Jeejeebhoy Towers, Lower Parel, 16th Floor, Mumbai – 400 013 Dalal Street, Tel. No. (022) 2499 4200 Mumbai - 400 001 Fax No. (022) 2497 2993 / 6351 Tel. No. (022) 2272 3333 Fax No. (022) 2272 3199 / 2072
The constituents of ‘Group’ as prescribed in Regulation 3(1)(e)(i) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 comprises Better Value Holdings Private Limited, Kirloskar Industries Limited (earlier known as Kirloskar Oil Engines Limited), Kirloskar Oil Engines Limited (earlier known as Kirloskar Engines India Limited), Kirloskar Pneumatic Company Limited, Kirloskar Ferrous Industries Limited, Pooja Credits Private Limited, Kirloskar Silk Industries Limited, Kirloskar Constructions and Engineers Limited, Gondwana Engineers Limited, The Kolhapur Steel Limited, Kirloskar Corrocoat Private Limited, Kirloskar Systems Limited, Asara Sales & Investments Private Limited, Cees Investments and Consultants Private Limited, Navsai Investments Private Limited, Prakar Investments Private Limited, Alpak Investments Private Limited, Achyut & Neeta Holdings & Finance Private Limited, SriHarihareshwara Finance & Investments Private Limited, VikramGeet Investments and Holdings Private Limited, Kirloskar Integrated Technologies Limited, Kothrud Power Equipment Limited, Koppal Mines & Minerals Private Limited, Kirloskar Proprietary Limited, G. G. Dandekar Machine Works Limited, Mahila Udyog Limited, Kirloskar Chillers Private Limited, Kirloskar Roadrailer Limited, Hematic Motors Private Limited, Pressmatic Electro Stampings Private Limited, Quadromatic Engineering Private Limited, Kirloskar Brothers Limited, Kirloskar Consultants Limited, Suman Kirloskar, Mrinalini Kirloskar, Neeta A. Kulkarni, Atul C. Kirloskar, Arti Kirloskar, Gauri Kirloskar, Aditi Kirloskar, Sanjay C. Kirloskar, Pratima Kirloskar, Alok Kirloskar, Rama Kirloskar, Rahul C. Kirloskar, Alpana Kirloskar, Alika Kirloskar, Aman Kirloskar, Gautam A. Kulkarni, Jyotsna Kulkarni, Nihal Kulkarni, Gargi Nihal Kulkarni, Shruti Kulkarni, Ambar Kulkarni, Komal Kulkarni, Vikram S. Kirloskar, Geetanjali Kirloskar, Manasi Kirloskar, Roopa Gupta and Chandrashekhar H. Naniwadekar.
20 DECLARATION FOR COMPLIANCE WITH CODE OF CONDUCT
To the members of KIRLOSKAR BROTHERS INVESTMENTS LIMITED
Pursuant to clause 49 I (D) (ii) of the Listing Agreement, I hereby declare that all the Board and Senior Management Personnel are aware of the provisions of the Code of Conduct laid down by the Board as made effective from March 2, 2010. All Board Members and Senior Management Personnel have affirmed compliance with Code of Conduct.
For Kirloskar Brothers Investments Limited
A. C. Kulkarni Executive Director
Pune : June 5, 2010
REPORT OF THE AUDITORS ON CORPORATE GOVERNANCE TO THE MEMBERS
We have examined the compliance of conditions of Corporate Governance by KIRLOSKAR BROTHERS INVESTMENTS LIMITED for the period ended on 31 March 2010, as stipulated in clause 49 of the Listing Agreement of the said company with stock exchanges. As per the information and explanations given and read with clause 11 of the Report on Corporate Governance, the company has made Listing Applications with BSE and NSE for listing of its equity shares in terms of the Scheme of Arrangement.
The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the company has complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement.
We further state that such compliance is neither an assurance as to the future viability of the company nor the efficiency or effectiveness with which the management has conducted the affairs of the company.
For M/s P. G. BHAGWAT Chartered Accountants
PANKAJA BHAGWAT Partner Membership No. 86155 Firm’s registration no: 101118W Pune : June 5, 2010
21 AUDITOR’S REPORT TO THE MEMBERS OF KIRLOSKAR BROTHERS INVESTMENTS LIMITED
1. We have audited the attached balance sheet of KIRLOSKAR BROTHERS INVESTMENTS LIMITED as at 31st March 2010, the profit and loss account and also the cash flow statement of the company for the period ended on that date, annexed thereto. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003 [as amended by Companies (Auditor’s Report) (Amendment) Order, 2004] issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
(i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(ii) in our opinion proper books of account as required by law have been kept by the company so far as appears from our examination of those books;
(iii) the balance sheet, the profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;
(iv) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply, in all material aspects and read with clause B.5. of Schedule 5 to the financial statements in respect of accounting and disclosures under Accounting Standard 15 (revised) not being practicable, comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
(v) on the basis of the written representations received from the directors as on 31st March, 2010, and taken on record by the board of directors, we report that none of the directors is disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;
(vi) in our opinion and to the best of our information and according to the explanations given to us, the accounts, read together with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the balance sheet, of the state of affairs of the company as at 31st March, 2010 ; (b) in the case of the profit and loss account of the profit for the period ended on that date; and (c) in the case of the cash flow statement, of the cash flows for the period ended on that date.
For M/s P. G. BHAGWAT Chartered Accountants
PANKAJA BHAGWAT Partner Membership No.: 86155 Firm’s Registration no.: 101118W Pune: April 26, 2010
22 ANNEXURE Re: KIRLOSKAR BROTHERS INVESTMENTS LIMITED
Referred to in paragraph 3 of our report of even date
(i) The company does not own any fixed assets. Accordingly, the provisions of clause 4 (i) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
(ii) As the company has no manufacturing activity, the provisions of clause 4 (ii) of the Companies (Auditor’s Report) Order,2003 are not applicable to the company.
(iii) (a) The company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained as per section 301 of the Companies Act, 1956.
Accordingly, the provisions of clause 4 (iii) (b) (c) and (d) are not applicable to the company.
(e) The company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained as per section 301 of the Companies Act, 1956.
Accordingly, the provisions of clause 4 (iii) (f) and (g) are not applicable to the company.
(iv) Being an investment company without any fixed assets, the provisions of clause 4 (iv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
(v) (a) According to the information and explanations given to us, there were no contracts or arrangements referred to in section 301 of the Companies Act, 1956.
Accordingly, the provisions of clause 4 (v) (b) are not applicable to the company.
(vi) According to information and explanations given to us, the company has not accepted any deposits from public.
(vii) According to information and explanations given to us, the company does not require a formal internal audit system taking into consideration nature and volume of its business.
(viii) Being an investment company, the provisions of clause 4 (viii) of the Companies (Auditor’s Report) Order, 2003 related to maintenance of cost records are not applicable to the company.
(ix) (a) The company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to it.
According to information and explanation given to us, no undisputed amounts payable in respect of statutory dues were in arrears, as at 31st March, 2010 for a period of more than six months from the date they became payable.
(b) According to information and explanation given to us, there are no dues of income tax, sales tax, wealth tax, service tax, custom duty, excise duty and cess which have not been deposited on account of any dispute.
(x) The company has no accumulated losses as at 31st March, 2010. The company has not incurred cash losses during the financial year.
(xi) According to information and explanations given to us, the company has no dues to any financial institution, bank or debenture holders. Accordingly, the provisions of clause 4 (xi) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
(xii) According to information and explanation given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4 (xii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
(xiii) In our opinion, the company is not a chit fund or a nidhi/mutual benefit fund/society. Accordingly, the provisions of clause 4 (xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
(xiv) According to information and explanation given to us, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable the company.
23 (xv) According to information and explanation given to us, the company has not given guarantees for loans taken by others from banks or financial institutions.
(xvi) According to information and explanation given to us, the company does not have any term loans.
(xvii) According to information and explanation given to us, we report that no funds raised on short-term basis have been used for long-term investment.
(xviii) According to information and explanation given to us, the company has not made any preferential allotment of any shares to parties and companies covered under section 301 of the Companies Act, 1956.
(xix) According to information and explanation given to us, the company has not issued any debentures. Accordingly, the provisions of clause 4 (xix) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
(xx) According to information and explanation given to us, the company has not made any public issue to raise money. Accordingly, the provisions of clause 4 (xx) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
(xxi) According to information and explanation given to us, no fraud on or by the company has been noticed or reported during the course of our audit.
For M/s P. G. BHAGWAT Chartered Accountants
PANKAJA BHAGWAT Partner Membership No.: 86155 Firm’s Registration no.: 101118W Pune : April 26, 2010
24 k n la b ft e l y ll a n o ti n te n i s i e g a p is h T
25 BALANCE SHEET AS AT MARCH 31, 2010 Rupees As at SCHEDULE March 31, 2010 I. SOURCES OF FUNDS
Shareholders’ funds
Capital 1 52,882,180
Reserves and surplus 2 791,973,912 844,856,092 II. APPLICATION OF FUNDS
Investments 3 589,380,000
Current Assets, Loans & Advances
Bank Balances 4 256,034,875
Loans and advances - Interest accrued on fixed deposits 84,106 256,118,981 Less: Current Liabilities
Sundry Creditors 642,889
Net Current Assets 255,476,092 844,856,092 Notes to Accounts 5
The schedule referred to above and the notes to accounts form an integral part of the Balance Sheet
As per our attached report of even date For and on behalf of the Board of Directors
For M/s P. G. Bhagwat ATUL C. KIRLOSKAR A. C. KULKARNI Chartered Accountants Chairman Executive Director
PANKAJA BHAGWAT VIKAS VOHRA Partner Secretarial & Compliance Officer
Pune : April 26, 2010
26 PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED MARCH 31, 2010 Rupees 2009-10 INCOME
Dividend from Investments 230,314,606
Interest on Fixed Deposit 84,106
Profit on Sale of Investments 597,483
230,996,195 EXPENDITURE
Salary 30,000
Legal & Consultation Fees 2,000
Rent, Rates and Taxes 43,406
Royalty 104,000
Postage & Telephone 2,206
Audit Fees 82,725
Director Fees 10,000
Managerial Remuneration 413,346
Other Expenses 24,350
Preliminary Expenses write off 337,380
Pre - Operative expenses write off 1,078,180
2,127,593
Profit/(Loss) before tax 228,868,602
Provision for tax -
Net profit / Surplus carried to Balance Sheet 228,868,602
228,868,602
Basic and Diluted Earning per Equity Share - not annualised 43.28 (Nominal Value per share Rs.10)
The schedule referred to above and the notes to accounts form an integral part of the Profit and Loss Account
As per our attached report of even date For and on behalf of the Board of Directors
For M/s P. G. Bhagwat ATUL C. KIRLOSKAR A. C. KULKARNI Chartered Accountants Chairman Executive Director
PANKAJA BHAGWAT VIKAS VOHRA Partner Secretarial & Compliance Officer
Pune : April 26, 2010
27 CASH FLOW STATEMENT FOR THE PERIOD ENDED MARCH 31, 2010 Rupees PARTICULARS 2009-2010
A. Cash Flow from Operating Activities Net Profit 228,868,602 Add : Preliminary Expenses write off 337,380 Pre - Operative expenses write off 1,078,180 Less: Profit on sale of Shares 597,483 229,686,679 Adjustment for :- Trade Payables 642,889 Loans and advances (84,106)
Total Cash Flow from Operating Activities 230,245,462
B. Cash Flow from Investing Activities Sale of Shares 26,704,973
C. Cash Flow from Financing Activities Issuance of Shares 500,000 Preliminary Expenses (337,380) Pre - Operative Expenses (1,078,180) Total Cash Flow from Financing Activities (915,560) Net Increase in Cash & Cash Equivalents 256,034,875 Cash and Cash Equivalents at beginning of period - Cash and Cash Equivalents at end of period 256,034,875
As per our attached report of even date For and on behalf of the Board of Directors
For M/s P. G. Bhagwat ATUL C. KIRLOSKAR A. C. KULKARNI Chartered Accountants Chairman Executive Director
PANKAJA BHAGWAT VIKAS VOHRA Partner Secretarial & Compliance Officer
Pune : April 26, 2010
28 SCHEDULE NOS. 1 TO 5 ANNEXED TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 2010
Rupees As at March 31, 2010 SCHEDULE 1 SHARE CAPITAL* Authorized 10,000,000 equity shares of Rs.10/- each 100,000,000
Issued 5,288, 218 equity shares of Rs. 10 each 52,882,180
Subscribed and paid up 5,288, 218 equity shares of Rs. 10 each 52,882,180 * Refer Note [B 7 ] 52,882,180 SCHEDULE 2 RESERVES AND SURPLUS General Reserve 563,105,310 Profit and Loss Account 228,868,602 791,973,912
SCHEDULE 3 INVESTMENTS Long Term Investments (At cost) A. Trade Quoted 73,903,270 equity shares of Rs.2/- each in Kirloskar Industries Ltd. 404,980,851 (formerly - Kirloskar Oil Engines Ltd.) 4,547,254 equity shares of Rs. 10/- each in Kirloskar Pneumatic Company Ltd. 125,655,633 400 equity shares of Rs. 10/- each in Housing Development Finance Corporation Ltd. 9,500 1,081 equity shares of Rs. 10/- each in I C I C I Bank Ltd. 100,000 60,000 equity shares of Rs. 5/- each in Kulkarni Power Tools Ltd. 301,500 531,047,484 Unquoted 1,272 ordinary shares of K. Sh. 1,000/- each in Kirloskar Kenya Ltd. 850,662 112,500 equity shares of Singapore $ 1/- each in Kirsons Trading Pte Ltd. 2,525,731 1 equity share of Rs. 50/- each in Maharashtra State Co-operative Bank Ltd. 53 100 equity shares of Rs. 5,000/- each in Kranti Sahakari Sakhar Karkhana Ltd. 500,000 3,876,446
29 SCHEDULE NOS. 1 TO 5 ANNEXED TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTD.) Rupees As at March 31, 2010 B. In Subsidiary Companies Unquoted Fully Paid Up 3,445,477 equity shares of Rs.10/- each in Pooja Credits Private Ltd. 34,454,770 2,000,130 equity shares of Rs. 10/- each in Kirloskar Silk Industries Ltd. 20,001,300 54,456,070 Total : 589,380,000 Aggregate amount of quoted investments 531,047,484 Market value 14,079,361,743 Aggregate amount of unquoted investments 58,332,516
Schedule 4: Bank Balances Balance in current account 2,634,875 Fixed Deposits with Bank 253,400,000 256,034,875
30 SCHEDULE 5 : NOTES FORMING PART OF THE ACCOUNTS A) Significant Accounting Policies 1) Basis of preparation of financial statements a) The financial statements have been prepared to comply in all material respects with The Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956. b) The financial statements have been prepared under the historical cost convention on an accrual basis. c) The accounting policies applied by the Company are consistent with those used in the previous year. 2) Fixed Assets Fixed assets are stated at cost less accumulated depreciation. Cost comprises the purchase price and any other attributable cost of bringing the asset to its working condition for its intended use. Financing costs relating to acquisition of qualifying fixed assets are also included to the extent they relate to the period till such assets are ready to be put to use. 3) Depreciation Depreciation on fixed assets has been provided in a manner that amortizes the cost of the assets over their estimated useful lives. 4) Investments Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. a) Current investments are carried at lower of cost and fair value determined on an individual investment basis. b) Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. 5) Employee Benefits Short term compensated absence benefits (both vesting and non vesting) are accounted for on the basis of the actual valuation of the leave entitlement as on the balance sheet date. I. Short Term Employee Benefits: All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, expected cost of bonus and short term compensated absences etc. are recognized in the period in which the employee renders the related service. II. Post-Employment Benefits: a) Defined Contribution Plans: The Company does not have any defined contribution plan. b) Defined Benefit Plans: The employees’ gratuity benefit is the Company’s defined benefit plan. The value of such obligation has been determined in terms of their entitlement based on the actual completed service at the end of the year. III. Long Term Employee Benefits: The obligation for long term employee benefits such as long term compensated absences is determined in terms of their entitlement based on the actual completed service at the end of the year. 6) Taxes on Income a) Tax on income for the current period is determined on the basis of taxable income after considering the various deductions available under The Income Tax Act, 1961. b) Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year. The tax effect is calculated on the accumulated timing differences at the end of the accounting period based on prevailing enacted or subsequently enacted regulations. 7) Provisions A provision is recognized when an enterprise has a present obligation as a result of a past event and it is probable that an outflow of resources is expected to settle the obligation, in respect of which a reliable estimate can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current management estimates. 8) Preoperative and preliminary expenses Preoperative and preliminary expenses are written off in first year.
31 SCHEDULE 5 : NOTES FORMING PART OF THE ACCOUNTS (CONTD.)
B) OTHER NOTES: 1. Related Party Disclosures : a) Names of the related party and nature of relationship where control exists Name of the related party Nature of relationship Period Kirloskar Silk Industries Limited Subsidiary Company Since 16.04.2009 Pooja Credits Private Limited Subsidiary Company Since 16.04.2009
b) Related Party Transactions : There are no transactions during the year. 2. Earning per Share : a) The amount used as the numerator in calculating basic and diluted earning per share is the Profit after Tax as disclosed in the Profit & Loss Account. b) The weighted average number of equity shares used as the denominator in calculating basic and diluted earning per share is 52,88,218. 3. Remuneration to Auditors : Statutory Auditors 2010 a) Audit Fees 82,725 b) For Certification 6,067
4. Contingent Liabilities : Nil 5. The company has only 2 employees as on March 31, 2010. Accordingly it is not considered practicable or material to obtain an actuarial valuation of its defined benefit obligation on account of gratuity and its long term employee benefits on account of leave encashment in terms of Accounting Standard 15. The company has accounted these liabilities in the manner specified in note A (5). Details of the provision made as at March 31, 2010 is as follows. Gratuity Rs. 11,000/- Leave Encashment Rs. 22,000/-
6. Managerial Remuneration : Computation of Managerial Remuneration in accordance with Section-198 of the Companies Act,1956 Rupees Profit as per Profit and Loss Account before provision for taxation 228,868,602 Add: Managerial Remuneration 413,346 Directors Fees 10,000 229,291,948 Commission to other Directors @ 1% 2,292,919 Restricted to Rs. - Details of Managerial Remuneration Salary 322,446 Contribution to provident fund and superannuation fund 90,900 413,346
32 SCHEDULE 5 : NOTES FORMING PART OF THE ACCOUNTS (CONTD.)
7. A Scheme of Arrangement between Kirloskar Brothers Limited (KBL), Kirloskar Brothers Investments Limited (KBIL) and their respective shareholders, was duly approved by all the requisite regulatory authorities including Honourable High Court of Judicature at Bombay. Pursuant to the Scheme, Pooja Credits Pvt. Ltd. and Kirloskar Silk Industries Ltd. have become subsidiaries of KBIL from the Appointed Date in terms of the Scheme of Arrangement i.e. April 16, 2009 As contemplated in the scheme, certain specified investments, as listed in the Scheme of Arrangement, held by KBL stand transferred to and vested in KBIL without any further acts, deeds and actions. Pursuant to the scheme, original subscribed and paid up equity share capital of Rs. 5 lacs stand cancelled and as per Honourable Bombay High Court order, as on 31.3.2010 it stands at Rs.52,882,180/- consisting of 5,288,218 equity shares of Rs. 10/- each. Further based on High Court order dated 23.04.2010 and in terms of the Scheme, the Board on 26.04.2010, issued and allotted 500 equity shares of Rs. 10/- each against the then 10,000 shares of KBL, kept in abeyance. 8. The name of Kirloskar Oil Engines Ltd. has been changed to “Kirloskar Industries Limited” with effect from 31st March 2010 pursuant to a Scheme of Arrangement of Demerger between Kirloskar Oil Engines Ltd. (KOEL) and Kirloskar Engines India Ltd. (KEIL) as approved by the Hon’ble High Court of Judicature at Bombay vide its order dated 31st July 2009 read with its order dated 19th March 2010 (the “Scheme”). The Company will be issued shares in the proportion of 3 equity shares in KEIL for every 4 equity shares held in KOEL, i.e. for every 20 equity shares of Rs. 2 each held by the Company in KOEL, it will be allotted 15 equity shares of Rs. 2 each in KEIL and the balance 5 shares of Rs. 2 each will be consolidated into 1 share of Rs. 10 each in KOEL. 9. The company has been incorporated on April 16, 2009 and has become operative from March 2, 2010. Hence, previous year figures are not given.
As per our attached report of even date For and on behalf of the Board of Directors
For M/s P. G. Bhagwat ATUL C. KIRLOSKAR A. C. KULKARNI Chartered Accountants Chairman Executive Director
PANKAJA BHAGWAT VIKAS VOHRA Partner Secretarial & Compliance Officer
Pune : April 26, 2010
33 BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE (Inserted vide Notification No. GSR388(E), dated 15.05.1995) I. Registration Details Registration No. 1 3 3 7 9 4
State Code 1 1 Balance Sheet Date 3 1 0 3 2 0 1 0
II. Capital raised during the year: (Amount in Rs. Thousands) Public Issue Rights Issue N I L N I L Bonus Issue Private Placement N I L N I L Scheme of Arrangement 5 2 8 8 2 III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) Total Liabilities Total Assets 8 4 4 8 5 6 8 4 4 8 5 6 Sources of Funds Paid Up Capital Reserves and Surplus 5 2 8 8 2 7 9 1 9 7 4 Secured Loans Unsecured Loans N I L N I L Application of Funds Net Fixed Assets Investments N I L 5 8 9 3 8 0 Net Current Assets Misc. Expenses 2 5 5 4 7 6 N I L Accumulated Losses N I L IV. Performance of the Company (Amount in Rs. Thousands) Turnover Total Expenditure 2 3 0 9 9 6 2 1 2 8 V. Profit of Company Profit/(Loss) before tax Profit/(Loss) after tax + - + - + 2 2 8 8 6 8 + 2 2 8 8 6 8 (Please tick appropriate box -> + for Profit, - for Loss) Earning per share (Rs.) Dividend Rate % 4 3 . 2 8 N I L VI. Generic name of three principal products/services of Company (as per monetary terms) Item Code No. - - (ITC Code) Product Description - -
As per our attached report of even date For and on behalf of the Board of Directors
For M/s P. G. Bhagwat ATUL C. KIRLOSKAR A. C. KULKARNI Chartered Accountants Chairman Executive Director
PANKAJA BHAGWAT VIKAS VOHRA Partner Secretarial & Compliance Officer
Pune : April 26, 2010
34 STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES :
Sr. Names of the Subsidiaries Pooja Credits Kirloskar Silk No. Pvt. Limited Industries Limited
1. The Financial year of the Subsidiary Companies ended on March 31, 2010 March 31, 2010
2. Holding Company's interest Controls composition Controls composition of the Board and of the Board and also owns 100 % of also owns 100 % of equity share capital equity share capital
3. Net aggregate amount of Subsidiary's Profits / (Losses) as far as it concerns members of the holding company not dealt with the Holding Company's accounts : (i) Profit / (Loss) for the Subsidiary's financial year end Rs. 48,076,089 (15,701) (ii) Profits / (Losses) for its previous financial years since becoming subsidiary. Rs. - -
4. Net aggegate amount of Subsidiary's Profits / (Losses) dealt with in the Holding Company's accounts : (i) for the Subsidiary's financial year ended March 31, 2010 Nil Nil (ii) for its previous financial years Nil Nil
As per our attached report of even date For and on behalf of the Board of Directors
For M/s P. G. Bhagwat ATUL C. KIRLOSKAR A. C. KULKARNI Chartered Accountants Chairman Executive Director
PANKAJA BHAGWAT VIKAS VOHRA Partner Secretarial & Compliance Officer
Pune : April 26, 2010
35 CONSOLIDATED FINANCIAL STATEMENTS
36 CONSOLIDATED FINANCIAL STATEMENTS AUDITOR’S REPORT TO THE BOARD OF DIRECTORS OF KIRLOSKAR BROTHERS INVESTMENTS LIMITED
We have audited the attached consolidated balance sheet of Kirloskar Brothers Investments Limited (KBIL) Group, as at March 31, 2010 and also the consolidated profit and loss account and the consolidated cash flow statement for the period ended on that date annexed thereto. These financial statements are the responsibility of the company's management and have been prepared by the management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the generally accepted auditing standards in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
We report that the consolidated financial statements have been prepared by the management in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements, Accounting Standard (AS) 23, Accounting for Investments in Associates in Consolidated Financial Statements and Accounting Standard (AS) 27, Financial Reporting of Interests in Joint Ventures, prescribed by Companies (Accounting Standards) Rules, 2006.
Based on our audit and on consideration of report of other auditors on separate financial statements and on the other financial information of the components, and to the best of our information and according to explanations given to us, we are of the opinion that the attached consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India: a) in the case of the consolidated balance sheet, of the state of affairs of KBIL Group as at March 31, 2010; b) in the case of consolidated profit and loss account, of the profit for the period ended on that date; and c) in the case of the consolidated cash flow statement, of the cash flows for the period ended March 31, 2010.
For M/s P. G. BHAGWAT Chartered Accountants
PANKAJA BHAGWAT Partner Membership No. 86155 Firms registration No. 101118W Pune : April 26, 2010
37 CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2010 Rupees As at SCHEDULE March 31, 2010 I. SOURCES OF FUNDS
Shareholders’ funds
Capital 1 52,882,180
Reserves and surplus 2 937,234,960
Loan Funds
Unsecured Loan 418,331
990,535,471
II. APPLICATION OF FUNDS
Fixed Assets 18,429,624
Land (Freehold)
Investments 662,929,381
Current Assets, Loans & Advances and Bank Balances 3 309,751,128
Loans and advances 4 997,133
Other current assets - Interest accrued on investments 97,174 310,845,435 Less: Current Liabilities
Sundry Creditors 1,668,969
Net Current Assets 309,176,466 990,535,471
Notes to Accounts 5
The schedule referred to above and the notes to accounts form an integral part of the Balance Sheet
As per our attached report of even date For and on behalf of the Board of Directors
For M/s P. G. Bhagwat ATUL C. KIRLOSKAR A. C. KULKARNI Chartered Accountants Chairman Executive Director
PANKAJA BHAGWAT VIKAS VOHRA Partner Secretarial & Compliance Officer
Pune : April 26, 2010
38 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED MARCH 31, 2010 Rupees 2009-10 INCOME
Dividend from Investments 275,706,944
Interest on Fixed Deposit 753,815
Profit on Sale of Investments 3,499,613 279,960,372
EXPENDITURE
Salary 290,000
Rent, Rates and Taxes 43,406
Postage & Telephone 2,206
Director Fees 10,000
Mangerial Remuneration 413,346
Other Expenses 256,863
Preliminery Expenses write off 337,380
Pre - Operative expenses write off 1,078,180 2,431,381
Profit/(Loss) before tax 277,528,991
Provision for current tax 600,000
Profit/(Loss) after tax 276,928,991
Balance brought forward -
Net profit / Surplus carried to Balace Sheet 276,928,991 276,928,991
Basic and Diluted Earning per Equity Share - not annualised 52.37 (Nominal Value per share Rs.10)
The schedule referred to above and the notes to accounts form an integral part of the Profit and Loss Account
As per our attached report of even date For and on behalf of the Board of Directors
For M/s P. G. Bhagwat ATUL C. KIRLOSKAR A. C. KULKARNI Chartered Accountants Chairman Executive Director
PANKAJA BHAGWAT VIKAS VOHRA Partner Secretarial & Compliance Officer
Pune : April 26, 2010
39 CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED MARCH 31, 2010 Rupees PARTICULARS 2009-2010
A. Cash Flow from Operating Activities Net Profit 277,528,991 Less: Profit on sale of Shares 3,499,613 274,029,378
Add : Preliminary Expenses write off 337,380 Pre - Operative expenses write off 1,078,180 275,444,938 Adjustment for :- Trade Payables 607,007 Loans and advances (97,174) Direct taxes paid (868,929) Total Cash Flow from Operating Activities 275,085,842
B. Cash Flow from Investing Activities Sale of Shares 34,952,839 Total Cash Flow from Investing Activities 34,952,839
C. Cash Flow from Financing Activities Issuance of Shares 500,000 Preliminary Expenses write off (337,380) Pre - Operative expenses write off (1,078,180) Other borrowings 11,927 Total Cash Flow from Financing Activities (903,633) Net Increase in Cash & Cash Equivalents 309,135,048 Cash and Cash Equivalents at beginning of period - Add: Cash and Cash Equivalents on acquisition of subsidiaries 616,081 Cash and Cash Equivalents at end of period 309,751,129
As per our attached report of even date For and on behalf of the Board of Directors
For M/s P. G. Bhagwat ATUL C. KIRLOSKAR A. C. KULKARNI Chartered Accountants Chairman Executive Director
PANKAJA BHAGWAT VIKAS VOHRA Partner Secretarial & Compliance Officer
Pune : April 26, 2010
40 SCHEDULE TO THE CONSOLIDATED ACCOUNTS Rupees 2009-10 Schedule 1: Share Capital
Authorized 10,000,000 equity shares of Rs.10/- each 100,000,000
Issued 5,288, 218 equity shares of Rs. 10 each 52,882,180
Subscribed and paid up 5,288, 218 equity shares of Rs. 10 each 52,882,180 52,882,180
Schedule 2: Reserves and Surplus
Capital Reserve (on account of acquisition of subsidiary companies) 97,200,659
General Reserve 563,105,310
Profit and Loss Account 276,928,991 937,234,960
Schedule 3: Bank Balances
Balance in current account 3,351,128
Fixed Deposit with Bank 306,400,000 309,751,128
Schedule 4: Loans And Advances
Deposits with post & others 120,150
Advance Income tax (net of Provison for tax) 876,983 997,133
41 SCHEDULE 5 : NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS
A. ACCOUNTING POLICIES
1. Principles of Consolidation :
The consolidated financial statements relate to Kirloskar Brothers Investments Limited (KBIL) and its majority owned subsidiary companies, consolidated on a line by line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group transactions and the unrealised profit/ losses on intra-group transactions and are presented to the extent possible in the manner as the Company's independant financial statements.
The names of the subsidiary companies, Country of Incorporation, Proportion of Ownership Interest and reporting dates considered in the Consolidated Financial Statements are:
Name of the Company Country of Incorporation Proportion of Ownership Reporting Date Interest of KBIL
Pooja Credits Private Limited India 100% 31/3/2010 (from April 16, 2009) @
Kirloskar Silk Industries Limited India 100% 31/3/2010 (from April 16, 2009) @
@ A Scheme of Arrangement between Kirloskar Brothers Limited (KBL), Kirloskar Brothers Investments Limited (KBIL) and their respective shareholders, was duly approved by all the requisite regulatory authorities including Honourable High Court of Judicature at Bombay. Pursuant to the Scheme, Pooja Credits Pvt. Ltd. and Kirloskar Silk Industries Ltd. have become subsidiaries of KBIL from the Appointed Date in terms of the Scheme of Arrangement i.e. April 16, 2009.
The excess of cost to the company of its investment in the subsidiary company over the parents' portion of equity is recognised in the consolidated financial statements as goodwill. The excess of company's share of equity of the subsidiary company over the cost of acquisition is treated as capital reserve.
2. Other Accounting Policies :
They are set out in the notes to accounts of the parent company - Kirloskar Brothers Investments Limited.
B. OTHER NOTES
1) The company has been incorporated on April 16, 2009 and has become operative from March 2, 2010, hence previous year figures are not given.
2) Contingent liabilities :
Notice received from Tahasildar Dindori (Nasik Dist) in respect of tax on non utilisation of land Rs. 2,726,125/- (PY 2,726,125/-)
3) Related Party Disclosures :
a) Names of the related party and nature of relationship where control exists
Name of the related party Nature of relationship Period
Kirloskar Silk Industries Limited Subsidiary Company Since 16.04.2009
Pooja Credits Private Limited Subsidiary Company Since 16.04.2009
b) Related Party Transactions : There are no transactions during the year.
42 NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS (CONTD.) 4) Earning per Share :
a) The amount used as the numerator in calculating basic and diluted earning per share is the Profit after Tax , disclosed in the Profit & Loss Account.
b) The weighted average number of equity shares used as the denominator in calculating basic and diluted earning per share is 5,288,218 .
5) The name of Kirloskar Oil Engines Ltd. has been changed to “Kirloskar Industries Limited” with effect from March 31, 2010 pursuant to a Scheme of Arrangement for Demerger, between Kirloskar Oil Engines Ltd. (KOEL) and Kirloskar Engines India Ltd. (KEIL) as approved by the Hon’ble High Court of Judicature at Bombay vide its order dated 31st July 2009 read with its order dated March 19, 2010 (the “Scheme”). The Company will be issued shares in the proportion of 3 equity shares in KEIL for every 4 equity shares held in KOEL, i.e. for every 20 equity shares of Rs. 2 each held by the Company in KOEL, it will be allotted 15 equity shares of Rs. 2 each in KEIL and the balance 5 shares of Rs. 2 each will be consolidated into 1 share of Rs. 10 each in KOEL
As per our attached report of even date For and on behalf of the Board of Directors
For M/s P. G. Bhagwat ATUL C. KIRLOSKAR A. C. KULKARNI Chartered Accountants Chairman Executive Director
PANKAJA BHAGWAT VIKAS VOHRA Partner Secretarial & Compliance Officer
Pune : April 26, 2010
43 ANNUAL REPORT OF SUBSIDIARIES
44 DIRECTORS’ REPORT TO THE MEMBERS
Your Directors present their 22nd Annual Report and Audited Accounts of the Company for the year ended March 31, 2010.
FINANCIAL PERFORMANCE:
Current Year ended Previous Year ended March 31, 2010 March 31, 2009 (in Rs.) (in Rs.)
Net Profit Before Tax 48,676,089 18,012,162 Provision for tax 600,000 --- Net Profit after Tax 48,076,089 18,012,162 Balance brought forward from previous year 91,652,771 93,177,168 Profit available for appropriation 139,728,861 111,189,330 Interim dividend paid during the year --- 15,160,099 Additional tax on dividend --- 25,76,460 Profit transferred to General Reserve --- 18,00,000 Balance carried to Balance Sheet 139,728,861 91,652,771
DIVIDEND:
Your Directors do not recommend any dividend.
PARTICULARS OF EMPLOYEES:
None of the employees is covered under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) (Amendment) Rules, 2002.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE :
Being an Investment Company, the provisions of Section 217 (1)(e) of the Companies Act, 1956 are not applicable.
SECRETARIAL COMPLIANCE CERTIFICATE:
In accordance with Section 383A of the Companies Act, 1956 and Companies (Compliance Certificate) Rules 2001 the company has obtained a certificate from a Secretary in whole time practice confirming that the Company had complied with all the provisions of the Act and a copy of such certificate is annexed to this report.
DIRECTORS’ RESPONSIBILITY STATEMENT:
Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors confirm – • that in the preparation of the annual accounts, the applicable accounting standards have been followed and there was no material departure from the accounting standards. • that the accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for period from April 1, 2009 to March 31, 2010. • that the proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, and • that the Annual Accounts have been prepared on a going concern basis.
HOLDING COMPANY:
A Scheme of Arrangement between Kirloskar Brothers Limited, Kirloskar Brothers Investments Limited and their respective shareholders was duly approved by all the requisite regulatory authorities including Hon’ble High Court of Judicature at Bombay. Pursuant to the Scheme, the Company ceased to be the Subsidiary Company of Kirloskar Brothers Limited and became a Subsidiary Company of Kirloskar Brothers Investments Limited with effect from the Appointed Date of the Scheme i.e. April 16, 2009.
45 DIRECTORS:
Mr. G. P. Kulkarni retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re- appointment.
Mr. A. C. Kulkarni was appointed as an Additional Director of the Company w.e.f. January 23, 2010. He holds office till the conclusion of this ensuing Annual General Meeting and is eligible for appointment.
Mr. Sanjay Kirloskar resigned from the Board w.e.f. January 23, 2010 due to pre-occupations. He was associated with the Company for last 8 years. The Board wishes to place on record its gratitude for the guidance received from him during his tenure as a Chairman of the Company.
APPLICATION FOR REGISTRATION AS NBFC:
Earlier, the Company did not apply for the Certificate of Registration (COR) as it was exempted from registration as a Non Banking Financial Company (NBFC) under the related provisions.
Subsequently, on receipt of the necessary clarification from RBI, the Company has on September 21, 2009, applied for COR as NBFC. However, the said application is still under process with RBI.
AUDITORS:
M/s P. G. Bhagwat will retire at the ensuing Annual General Meeting and are eligible for re-appointment.
For and on behalf of the Board of Directors
A. R. SATHE DIRECTOR Pune : April 26, 2010
46 COMPLIANCE CERTIFICATE (Under sub-section (1) of Section 383A of the Companies Act, 1956)
Regn. No: U57101MH1988PTC071708 Nominal Capital: Rs. 4,00,00,000/- Paid Up Capital: Rs. 3,44,54,770/-
To, The Members, Pooja Credits Private Limited Udyog Bhavan, Tilak Road, Pune 411 002
I have examined the registers, records, books and papers of POOJA CREDITS PRIVATE LIMITED required to be maintained under the Companies Act, 1956, (the Act) and the rules made there under and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year 31st March 2010. In my opinion and to the best of my information and according to the examinations carried out by me and explanations furnished to me by the Company, its officers and agents, I certify that in respect of the aforesaid financial year:
1. The company has kept and maintained all registers as stated in Annexure ‘A’ to this certificate, as per the provisions of the Act and the rules made there under and all entries therein have been duly recorded.
2. The company has duly filed the forms and returns as stated in Annexure ‘B’ to this certificate, with the Registrar of Companies, Regional Director, Central Government, Company Law Board or other authorities within the time prescribed under the Act and the rules made there under.
3. The company being a private limited company which is a subsidiary of public limited Company has the minimum prescribed paid-up capital and its maximum and total number of members during the said financial year was 3 (Three) excluding its present and past employees and the company during the year under scrutiny;
i. has not invited public to subscribe for its shares or debentures; and ii has not invited or accepted any deposits from persons other than its members, directors or their relatives.
4. The Board of Directors duly met 7 (Seven) times respectively on Monday the 20th April 2009, Thursday the 16th July 2009, Saturday the 5th September 2009, Thursday the 22nd October 2009, Friday the 15th January 2010, Saturday the 23rd January 2010 and Monday the 8th March 2010 in respect of which meetings, proper notices were given and the proceedings were properly recorded and signed including the circular resolutions passed in the Minutes Book maintained for the purpose.
5. The company was not required to close its Register of Members during the financial year.
6. The Annual General Meeting for the financial year ended on 31st March 2009 was held on Friday the 17th July 2009 after giving due notice to the members of the company and the resolutions passed thereat were duly recorded in the Minutes Book maintained for the purpose.
7. No Extra-Ordinary General Meeting was held during the financial year.
8. The Company has not advanced any loans to its directors or persons or firms or companies referred to under section 295 of the Act.
9. The company has not entered into contracts falling within the purview of section 297 of the Act.
10. During the year, the company has complied with the provisions under section 301 of the Act.
11. As there were no instances falling within the purview of section 314 of the Act, the company has not obtained any approvals from the Board of Directors, members or the Central Government.
12. The company has issued duplicate share certificates during the financial year.
13. (i) The Company has delivered all the Certificates of Securities after the transfer of shares as per the Scheme of Arrangement between Kirloskar Brothers Limited and Kirloskar Brothers Investments Limited. There was no allotment of shares.
(ii) The company has not deposited any amount in a separate Bank Account as the company did not declare any dividend during the financial year.
47 (iii) The Company was not required to post warrants to any members in respect of dividend.
(iv) The provisions of the Act relating to transfer of amount remaining in unpaid dividend account, application money due for refund, matured deposits, matured debentures and the interest accrued thereon which have remained unclaimed or unpaid for a period of seven years to Investor Education and Protection Fund are not applicable.
(v) The Company has duly complied with the requirements of Section 217 of the Act.
14. The Board of directors of the company is duly constituted. Mr. A. C. Kulkarni was co-opted as Additional Director w. e. f. 23rd January 2010 and Mr. Sanjay Kirloskar resigned from the post of Director w. e. f. 23rd January 2010. There was no appointment of alternate Director or Director filling casual vacancy.
15. The Company has not appointed any Managing Director/ Whole-time Director/ Manager during the financial year.
16. The company has not appointed any sole-selling agents during the financial year.
17. The company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Directors, Registrar and/or such authorities prescribed under the various provisions of the Act during the financial year.
18. The directors have disclosed their interest in other firms/ companies to the Board of Directors pursuant to the provisions of the Act and the rules made there under.
19. The company has not issued any shares, debentures or other securities during the financial year.
20. The company has not bought back any shares during the financial year.
21. There was no redemption of preference shares or debentures during the financial year.
22. There were no transactions necessitating the company to keep in abeyance the rights to dividend, rights shares and bonus shares pending registration of transfer.
23. The company has not invited / accepted any deposits including any unsecured loans falling within the purview of section 58A during the financial year.
24. The company has not made any borrowings during the financial year ended 31st March 2010.
25. The Company has not made any loans or Investments or given guarantees or provided securities to other bodies corporate and consequently no entries have been made in the register kept for the purpose.
26. The company has not altered the provisions of the Memorandum with respect to situation of the company’s registered office from One State to another during the year under scrutiny.
27. The company has not altered the provisions of the Memorandum with respect to the objects of the company during the year under scrutiny.
28. The company has not altered the provisions of the Memorandum with respect to name of the company during the year under scrutiny.
29. The company has not altered the provisions of the Memorandum with respect to share capital of the company during the year under scrutiny and complied with the provisions of the Act.
30. The company has not altered its Articles of Association of the Company during the financial year.
31. There was no prosecution initiated against or show cause notice received by the company and no fines or penalties or any other punishment imposed on the company during the financial year, for the offences under the Act.
32. The company has not received any money as security from its employees during the financial year.
33. The Company has not set up its own scheme of provident fund; hence the provisions of Section 418 of the Companies Act, 1956 are not applicable to the Company.
JAYAVANT BHAGWAN BHAVE COMPANY SECRETARY Pune : April 26, 2010 FCS 4266, CP No. 3068
48 ANNEXURE – A
Annexure to the compliance certificate of POOJA CREDITS PRIVATE LIMITED
Registers and records maintained by the company.
No. Particulars 1 Register of Members under Section 150. 2 Register of Transfer of shares. 3 Copies of Annual Returns under Section 159. 4 Books of Accounts under Section 209 5 Register of particulars of contracts in which Directors are interested under Section 301. 6 Register of Directors, Managing Director, Manager and Company Secretary under Section 303. 7 Register of Director’s shareholdings under Section 307. 8 Minutes Books for minutes of meetings of the Board of Directors and Members. 9 Register of Charges under Section 143. 10 Register of application and allotment of shares.
JAYAVANT BHAGWAN BHAVE COMPANY SECRETARY Pune : April 26, 2010 FCS 4266, CP No. 3068
ANNEXURE - B
Annexure to the compliance certificate of POOJA CREDITS PRIVATE LIMITED
Forms and Returns as filed by POOJA CREDITS PRIVATE LIMITED with the Registrar of Companies during the financial year ended 31st March 2010
No Form No./ Filed under Particulars Date of filing Whether filed If delay in filing Return relevant (Date of within whether Section event) prescribed requisite of the Act time. Yes/No additional fee paid. Yes/No
1. Form 23AC/ Sec.220 31.03.2009 29.07.2009 Yes N.A. Form 23ACA – Annual Accounts
2. Form 20B – Sec.159 17.07.2009 25.08.2009 Yes N.A. Annual Return
3. Form 32 Sec 303 23.01.2010 02.02.2010 Yes N.A.
JAYAVANT BHAGWAN BHAVE COMPANY SECRETARY Pune : April 26, 2010 FCS 4266, CP No. 3068
49 AUDITOR’S REPORT TO THE MEMBERS OF POOJA CREDITS PRIVATE LIMITED
1. We have audited the attached balance sheet of Pooja Credits Private Limited as at 31st March 2010, the profit and loss account and also the cash flow statement of the company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003 [as amended by Companies (Auditor’s Report) (Amendment) Order, 2004] issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
(i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(ii) in our opinion proper books of account as required by law have been kept by the company so far as appears from our examination of those books;
(iii) the balance sheet, the profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;
(iv) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
(v) on the basis of the written representations received from the directors as on 31st March, 2010, and taken on record by the board of directors, we report that none of the directors is disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;
(vi) in our opinion and to the best of our information and according to the explanations given to us, the accounts, read together with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the balance sheet, of the state of affairs of the company as at 31st March, 2010 ;
(b) in the case of the profit and loss account of the profit for the year ended on that date;
(c) in the case of the cash flow statement, of the cash flows for the year ended on that date.
For M/s P. G. BHAGWAT Chartered Accountants
PANKAJA BHAGWAT Partner Membership No.: 86155 Firm’s Registration no.: 101118W Pune: April 26, 2010
50 ANNEXURE Re: Pooja Credits Private Limited
Referred to in paragraph 3 of our report of even date
(i) The company does not own any fixed assets. Accordingly, the provisions of clause 4 (i) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
(ii) As the company has no manufacturing activity, the provisions of clause 4 (ii) of the Companies (Auditor’s Report) Order,2003 are not applicable to the company.
(iii) (a) The company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained as per section 301 of the Companies Act, 1956.
Accordingly, the provisions of clause 4 (iii) (b) (c) and (d) are not applicable to the company.
(e) The company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained as per section 301 of the Companies Act, 1956.
Accordingly, the provisions of clause 4 (iii) (f) and (g) are not applicable to the company.
(iv) Being an investment company without any fixed assets, the provisions of clause 4 (iv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
(v) (a) According to the information and explanations given to us, there were no contracts or arrangements referred to in section 301 of the Companies Act, 1956.
Accordingly, the provisions of clause 4 (v) (b) are not applicable to the company.
(vi) According to information and explanations given to us, the company has not accepted any deposits from public.
(vii) According to information and explanations given to us, the company does not require a formal internal audit system taking into consideration nature and volume of its business.
(viii) Being an investment company, the provisions of clause 4 (viii) of the Companies (Auditor’s Report) Order, 2003 related to maintenance of cost records are not applicable to the company.
(ix) (a) The company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to it.
According to information and explanation given to us, no undisputed amounts payable in respect of statutory dues were in arrears, as at 31st March, 2010 for a period of more than six months from the date they became payable.
(b) According to information and explanation given to us, there are no dues of income tax, sales tax, wealth tax, service tax, custom duty, excise duty and cess which have not been deposited on account of any dispute.
(x) The company has no accumulated losses as at 31st March, 2010. The company has not incurred cash losses during the financial year and in the immediately preceding financial year.
(xi) According to information and explanations given to us, the company has no dues to any financial institution, bank or debenture holders. Accordingly, the provisions of clause 4 (xi) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
(xii) According to information and explanation given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4 (xii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
(xiii) In our opinion, the company is not a chit fund or a nidhi/mutual benefit fund/society. Accordingly, the provisions of clause 4 (xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
(xiv) According to information and explanation given to us, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable the company.
51 (xv) According to information and explanation given to us, the company has not given guarantees for loans taken by others from banks or financial institutions.
(xvi) According to information and explanation given to us, the company does not have any term loans.
(xvii) According to information and explanation given to us, we report that no funds raised on short-term basis have been used for long-term investment.
(xviii) According to information and explanation given to us, the company has not made any preferential allotment of any shares to parties and companies covered under section 301 of the Companies Act, 1956.
(xix) According to information and explanation given to us, the company has not issued any debentures. Accordingly, the provisions of clause 4 (xix) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
(xx) According to information and explanation given to us, the company has not made any public issue to raise money. Accordingly, the provisions of clause 4 (xx) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
(xxi) According to information and explanation given to us, no fraud on or by the company has been noticed or reported during the course of our audit.
For M/S P. G. BHAGWAT Chartered Accountants
PANKAJA BHAGWAT Partner Membership No.: 86155 Firm’s Registration no.: 101118W Pune: April 26, 2010.
52 k n la b ft e l y ll a n o ti n te n i s i e g a p is h T
53 BALANCE SHEET AS AT MARCH 31, 2010 Rupees SCHEDULE 2010 2009
SOURCES OF FUNDS :
Shareholders' Funds Capital 1 34,454,770 34,454,770 Reserves and surplus 2 148,104,295 100,028,205 182,559,065 134,482,975
APPLICATION OF FUNDS :
Investments 3 128,005,451 133,351,187
Current Assets, Loans & Advances Bank Balances 4 53,714,667 614,030 Loans and advances - Interest Accrued 13,068 - Advance Income Tax ( Net of Provision for Tax) 839,115 570,185 54,566,850 1,184,215 Less: Current Liabilities Sundry Creditors 13,236 52,427 Net Current Assets 54,553,614 1,131,788 182,559,065 134,482,975
Notes to Accounts 5
The schedule referred to above and the notes to accounts form an integral part of the Balance Sheet
As per our report of even date attached For and on behalf of the Board of Directors
For M/s P.G. Bhagwat A. C. KULKARNI A. R. SATHE Chartered Accountants Director Director
PANKAJA BHAGWAT Partner
Pune : April 26, 2010
54 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010 Rupees 2010 2009 INCOME Dividend from Investments 45,392,338 18,266,340 Interest received on Fixed Deposits 669,709 - Profit on Sale of Investments 2,902,130 -
48,964,176 18,266,340
EXPENDITURE Salary 260,000 235,000 Audit Fees 13,236 9,927 Other fees to Auditors 12,134 5,629 Filing Fees 2,000 3,060 Other Expenses 717 562
288,087 254,178
Profit/(Loss) before tax 48,676,089 18,012,162 Provision for tax 600,000 - Net profit 48,076,089 18,012,162 Balance brought forward from previous year 91,652,771 93,177,168
Profit available for appropriation 139,728,861 111,189,330 Appropriations Interim dividend - 15,160,099 Additional tax on dividend - 2,576,460 Transfer to General Reserve - 1,800,000 Surplus carried to Balance Sheet 139,728,861 91,652,771
139,728,861 111,189,330
Basic and Diluted Earning per Equity Share - not annualised 13.95 5.23 (Nominal Value per share Rs.10)
The schedule referred to above and the notes to accounts form an integral part of the Profit and Loss Account
As per our report of even date attached For and on behalf of the Board of Directors
For M/s P.G. Bhagwat A. C. KULKARNI A. R. SATHE Chartered Accountants Director Director
PANKAJA BHAGWAT Partner
Pune : April 26, 2010
55 CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010 Rupees PARTICULARS 2010 2009
A. Cash Flow from Operating Activities Net Profit 48,676,089 18,012,162 Less : Profit on sale of Shares 2,902,130 Adjustment for :- Trade Payables (39,191) 42,325 Loans and advances (13,068) Direct Taxes Paid (868,929) - Total Cash Flow from Operating Activities 44,852,771 18,054,487
B. Cash Flow from Investing Activities 8,247,866 -
C. Cash Flow from Financing Activities Dividend Paid - (15,160,099) Tax on Dividend - (2,576,460) Total Cash Flow from Financing Activities - (17,736,559) Net Increase in Cash & Cash Equivalents 53,100,637 317,928 Cash and Cash Equivalents at begining of period 614,030 296,102 Cash and Cash Equivalents at end of period 53,714,667 614,030
As per our report of even date attached For and on behalf of the Board of Directors
For M/s P.G. Bhagwat A. C. KULKARNI A. R. SATHE Chartered Accountants Director Director
PANKAJA BHAGWAT Partner
Pune : April 26, 2010
56 SCHEDULE TO THE ACCOUNTS Rupees 2010 2009 Schedule 1: Share Capital
Authorized 4,000,000 ( 4,000,000 ) equity shares of Rs.10/- each 40,000,000 40,000,000 Issued 3,485,000 ( 3,485,000) equity shares of Rs. 10 each 34,850,000 34,850,000 Subscribed and paid up 3,445,477 ( 3,445,477) equity shares of Rs. 10 each 34,454,770 34,454,770 [3,445,477 ( -) equity shares are held by Kirloskar Brothers Investment Ltd., the holding company] (Refer Note - B 7) 34,454,770 34,454,770
Schedule 2: Reserves and Surplus
General Reserve Balance as per last account 8,375,434 6,575,434 Add: Transfer from Profit and Loss Account - 1,800,000 8,375,434 8,375,434 Profit and Loss Account 139,728,861 91,652,771 148,104,295 100,028,205
Schedule 3: Investments
Long Term Investments (At cost) Non-Trade Investments Quoted 57,650 (57,650) equity shares of Rs. 10/- each in Kirloskar Investments & Finance Ltd. 1,153,000 1,153,000 17,002,090 (17,002,090) equity shares of Rs.2/- (Rs.2/-) each in Kirloskar Industries Ltd. (formerly - Kirloskar Oil Engines Ltd.) 58,188,067 58,188,067 3,800,000 (3,800,000) equity shares of Rs. 5/- (Rs.5/-) each in Kirloskar Ferrous Industries Ltd. 69,100,000 69,100,000 128,441,067 128,441,067
Unquoted 445,500 (445,500) equity shares of Rs. 10/- each in Kirloskar Consultants Ltd. 4,455,000 4,455,000 - (4,207) equity shares of Rs. 100/- each in Hematic Motors Pvt. Ltd. - 3,179,699 - (3,360) equity shares of Rs. 100/- each in Pressmatic Electro Stampings Pvt. Ltd. - 1,116,998 - (16,375) equity shares of Rs. 10/- each in Quadromatic Engineering Pvt. Ltd. - 706,039 - (34,300) equity shares of Rs. 10/- each in Quadrant Communications Ltd. - 343,000 4,455,000 9,800,736 Sub Total 132,896,067 138,241,803 Less : Provision made for decline in value of Investments (Refer Note no. B 2) 4,899,616 4,899,616 127,996,451 133,342,187 Current Investments Quoted 200 (200) equity shares of Rs. 10/- each in Bank of India 9,000 9,000 128,005,451 133,351,187
Aggregate amount of quoted investments 128,450,067 128,450,067 Market value 2,929,285,571 1,003,537,054
Aggregate amount of unquoted investments 4,455,000 9,800,736
Schedule 4: Bank Balances
Balance in current account 714,667 614,030 Fixed Deposit with Bank 53,000,000 - 53,714,667 614,030
57 SCHEDULE 5 : NOTES TO ACCOUNTS
A] SIGNIFICANT ACCOUNTING POLICIES : 1) Basis of preparation of financial statements : a) The financial statements have been prepared to comply in all material respects with The Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956. b) The financial statements have been prepared under the historical cost convention on an accrual basis. c) The accounting policies applied by the Company are consistent with those used in the previous year.
2) Investments : I) Long Term Investments are carried at cost. Provision for diminution in the value of Long Term Investments is made only if such a decline is other than temporary in the opinion of the management. II) Current Investments are carried at the lower of cost and fair value.
B] OTHER NOTES: 1) Additional information pursuant to part II of Schedule VI to the Companies Act, 1956 - Not Applicable.
2) The company has made a provision of Rs. 4,899,616/- to cover general decline in the value of its long term investments. The same is deducted from aggregate value of long term non trade investments in Schedule "3".
3) Related Party Disclosures :
a) Names of the related party and nature of relationship where control exists.
Name of the related party Nature of relationship Period Kirloskar Brothers Ltd. Holding Company 1st April, 2009 to 15th April, 2009 Kirloskar Brothers Investments Ltd. Holding Company 16th April 2009 to 31st March, 2010
b) Related Party Transactions :
There are no transactions during the year.
4) Earning per Share : a) The amount used as the numerator in calculating basic and diluted earning per share is the Profit after Tax, disclosed in the Profit & Loss Account. b) The weighted average number of equity shares used as the denominator in calculating basic and diluted earning per share is 3,445,477 .
5) Remuneration to Auditors :
Statutory Auditors 2010 2009 a) Audit Fees 13,236 9,927 b) For Certification 12,134 5,629
6) Managerial Remuneration : Nil Nil
7) A Scheme of Arrangement between Kirloskar Brothers Limited, Kirloskar Brothers Investments Limited (KBIL) and their respective shareholders, was duly approved by all the requisite regulatory authorities including Honourable High Court of Judicature at Bombay. Pursuant to the Scheme, Pooja Credits Pvt. Ltd. has become a subsidiary of KBIL from the Appointed Date of the Scheme of Arrangement i.e. April 16, 2009.
8) The name of Kirloskar Oil Engines Ltd. has been changed to “Kirloskar Industries Limited” with effect from 31st March 2010 pursuant to a Scheme of Arrangement of Demerger between Kirloskar Oil Engines Ltd. (KOEL) and Kirloskar Engines India Ltd. (KEIL) as approved by the Hon’ble High Court of Judicature at Bombay vide its order dated 31st July 2009 read with its order dated 19th March 2010 (the “Scheme”). The Company will be issued shares in the proportion of 3 equity shares in KEIL for every 4 equity shares held in KOEL, i.e. for every 20 equity shares of Rs. 2 each held by the Company in KOEL, it will be allotted 15 equity shares of Rs. 2 each in KEIL and the balance 5 shares of Rs. 2 each will be consolidated into 1 share of Rs. 10 each in KOEL.
As per our report of even date attached For and on behalf of the Board of Directors
For M/s P.G. Bhagwat A. C. KULKARNI A. R. SATHE Chartered Accountants Director Director
PANKAJA BHAGWAT Partner Pune : April 26, 2010
58 BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE (Inserted vide Notification No. GSR388(E), dated 15.05.1995) I. Registration Details Registration No. 0 7 1 7 0 8
State Code 1 1 Balance Sheet Date 3 1 0 3 2 0 1 0
II. Capital raised during the year: (Amount in Rs. Thousands) Public Issue Rights Issue N I L N I L Bonus Issue Private Placement N I L N I L
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) Total Liabilities Total Assets 1 8 2 5 5 9 1 8 2 5 5 9 Sources of Funds Paid Up Capital Reserves and Surplus 3 4 4 5 5 1 4 8 1 0 4 Secured Loans Unsecured Loans N I L N I L Application of Funds Net Fixed Assets Investments N I L 1 2 8 0 0 5 Net Current Assets Misc. Expenses 5 4 5 5 4 N I L Accumulated Losses N I L IV. Performance of the Company (Amount in Rs. Thousands) Turnover Total Expenditure 4 8 9 6 4 2 8 8 V. Profit of Company (Amount in Rs. Thousands) + - Profit/(Loss) before tax + - Profit/(Loss) after tax + 4 8 6 7 6 + 4 8 0 7 6 (Please tick appropriate box -> + for Profit, - for Loss) Earning per share (Rs.) Dividend Rate % 1 3 . 9 5 N I L
VI. Generic name of three principal products/services of Company (as per monetary terms)
Item Code No. - - (ITC Code) Product Description - -
As per our report of even date attached For and on behalf of the Board of Directors
For M/s P.G. Bhagwat A. C. KULKARNI A. R. SATHE Chartered Accountants Director Director
PANKAJA BHAGWAT Partner
Pune : April 26, 2010
59 DIRECTORS’ REPORT TO THE MEMBERS
Your Directors present their 18th Annual Report and Audited Accounts of the company for the year ended March 31, 2010.
FINANCIAL RESULTS
Particulars Current year ended Previous Year ended March 31, 2010 March 31, 2009 (in Rs.) (in Rs.) Profit(Loss) before Tax (15,701) (10,432) Provision for Tax -- -- Profit(Loss) carried to Balance Sheet (28,43,247) (28,27,546)
PARTICULARS OF EMPLOYEES: There are no employees of the Company whose particulars are required to be reported under Section 217 (2A) of the Companies Act, 1956.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE : Particulars required to be furnished in this report under section 217 (1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption are not applicable and hence not furnished.
SECRETARIAL COMPLIANCE CERTIFICATE: In accordance with Section 383A of the Companies Act, 1956 and Companies (Compliance Certificate) Rules 2001 the company has obtained a certificate from a Secretary in whole time practice confirming that the company had complied with all the provisions of the Act and a copy of such certificate is annexed to this report.
HOLDING COMPANY: A Scheme of Arrangement between Kirloskar Brothers Limited, Kirloskar Brothers Investments Limited and their respective shareholders was duly approved by all the requisite regulatory authorities including Hon’ble High Court of Judicature at Bombay. Pursuant to the Scheme, the Company ceased to be the Subsidiary Company of Kirloskar Brothers Limited and became a Subsidiary Company of Kirloskar Brothers Investments Limited with effect from the Appointed Date of the Scheme i.e. April 16, 2009.
DIRECTORS’ RESPONSIBILITY STATEMENT: Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors confirm • that in the preparation of the annual accounts, the applicable accounting standards have been followed. • that the accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for period from April 1, 2009 to March 31, 2010. • that the proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, and • that the Annual Accounts have been prepared on a going concern basis.
DIRECTORS: Mr. Sanjay Kirloskar, Director of the Company retire by rotation and being eligible, offers himself for re-appointment.
AUDITORS: M/s P. G. Bhagwat will retire at the ensuing Annual General Meeting and are eligible for re-appointment.
For and on behalf of the Board of Directors
SANJAY KIRLOSKAR CHAIRMAN Pune : April 26, 2010
60 COMPLIANCE CERTIFICATE (Under sub-section (1) of Section 383A of the Companies Act, 1956)
CIN: U29299PN1992PLC066655 Nominal Capital: Equity: Rs.15,00,00,000/- Paid Up Capital: Equity: Rs.2,00,01,300/-
To, THE MEMBERS, KIRLOSKAR SILK INDUSTRIES LIMITED UDYOG BHAVAN, TILAK ROAD, PUNE – 411 002.
I have examined the registers, records, books and papers of KIRLOSKAR SILK INDUSTRIES LIMITED required to be maintained under the Companies Act, 1956, (the Act) and the rules made there under and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended 31st March 2010. In my opinion and to the best of my information and according to the examinations carried out by me and explanations furnished to me by the Company, its officers and agents, I certify that in respect of the aforesaid financial year:
1. The company has kept and maintained all registers as stated in Annexure ‘A’ to this certificate, as per the provisions of the Act and the rules made there under and all entries therein have been duly recorded.
2. The company has filed the forms and returns as stated in Annexure ‘B’ to this certificate, with the Registrar of Companies, Regional Director, Central Government, Company Law Board or other authorities within the time prescribed under the Act and the rules made there under.
3. The Company being a Public Limited Company, comments on this point are not required.
4. The Board of Directors duly met 5 (Five) times respectively on Monday the 20th April 2009, Thursday the 16th July 2009, Thursday the 22nd October 2009, Friday the 15th January 2010 and Monday the 8th March 2010 in respect of which meetings proper notices were given and the proceedings were properly recorded and signed including the circular resolutions passed in the Minutes Book maintained for the purpose.
5. The company was not required to close its Register of Members during the financial year.
6. The Annual General Meeting for the year ended 31st March 2009 was held on Friday the 17th July 2009 after giving due notice to the members and the minutes of the resolutions passed thereat were duly recorded in minutes book maintained for the purpose.
7. No Extra-ordinary General Meeting was held during the financial year.
8. The company has not advanced any loans to its directors or persons or firms or companies referred to under the section 295 of the Act.
9. The company has not entered into any Contracts falling within the purview of section 297 of the Act.
10. During the year, the company has complied with the provisions under section 301 of the Act.
11. As there were no instances falling within the purview of section 314 of the Act, the company has not obtained any approvals from the Board of Directors, member or the Central Government.
12. The Company has issued duplicate share certificates during the financial year.
13. (i) The Company has delivered all the Certificates of Securities after the transfer of shares as per the Scheme of Arrangement between Kirloskar Brothers Limited and Kirloskar Brothers Investments Limited. There was no allotment of shares.
(ii) The company has not deposited any amount in a separate Bank Account as no dividend was declared by the company during the financial year.
(iii) The Company was not required to post warrant to any member as no dividend was declared by the Company during the financial year.
61 (iv) The provisions of the Act relating to transfer of amount remaining in unpaid dividend account, application money due for refund, matured deposits, matured debentures and the interest accrued thereon which have remained unclaimed or unpaid for a period of seven years to Investor Education and Protection Fund are not applicable.
(v) The Company has duly complied with the requirements of Section 217 of the Act.
14. The Board of directors of the company was duly constituted. Mr. Gajanan P. Kulkarni was appointed as additional director w.e.f. 20th April 2009 and the he was appointed as Director Liable to retire by rotation at Annual General Meeting held on 17th July 2009. Mr. S. B. Deshpande retired at the Annual General Meeting held on 17th July 2009.
15. The Company has not appointed any Managing Director/ Whole-time Director/ Manager during the financial year.
16. The company has not appointed any sole-selling agents during the financial year.
17. The Company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar and/or such authorities prescribed under the various provisions of the Act during the financial year.
18. The directors have disclosed their interest in other firms/ companies to the Board of Directors pursuant to the provisions of the Act and the rules made thereunder.
19. The Company has not issued any shares, during the financial year.
20. The company has not bought back any shares during the financial year.
21. There was no redemption of preference shares or debentures during the financial year.
22. There were no transactions necessitating the company to keep in abeyance the rights to dividend, rights shares and bonus shares pending registration of transfer.
23. The company has not invited/ accepted any deposits including any unsecured loans falling within the purview of section 58A during the financial year.
24. The company has not made any borrowings during the financial year.
25. The Company has not made any loans or Investments or given Guarantees or provided securities to other bodies corporate and consequently no entries have been made in the register kept for the purpose.
26. The company has not altered the provisions of the Memorandum with respect to situation of the company’s registered office from one State to another during the year under scrutiny.
27. The company has not altered the provisions of the Memorandum with respect to the objects of the company during the year under scrutiny.
28. The Company has not altered the provisions of the Memorandum with respect to the name of the Company during the year under scrutiny.
29. The company has not altered the provisions of Memorandum in the respect to the Share Capital of the Company during the year under scrutiny.
30. The company has not altered its Articles of Association during the financial year.
31. There was no prosecution initiated against or show cause notice received by the company and no fines or penalties or any other punishment imposed on the company during the financial year, for the offences under the Act.
32. The company has not received any money as security from its employees during the financial year.
33. The company does not have its own provident fund therefore the provisions of Section 418 are not applicable.
JAYAVANT BHAGWAN BHAVE COMPANY SECRETARY Pune : April 26, 2010 FCS 4266, CP No. 3068
62 ANNEXURE – A
Annexure to the compliance certificate of KIRLOSKAR SILK INDUSTRIES LIMITED
Registers and records maintained by the company.
No. Particulars 1 Register of Members under Section 150. 2 Register of Transfer of shares. 3 Copies of Annual Returns under Section 159. 4 Books of Accounts under Section 209 5 Register of particulars of contracts in which Directors are interested under Section 301. 6 Register of Directors, Managing Director, Manager and Company Secretary under Section 303. 7 Register of Director’s shareholdings under Section 307. 8 Minutes Books for minutes of meetings of the Board of Directors and Members. 9 Register of Charges under Section 143. 10 Register of application and allotment of shares.
JAYAVANT BHAGWAN BHAVE COMPANY SECRETARY Pune : April 26, 2010 FCS 4266, CP No. 3068
ANNEXURE - B
Annexure to the compliance certificate of KIRLOSKAR SILK INDUSTRIES LIMITED
Forms and Returns as filed by the KIRLOSKAR SILK INDUSTRIES LIMITED with the Registrar of Companies during the financial year ended 31st March 2010
No Form No./ Filed under Particulars Date of filing Whether filed If delay in filing Return relevant (Date of within whether Section document) prescribed requisite of the Act time. Yes/No additional fee paid. Yes/No
1 Form 32 Sec. 301 20/04/2009 18/05/2009 Yes N.A. 2 Form 66 Sec.383 A 31/03/2009 27/07/2009 Yes N.A. 3 Form 32 Sec. 301 17/07/2009 27/07/2009 Yes N.A. 4 Form 23 AC Sec. 220 31/03/2009 29/07/2009 Yes N.A. 5 Form 23ACA Sec.220 31/03/2009 29/07/2009 Yes N.A. 6 Form 20B Sec.159 17/07/2009 25/08/2009 Yes N.A.
JAYAVANT BHAGWAN BHAVE COMPANY SECRETARY Pune : April 26, 2010 FCS 4266, CP No. 3068
63 AUDITOR’S REPORT TO THE MEMBERS OF KIRLOSKAR SILK INDUSTRIES LIMITED
1. We have audited the attached balance sheet of Kirloskar Silk Industries Limited as at 31st March 2010, the profit and loss account and also the cash flow statement of the company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003 [as amended by Companies (Auditor’s Report) (Amendment) Order, 2004] issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 and 5 of the said Order.
4. The company has accumulated loss of Rs. 2,843,247/- as on the date of Balance Sheet. The company has discontinued its trading operations as well as operations related to development, manufacture and sale of raw silk and disposed off all its assets except land. Under the circumstances, it is doubtful whether the company will be able to continue as a going concern.
5. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
(i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(ii) in our opinion proper books of accounts as required by law have been kept by the company so far as appears from our examination of those books;
(iii) the balance sheet, the profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;
(iv) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
(v) on the basis of the written representations received from the directors as on 31st March, 2010, and taken on record by the board of directors, we report that none of the directors is disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;
(vi) in our opinion and to the best of our information and according to the explanations given to us, the accounts, read together with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the balance sheet, of the state of affairs of the company as at 31st March, 2010 ;
(b) in the case of the profit and loss account of the Loss for the year ended on that date; and
(c) in the case of the cash flow statement, of the cash flows for the year ended on that date.
For M/s P. G. BHAGWAT Chartered Accountants
PANKAJA BHAGWAT Partner Membership No.: 86155 Firm’s registration No. 101118W Pune: April 26, 2010
64 ANNEXURE
Re: Kirloskar Silk Industries Limited
Referred to in Paragraph 3 of our report of even date
(i) (a) The Company has maintained proper records showing full particulars of freehold land owned by it.
(b) As Company does not have any Fixed Assets other than free hold land, the provisions of clause 4(i) (b) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.
(c) The Company has disposed off all its movable Fixed Assets including Plant and machinery in earlier years and it is doubtful whether the company will be able to continue as a going concern.
(ii) The Company has no inventory. Accordingly the provisions of clause 4(ii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.
(iii) (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained as per section 301 of the Companies Act, 1956.
Accordingly, the provisions of clause 4 (iii) (b) (c) and (d) are not applicable to the company.
(e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained as per section 301 of the Companies Act, 1956.
Accordingly, the provisions of clause 4 (iii) (f) and (g) are not applicable to the company.
(iv) As the Company has discontinued all its operations, the provisions of clause 4 (iv) are not applicable to the Company.
(v) (a) According to the information and explanations given to us, there were no contracts or arrangements referred to in section 301 of the Companies Act , 1956.
Accordingly, the provisions of clause 4 (v) (b) are not applicable to the company.
(vi) According to the information and explanations given to us, the company has not accepted any deposits from public.
(vii) According to the information and explanations given to us, the company did not require a formal internal audit system as it has discontinued all its operations.
(viii) In our opinion, the provisions of clause 4 (viii) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the company.
(ix) In our opinion, the provisions of clause 4 (ix) are not applicable to the Company.
(x) In our opinion, the accumulated losses of the company are not more than fifty percent of its net worth. The company has incurred cash losses during the financial year and had incurred cash losses in the financial year immediately preceeding such financial year.
(xi) According to the information and explanations given to us, the company has no dues to any financial institutions, bank or debenture holders. Accordingly, the provisions of clause 4(xi) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the Company.
(xii) According to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4 (xii) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the company.
(xiii) In our opinion, the company is not a chit fund or a nidhi / mutual benefit fund / society. Accordingly, the provisions of clause 4 (xiii) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the company.
65 (xiv) According to information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the company.
(xv) According to the information and explanations given to us, the company has not given any guarantees for loans taken by others from bank or financial institutions. Accordingly, the provisions of clause 4 (xv) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the company.
(xvi) In our opinion, the provisions of clause 4 (xvi) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the company.
(xvii) According to information and explanations given to us, we report that no funds raised on short term basis have been used for long term investment.
(xviii) According to the information and explanations given to us, the company has not made any preferential allotment of any shares to parties and companies covered under section 301 of the Companies Act, 1956.
(xix) According to the information and explanations given to us, the company has not issued any debentures. Accordingly, the provisions of clause 4 (xix) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the company.
(xx) According to the information and explanations given to us, the company has not made any public issue to raise money. Accordingly, the provisions of clause 4 of the Companies (Auditors’ Report) Order, 2003 are not applicable to the company.
(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.
For M/s P. G. Bhagwat Chartered Accountants
PANKAJA BHAGWAT Partner Membership No. 86155 Firm’s registration No. 101118W Pune: April 26, 2010
66 BALANCE SHEET AS AT MARCH 31, 2010 Rupees As at As at SCHEDULE March 31, 2010 March 31, 2009 I. SOURCES OF FUNDS
1. Shareholders’ funds
Capital 1 20,001,300 20,001,300
2. Loan Funds
Unsecured Loan from Kirloskar Brothers Ltd. 418,331 406,404
Total 20,419,631 20,407,704
II. APPLICATION OF FUNDS
1. Fixed Assets
Land (Freehold) 18,429,624 18,429,624
2. Current Assets, Loans & Advances
Bank Balances with Scheduled Banks 1,586 2,051
Loans and advances 2 158,018 158,018
159,604 160,069
Less: Current Liabilities
Sundry Creditors 1,012,844 1,009,535
Net Current Assets (853,240) (849,466)
Profit and Loss Account 2,843,247 2,827,546
Total 20,419,631 20,407,704
Notes to Accounts 3
The schedule referred to above and the notes to accounts form an integral part of the Balance Sheet
As per our report of even date attached For and on behalf of the Board of Directors
For M/s P.G. Bhagwat A. R. SATHE G. P. KULKARNI Chartered Accountants Director Director
PANKAJA BHAGWAT Partner
Pune : April 26, 2010
67 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010
Rupees SCHEDULE 2010 2009
INCOME - -
Total - -
EXPENDITURE
Operating and Other Expenses
Legal & Consultation Expenses - -
Other Expenses 15,701 10,432
Total 15,701 10,432
Profit/(Loss) before tax (15,701) (10,432)
Provision for Tax - -
Profit / (Loss) after Tax (15,701) (10,432)
Balance brought forward from previous year (2,827,546) (2,817,114)
Profit / (Loss) carried to Balance Sheet (2,843,247) (2,827,546)
Basic and Diluted Earning per Equity Share - not annualised (0.01) (0.01)
(Nominal Value per share Rs.10)
The schedule referred to above and the notes to accounts form an integral part of the Profit and Loss Account
As per our report of even date attached For and on behalf of the Board of Directors
For M/s P.G. Bhagwat A. R. SATHE G. P. KULKARNI Chartered Accountants Director Director
PANKAJA BHAGWAT Partner
Pune : April 26, 2010
68 CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010 Rupees PARTICULARS 2010 2009
A. Cash Flow from Operating Activities
Net Profit (15,701) (10,432)
Add : Decrease in Sundry Creditors 3,309 9,927
Cash Flow from Operating Activities (12,392) (505)
B. Cash Flow from Investing Activities - -
C. Cash Flow from Financing Activities
Other Borrowings 11,927 -
Net Increase in Cash & Cash Equivalents (465) (505)
Cash and Cash Equivalents at beginning of period 2,051 2,556
Cash and Cash Equivalents at end of period 1,586 2,051
As per our report of even date attached For and on behalf of the Board of Directors
For M/s P.G. Bhagwat A. R. SATHE G. P. KULKARNI Chartered Accountants Director Director
PANKAJA BHAGWAT Partner
Pune : April 26, 2010
69 SCHEDULE TO THE ACCOUNTS Rupees 2010 2009 Schedule 1: Share capital
Authorized
15,000,000 (15,000,000 ) equity shares of Rs. 10/- each 150,000,000 150,000,000
Issued, Subscribed and paid up
2,000,130 ( 2,000,130) equity shares of Rs. 10 each 20,001,300 20,001,300
[2,000,130 ( - ) equity shares are held by Kirloskar Brothers Investment Ltd., the holding company] (Refer note no B 7)
20,001,300 20,001,300
Schedule 2: Loans And Advances
Deposits with Post, Railways and Others 120,150 120,150
Advance Income tax including tax deducted at source 432,603 432,603
Less: Provision for Tax 394,735 394,735
37,868 37,868
158,018 158,018
70 SCHEDULE 3 : NOTE TO ACCOUNTS
A] SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation of financial statements
a) The financial statements have been prepared to comply in all material respects with The Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.
b) The financial statements have been prepared under the historical cost convention on an accrual basis.
c) The accounting policies applied by the Company are consistent with those used in the previous year.
B] OTHER NOTES
1. The Company has approached the Development Commissioner - Mumbai, the appropriate authority, seeking change in the usage of the land instead of silk manufacturing. In view of the above the Board of Directors has decided to pursue the said application and hence deferred the decision of disposal of land and existing business.
2. Contingent Liabilities not provided for in respect of :
Notice received from Tahasildar Dindori (Nasik Dist) in respect of tax on non utilisation of land Rs. 2,726,125/- (P.Y.2,726,125/-)
3. Related Party Disclosures :
a) Names of the related party and nature of relationship where control exists
Name of the related party Nature of relationship Period 1. Kirloskar Brothers Ltd. Holding Company 1st April, 2009 to 15th April, 2009 2. Kirloskar Brothers Investments Ltd. Holding Company 16th April 2009 to 31st March, 2010
b) Related Party Transactions : There are no transactions during the year.
4. Earning per Share :
a) The amount used as the numerator in calculating basic and diluted earning per share is the Profit after Tax, disclosed in the Profit & Loss Account.
b) The weighted average number of equity shares used as the denominator in calculating basic and diluted earning per share is 2,000,130.
5. Remuneration to Auditors :
Statutory Auditors 2010 2009
a) Audit Fees 13,236 9,927
6. Managerial Remuneration : Nil Nil
7. A Scheme of Arrangement between Kirloskar Brothers Limited, Kirloskar Brothers Investments Limited (KBIL) and their respective shareholders, was duly approved by all the requisite regulatory authorities including Honourable High Court of Judicature at Bombay. Pursuant to the Scheme, Kirloskar Silk Industries Ltd has become a subsidiary of KBIL from the Appointed Date in terms of the Scheme of Arrangement i.e. April 16, 2009.
As per our report of even date attached For and on behalf of the Board of Directors
For M/s P.G. Bhagwat A. R. SATHE G. P. KULKARNI Chartered Accountants Director Director
PANKAJA BHAGWAT Partner
Pune : April 26, 2010
71 BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE (Inserted vide Notification No. GSR388(E), dated 15.05.1995) I. Registration Details Registration No. 0 6 6 6 5 5
State Code 1 1 Balance Sheet Date 3 1 0 3 2 0 1 0 II. Capital raised during the year: (Amount in Rs. Thousands) Public Issue Rights Issue N I L N I L Bonus Issue Private Placement N I L N I L III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) Total Liabilities Total Assets 2 0 4 2 0 2 0 4 2 0 Sources of Funds Paid Up Capital Reserves and Surplus 2 0 0 0 1 N I L Secured Loans Unsecured Loans N I L 4 1 9 Application of Funds Net Fixed Assets Investments 1 8 4 3 0 N I L Net Current Assets Misc. Expenses - 8 5 3 N I L Accumulated Losses 2 8 4 3 IV. Performance of the Company (Amount in Rs. Thousands) Turnover Total Expenditure N I L 1 6 V. Profit of Company (Amount in Rs. Thousands) + - Profit/(Loss) before tax + - Profit/(Loss) after tax - 1 6 - 1 6 (Please tick appropriate box -> + for Profit, - for Loss) Earning per share (Rs.) Dividend Rate % - 0 . 0 1 N I L VI. Generic name of three principal products/services of Company (as per monetary terms) Item Code No. (ITC Code) 5 0 0 2 0 0 0 1 Product Description M U L B E R R Y S I L K Item Code No. (ITC Code) 5 0 0 2 0 0 0 1 Product Description S I L K W O R M C O C O O N S S U I T A B L E F O R R E E L I N G Item Code No. (ITC Code) 5 0 0 2 0 0 0 1 Product Description M U L B E R R Y S I L K W A S T E
As per our report of even date attached For and on behalf of the Board of Directors
For M/s P.G. Bhagwat A. R. SATHE G. P. KULKARNI Chartered Accountants Director Director
PANKAJA BHAGWAT Partner Pune : April 26, 2010
72