MIRA INFORM REPORT

Report Date :

12.04.2007

IDENTIFICATION DETAILS

Name :	KIRLOSKAR BROTHERS LIMITED
Registered Office :	Udyog Bhavan, Tilak Road, Pune – 411 002, Maharashtra, India
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	15.01.1920
Com. Reg. No.:	11-670
CIN No.: [Company Identification No.]	L29113PN1920PLC000670
TAN No.: [Tax Deduction & Collection Account No.]	PNEK0011E
PAN No.: [Permanent Account No.]	AAACK7300E
Legal Form :	Public limited liability company. The company’s shares are listed on the Stock Exchanges
Line of Business :	Manufacturing and Marketing of Power Driven Pumps, Metal Cutting Including Grinding Machines, Reduction Gear Units, Valves, Ploughs, Alloy Iron Castings including Steel Castings, Cast Iron Castings and Cast Iron Castings including Alloy Steel Castings for Automotive Purposes.

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large

Maximum Credit Limit :	USD 12500000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a part of Kirloskar Group, a well established and diversified industrial house. Available information indicates high financial responsibility of the company. Trade relations are fair. Financial position is healthy. Fundamentals are strong and healthy. The company is doing very well. It can be considered good for any normal business dealings. The company can be regarded as a promising business partner in a medium to long run.

LOCATIONS

Registered Office / Corporate Office :	Udyog Bhavan, Tilak Road, Pune – 411 002, Maharashtra, India
Tel. No.:	91-20-24440770/24444455/24444444
Fax No.:	91-20-24440824/24444198/24442780/ 24440156/24434198
E-Mail :	kblin@kbl.co.in
Website :	1. http://www.kirloskars.com 2. http://www.kbl.co.in
Factory 1 :	Kirloskarvadi - 416 308, Dist. Sangli (India) Tel No. (02346) 222301 – 05 Opposite Railway Station, Ujjain Road, Dewas - 455 001 Tel No. (07272) 228582 – 87 Gat No. 252/2 + 254/2, Kondhapuri Tal : Shirur, Dist. Pune - 412 208 Tel No. (02137) 270115 Shirval 4. Gat No. 117, Shindevadi Tal. Khandala, Dist. Satara-412 801 Tel No. (02169) 244360 / 244370 Printing Press, Kirloskar Kisan Compound, 13A, Karve Road, Kothrud, Pune = 411038, Maharashtra Tel. No. 91-20-5412471-4
Branches :	Located at: - New India Centre, 17-A Cooperage Road, Colaba, Mumbai – 400 039, Maharashtra Tel. No. 91-22-22020828 Fax No. 91-22-22026267 Jeevan Tara Building, 5 Sansad Marg, New Delhi – 110 001 Tel. No. 91-11-23341484 / 23347233 / 23347234 Also at Ahmedabad, Bangalore, Bhubaneshwar, Chennai, Jaipur, Kochi, Kolkata, Lucknow, Nagpur and Secunderabad.
Overseas Office :	Germany, United Arab Emirates, Kenya, Lao PDR, Malaysia, Singapore and Vietnam.
Projects & Marketing Engineering	"Chintan", 408/15, Mukund Nagar, Pune 411 037 ( India) Phone: 91 20 24440770 Fax: 91 20 24270879

DIRECTORS

Name :	Sanjay Kirloskar
Designation :	Chairman & Managing Director
Age :	48 years
Qualification :	Bachelor of Science (M.E), Illinois Inst. Of Tech. USA
Date of Appointment :	02/05/1983
Experience :	27 years
Name :	Gautam Kulkarni
Designation :	Vice Chairman
Name :	Vikram Kirloskar
Designation :	Executive Director
Age :	46 years
Qualification :	Bachelor of Science (Mech.) MIT, USA
Date of Appointment :	06/06/2001
Experience :	23 years
Name :	M. S. Kirloskar
Designation :	Director
Name :	S. S. Marathe
Designation :	Director
Name :	Shivraj Gupta
Designation :	Director
Name :	S. N. Inamdar
Designation :	Director
Name :	M. G. Padhye
Designation :	Director
Name :	Rahul Kirloskar
Designation :	Director
Name :	Kumar Bakhru (Upto 06.06.2005)
Designation :	Director
Name :	U. V Rao
Designation :	Director
Name :	R. K. Srivastava
Designation :	Whole Time Director
Age :	58 years
Qualification :	M. Tech (LIT. Bombay)
Date of Appointment :	15/05/1989
Experience :	33 years
Name :	G. Ramaiya (Upto 20.04.2005)
Designation :	Whole Time Director
Age :	56 years
Qualification :	B. E. (Mech)
Date of Appointment :	06/04/2000
Experience :	35 years
Name :	K S. Jawadekar (from 19.02.2005)
Designation :	Director
Name :	J. R. Sapre (from 29.04-2005)
Designation :	Whole Time Director
Name :	Mr. B S. Jawadekar
Designation :	Director
Name :	Mr. A. N. Alawani
Designation :	Director

KEY EXECUTIVES

Name :	G. P Kulkarni
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters' Holding
Indian Promoters	65574010	62.00
Non Promoters' Holding
Mutual funds	3494180	3.30
Insurance Companies / Banks	6526368	6.17
Foreign Institutional Investors	3033720	2.87
Private Corporate Bodies	2919364	2.76
Indian Public	24032328	22.73
Non Resident Indians	184385	0.17
TOTAL	105764355	100.00

BUSINESS DETAILS

Line of Business :	Manufacturing and Marketing of Power Driven Pumps, Metal Cutting Including Grinding Machines, Reduction Gear Units, Valves, Ploughs, Alloy Iron Castings including Steel Castings, Cast Iron Castings and Cast Iron Castings including Alloy Steel Castings for Automotive Purposes.
Products :	Item Code No. (ITC Code) 84.13 Product Description Pumps for Liquids Item Code No. (ITC Code) 84.81 Product Description Valves Item Code No. (ITC Code) 84.59 Product Description Machines Tools Item Code No. (ITC Code) 39.08 Product Description Anti Corrosiv Prod
Exports to :	Africa, Germany, Gulf Countries, Hong Kong, Indonesia, Malaysia, New Zealand, Singapore, U.K. and U.S.A
Imports from :	Africa, Germany, Gulf Countries, Hong Kong, Indonesia, Malaysia, New Zealand, Singapore, U.K. and U.S.A

PRODUCTION STATUS

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Power Driven Pumps	Nos.	194000	194000	@ 162185
Metal Cutting including Grinding Machines	Nos.	736	736	--
Reduction Gear Units	Nos.	1200	1200	--
Valves	Nos.	70070	70070	15767
Ploughs	Nos.	3216	3216	--
Alloy Iron Castings including Steel Castings	M.T.	120	120
Cast Iron Castings	M.T.	2500	2500	888.633
Cast Iron Castings including Alloy Steel Castings for Automotive purposes	M.T.	5000	5000
Turbines	Nos.	--	--	--
Electric Motors	Nos.	--	--	13587
Anti-Corrosion Products	Ltrs.	--	--	84002.84

GENERAL INFORMATION

No. of Employees :

2960

Bankers :

• Bank of India
• Canara Bank
• HDFC Bank

Facilities :

SECURED LOANS	(Rs. in millions)
Loans and advances from banks	63.212
Cash/Export Credit facilities [Secured by hypothecation of tangible movable assets and book debts of the company]
company]
Other loans and advances
From Exim bank
I) Foreign currency loan	98.651
II) Rupee loan [Secured by way of hypothecation of movable fixed assets and mortgage of immovable properties of the company ( both present and future).	50.000
For Rupee loan, there is an additional security by way of pledge of shares in SPP Pumps Ltd., UK.]
UNSECURED LOANS
From others-interest free loan under Sales Tax Deferral Scheme	44.885

Banking Relations :	Satisfactory
Auditors :	M/s. R G. Bhagwat Chartered Accountants
Associates :	v Better Value Holdings Private Limited v Kirloskar Oil Engines Limited v The Mysore Kirloskar Limited v Kirloskar Ebara Pumps Limited v Hematic Motors Limited v Pressmatic Electro Stampings Limited v Quadramatic Engineering Private Limited v Kirloskar Proprietory Limited v Kirloskar Kenya Limited, Kenya v Kirloskar Ebara Pumps :Limited v Kirloskar Trading Pte Limited, Singapore v Kirloskar Pneumatic Company Limited
Membership :	Confederation of Indian Industry
Joint Ventures :	Kirloskar Ebara Pumps Limited. HCC - KBL Joint Venture KBL - MCCL Joint Venture KCCPL-IHP-BRC-TAIPPL-KBL JV
Subsidiaries :	Kirloskar Copeland Limited. Pooja Credits Private Limited. Kirloskar Silk Industries Limited. SPP Pumps Ltd. (UK) SPP (South Africa) (pty) Limited.

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
250000000	Equity Shares	Rs.2/- each	Rs.500.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
	Issued Capital
105907030	Equity Shares	Rs.2/- each	Rs.211.814 millions
	Subscribed & Paid-up Capital
105764355	Equity Shares Out of the above 165,000 (33,000) equity shares of Rs.2/-(Rs.10/-) each were allotted as fully paid up pursuant to contract for consideration other than cash. 88,499,975 (3,598,081) shares of Rs.2/- (Rs.10/-) each were allotted as fully paid up bonus shares by capitalisation of General Reserve and Share Premium	Rs.2/- each	Rs.211.528 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2006	31.03.2005	31.03.2004
SHAREHOLDERS FUNDS
1] Share Capital		211.528	70.509	70.509
3] Reserves & Surplus		2932.481	1832.031	1565.223
NETWORTH		3144.009	1902.540	1635.732
LOAN FUNDS
1] Secured Loans		211.864	568.117	696.433
2] Unsecured Loans		44.885	88.335	318.610
TOTAL BORROWING		256.749	656.452	1015.043
DEFERRED TAX LIABILITIES		0.000	1.644	26.355
TOTAL		3400.758	2560.636	2677.130
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		786.160	518.737	544.167
Intangible Assets		9.077	17.035	27.119
Capital work-in-progress		162.442	11.086	14.353
INVESTMENT		1014.380	828.267	924.330
DEFERREX TAX ASSETS		4.965	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	657.354	484.685	420.303
	Gross mount due from customers for project related contract work	225.614	336.575	322.836
	Sundry Debtors	3702.388	2690.606	2135.697
	Cash & Bank Balances	502.544	582.754	86.561
	Other Current Assets	140.131	92.861	96.614
	Loans & Advances	1604.006	758.008	902.006
Total Current Assets		6832.037	4945.489	3964.017
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	4517.428	3297.755	2429.169
	Gross amount due to customers for project related contract work	522.579	162.033	202.538
	Provisions	368.296	300.190	165.149
Total Current Liabilities		5408.303	3759.978	2796.856
Net Current Assets		1423.734	1185.511	1167.161
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		3400.758	2560.636	2677.130

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Sales Turnover [including other income]	9995.853	7441.392	5302.520
Profit/(Loss) Before Tax	1786.569	537.930	332.572
Provision for Taxation	62.708	30.601	67.717
Profit/(Loss) After Tax	1723.861	507.328	264.855
Export Value	684.644	1005.050	581.365
Import Value	606.708	261.584	143.849
Total Expenditure	8210.508	6903.462	4954.479

QUARTERLY / SUMMARISED RESULTS

PARTICULARS	30.06.2006 (1^ST Quarter)	30.09.2006 (2^nd Quarter)	31.12.2006 (3^rd Quarter)
Sales Turnover	3309.600	2790.700	2813.700
Other Income	109.300	2117.900	58.900
Total Income	3418.900	4908.600	2872.600
Total Expenditure	2899.400	2492.600	2365.000
Operating Profit	519.500	2416.000	507.600
Interest	28.000	13.100	16.400
Gross Profit	491.500	2402.900	491.200
Depreciation	27.800	31.100	29.600
Tax	81.600	64.800	123.300
Reported PAT	390.900	2289.000	317.700

200606 Quarter 1 - Expenditure Includes (Increase)/Decrease in Stock in Trade Rs 88.10 million Consumption of Raw Materials Rs 2119.90 million Staff Cost Rs 149.30 million Other Expenditure Rs 542.10 million Tax Includes Provision for Current Tax Rs 79.00 million Deferred Tax Rs (8.80) million Fringe Benefit Tax Rs 2.60 million EPS is Basic & Diluted Status of Investor Complaints for the quarter ended June 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 05 Complaints disposed off during the quarter 05 Complaints unresolved at the end of the quarter Nil 1. The above results have been reviewed by the Audit Committee and taken on record by the Board of Directors at their meetings held on July 21, 2006. 2. The limited review of the financial results for the quarter ended June 30, 2006, pursuant to clause 41 of the listing agreement, has been carried out by the Statutory Auditors. 3. The Earning Per Share is calculated in accordance with Accounting Standard on Earning Per Share (AS-20) issued by The Institute of Chartered Accountants of India for all the reported periods above, after considering the subdivision of equity share of Rs 10/- each to share of Rs 2/- each and the issue of bonus equity shares in the proportion of 2:1, allotted on October 22, 2005. 4. Figures have been regrouped, wherever necessary.

200609 Quarter 2

Notes:

EPS is Basic & Diluted Status of Investor Complaints for the quarter ended September 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 10 Complaints disposed off during the quarter 10 Complaints unresolved at the end of the quarter Nil 1. On July 26, 2006 the Company has disposed off its entire shareholding i.e. 51% in Kirloskar Copeland Ltd to Copeland Corporation, USA for total consideration of US$ 40 millions (equivalent to Rs 1872.40 million). The profit on sale of said investments is as shown under exceptional income above. 2. On September 29, 2006, the Company has acquired fully paid up 61,50,002 Equity Shares in Aban Constructions Pvt Ltd (ACPL), Chennai, for Rs 614.50 million, (comprising of consideration of Rs 577.00 million and Rs 37.50 million as working capital adjustment) which represents 100% of Issued, Subscribed and Paid up Share Capital of ACPL. As a result, ACPL has become a wholly owned subsidiary of the Company. 3. The above results have been reviewed by the Audit Committee and taken on record by the Board of Directors at their meetings held on October 17, 2006. 4. The limited review of the financial results for the quarter and half year ended September 30, 2006, pursuant to clause 41 of the listing agreement, has been carried out by the Statutory Auditors. 5. Figures have been regrouped wherever necessary.

200612 Quarter 3

Notes

Expenditure Includes (Increase)/Decrease in Stock in Trade Rs 8.50 million Consumption of Raw Materials Rs 1855.80 million Staff Cost Rs 150.00 million Other Expenditure Rs 350.70 million Tax Includes Provision for Current Tax Rs 120.00 million Deferred Tax Rs 20.60 million Fringe Benefit Tax Rs 3.30 million Extraordinary items indicates Profit on sale of Investments EPS is Basic & Diluted Status of Investor Complaints for the quarter ended December 31, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 09 Complaints disposed off during the quarter 09 Complaints unresolved at the end of the quarter Nil 1. The above results have been reviewed by the Audit Committee and taken on record by the board of Directors at their meetings held on January 18, 2007. 2. The limited review of the financial results for the quarter and nine months ended December 31, 2006, pursuant to clause 41 of the listing agreement, has been carried out by the Statutory Auditors. 3. The Board of Directors has declared an interim dividend of Rs 2/- per equity share (100%) on 105,764,355 equity share of Rs 2/- each the financial year 2O06-07. 4. Figures have been regrouped wherever necessary.

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt-Equity Ratio	0.18	0.47	0.62
Long Term Debt-Equity Ratio	0.10	0.23	0.26
Current Ratio	1.23	1.19	1.17
TURNOVER RATIOS
Fixed Assets	5.98	5.45	3.75
Inventory	16.75	16.76	14.35
Debtors	2.99	3.14	2.68
Interest Cover Ratio	11.14	5.59	4.06
Operating Profit Margin(%)	15.82	11.11	12.02
Profit Before Interest And Tax Margin(%)	14.81	9.79	10.00
Cash Profit Margin(%)	14.25	8.84	7.90
Adjusted Net Profit Margin(%)	13.24	7.53	5.88
Return On Capital Employed(%)	47.55	28.52	20.60
Return On Net Worth(%)	50.19	32.28	19.64

STOCK PRICES

Face Value	Rs.10.00/-
High	Rs.375.25
Low	Rs.373.00

LOCAL AGENCY FURTHER INFORMATION

HISTORY

The company was incorporated on 15^th January, 1920 at Pune in Maharashtra having Company Registration Number 670.

The company was promoted by Mr. S. L. Kirloskar in 1920.

During the year 1997-98, the company inaugurated its Anti Corrosion coating plant at Kirloskarvadi having a capacity of 150 tpa. In 1998-99, the company tied up with one of the world leaders in hydro-turbines-Ebara Corporation, Japan to offer turnkey execution facilities.

The work of the Company’s first mini hydel electric project site at Murkurthy Tamil Nadu was commissioned and the plant has generated over half a million units of electric power. For the domestic segment, the agricultural and domestic pumps group launched all round “PP” shallow well Jet pump and the group has received ISO 14001 accredition, the globally recognised standard for environmental management systems for its Dewas and Shirval plant.

During the year 2000-01 the company had completed the project of NTPC by supplying them Concrete Volute Pumping-systems for 2500 MW at Simhadri in Andhra Pradesh. The company had implemented ERP systems SAP R/3 in place for the Marketing and Distribution activities.

During 2003-04, the Company acquired SPP Pumps Limited of United Kingdom, which is dealing in SPP Pumps selling its pumping packages for various applications like construction, irrigation, fire fighting, water supply etc. This acquisition is expected to help the Company to strengthen its presence in European and Common-wealth Markets

CORPORATE GOVERNANCE 

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, Management Discussion and Analysis Report, Corporate Governance Report and Auditors Certificate on Corporate Governance are annexed to this report. 

Research and Development (R&D) 

Specific areas in which R&D carried out by the company 

Energy saving sewage pumps with improved efficiency comparable with international standards. A few products in Agriculture pumps division such as Genext monoblocs, improved version Ultima pumps and Alternators are developed at Dewas plant which are Energy Efficient. The company is taking continuous efforts for in-house Energy Saving such as replacement of 250 watt Metal Halide lamps with 36 X 36 PLS TL fixtures with electronic ballast replacement of 50 HP compressors with 30 HP screw compressors. 

Management Discussion and Analysis 

Industry Structure and Developments 

The Indian economy has been growing from strength to strength with a GDP growth rate of around 8% in 2005-06. The estimated figure reflects growth rates of 2.6% in agriculture, 9% in industrial and 10% in the service sectors. Some significant dimensions of the dynamic growth in the year are indicated by industrial resurgence, enhanced investment, modest inflation in spite of spiraling crude oil prices, rapid growth in exports and imports. This has been supplemented by faster development of the infrastructure sector. The other economic factors are as follows : 

 * Index of core infrastructure industries grew at a slower pace of 4.4%.

 * Owing to normal monsoon, agricultural production increased by 2.6%. 

 * The industrial sector was on a high with industrial production achieving growth of 8% and manufacturing sector 9%. Industrial growth was aided by buoyancy in both the consumer and investment goods sector. 

 * Infrastructure grew at 10%, attracting private investments. This sector is expected to grow at a CAGR of 15% over the next few years. 

 * Construction, the second largest economic activity after agriculture, accounting for nearly 65% of the total investment in infrastructure grew at 10% and the cement segment maintained a growth rate of 9%. 

 * The services sector accounting for almost half of India's GDP, showed consistent growth at nearly 10%. Growth in services sector accelerated corresponding growth in infrastructure development and led to pronounced improvement in manufacturing sector. 

 * Foreign Direct Investment inflows into India increased considerably due to sustained growth in economic activity and positive investment climate. 

 * India's economy is the sixth largest in the world and India holds the fifth largest foreign exchange reserves among the emerging market economies. 

 * Indian exports are growing at one of the fastest rates in the world at 25%, crossing US$100 billion (Rs. 4450 billion) mark during the year. Imports went up by 32% to US$140 billion (Rs. 6230 billion) in the year. 

 * India's stock market capitalization at US$ 525 billion (Rs. 23100 billion) is now one of the highest in Asia. 

 All these factors have put the Indian economy on the development track. 

The Global Economy 

The world economy saw phenomenal growth in the last year with the level of growth being particularly good in the Indian and Chinese economies. The Chinese GDP was up by 9%. In the US the GDP grew by 3%, in the Europe GDP was up by around 1.5%. Japan coming out of deflation showed a growth rate of around 3%, while growth in Russia and Latin America except Brazil was steady in the last year. Most of the developing economies in the East Asian and African regions recorded strong growth rates last year. 

High oil prices and domestic capacity constraints continued to be seen as factors restraining growth for most countries. The economic intelligence surveys indicate that the Asia-Pacific region would offer the greatest growth prospects for business in the next three years, followed by Central and Eastern Europe. 

Opportunities 

As the markets in the developed countries are saturated, global investors and corporations are concentrating on emerging markets in the developing countries. Infrastructure development is always brought under focus with the prospects of business growth and is conjoint with urbanization as well as rural development.

The central government as well as state governments are promising allocation of funds for irrigation, water supply and power projects. For instance, under the Bharat Nirman Programme, a grant of around Rs. 9.50 billion has been sanctioned for development of irrigation facilities and increased funding for development of water bodies in the current budget. 

For the power sector, the government has set a target of capacity addition of 12000 MW per year for the next three years. Many state governments have announced their priority to fund irrigation and power projects. The government has taken initiatives to improve conditions for attracting private investment and FDI in the power sector. 

The situation is the same in all the developing countries where markets are open to acceptance of Indian products. 

Threats 

The pump market is in a transformation mode with demand for products involving superior technology. The increased competition from multinationals with respect to price and technology will make Indian companies competitive. 

Perceived Risks and Concerns  

The pump business depends on the growth in core sectors. Though a lot of development programmes are announced, they are not implemented in time due to delay in disbursement of funds for various reasons. 

Segmental Performance 

The Industrial Pumps Group performed well by manufacturing and selling more than 21000 pumps. Market oriented initiatives taken to improve quality, achieve greater penetration in unexplored markets, improve delivery period, reduce cost by value engineering and increase overall market share yielded good results. This group achieved 29% rise in sale of newly developed products compared to earlier year. It improved its market share specifically in process industry as well as in steel and coal sectors. 

This group received good response from the focused segments. The orders for providing various pumping solutions were received from reputed customers like South Eastern Coalfields, Delhi Metro Rail Corporation, Jindal Vijayanagar Steel, Hindustan Petroleum Corporation, Electro Steel Castings, Northern Coalfields and Essar Steel. In addition, orders for supply of various types of process pumps from Tata Projects and Hindustan Petroleum Corporation Were fruitful results of their solution giving approach. 

Another significant initiative was to acquire approval of international agencies such as Factory Mutual (FM) and Underwriters Laboratories (UL) for their fire protection pumping systems. Their manufacturing facility for fire pumpsets has also been approved by these two agencies and thus their company is the only one in India to have such approvals. 

With the infrastructure segment receiving the thrust, Projects and Engineered Pumps Group showed good performance registering growth in sale by 37%. The concentration of efforts remained on infrastructure segments particularly water supply, irrigation and power. 

Their expertise in providing pumping solution to power plants was well acknowledged. This group received many valuable contracts for supply of circulating water pumps and condensate extraction pumps in India and abroad. These included prestigious orders from Gujarat Electricity Board, Sugen Power Project, through Siemens and for Tennozulia Power Project in Venezuela through MAN Ferrostaal Power Industry GmbH. The group also received an order for secondary heat transfer pumps from Nuclear Power Corporation of India Limited (NPCIL). 

Reposing faith in us on the basis of their efficient handling of the previous projects, wherein one case we had brought water to the city of Hyderabad within six months, Hyderabad Metro Water Supply and Sewerage Board (HMWSSB) entrusted a contract for a turnkey water supply scheme phase II for the sixth time consecutively. 

Many projects such as Circulating Cooling Water Systems at NPCIL, Tarapore and National Thermal Power Corporation (NTPC), Rihand in power sector and a booster pumping station of Kolkata Metropolitan Water and Sanitation Authority in water supply segment were successfully commissioned. 

The pumping station involving two vertical turbine pumps, under phase I of the world's largest pumping system for Sardar Sarovar Nigam Project was successfully commissioned, effecting water supply from the Narmada river to Saurashtra region. The group ensured significant progress in all other turnkey contracts being undertaken such as irrigation projects in Andhra Pradesh and various pumping projects for NTPC and NPCIL. 

Agriculture and Domestic Pumps Group increased its sales turnover by 28% over the previous year through an intensive promotional campaign across the country. The strategy involved review of the entire product line and upgrading aging models through value engineering. 

Pumps were also redesigned to improve their energy efficiency characteristics. The foundry was modernized and manufacturing process was upgraded to reduce cycle time, improve product aesthetics and meet market needs such as delivery and performance. 

Energy efficiency was one of the effective themes in product promotional campaign. The distribution channel was also revamped by widening the dealership network at strategically identified locations and rationalizing the territorial operations. Supply of 140 submersible pumps to Orissa Lift Irrigation Corporation, 125 pumps to West Bengal Agro Industries and 600 alternators to defence establishment was the hallmark of the performance in the year. The operations of Agriculture and Domestic Pumps Group were also re-certified as per ISO-9001 and ISO-14001 standards. 

With the focus on infrastructure segments such as water and power continuing, the Valves Business Group performed well in the year. Among the orders executed, the significant were supply of 1800 mm and 2100 mm butterfly valves to Black and Veatch, USA and various types of valves to Maharashtra Industrial Development Corporation. Proof of Design Test was successfully completed covering major range of butterfly valves to be qualified for NTPC contracts. 

Infrastructure including water supply and power and oil and gas were the focused sectors for Anti Corrosion Products Group. This group made a noteworthy foray in these segments. In order to serve the targeted segments better, we have recently entered into a Joint Venture with Corrocoat Limited, UK to form a new company, Kirloskar Corrocoat Private Limited operating from April 1, 2006. Their company is the major partner in this joint venture. The newly formed company would cater to the global market by providing solutions to problems related to corrosion, erosion, cathodic protection and galvanic action and energy loss in core industries such as power, petrochemical, process, irrigation and water supply. The production capacity at Kirloskarwadi would be expanded to satisfy the demands of the emerging opportunities in the growing infrastructure segment all over the world

Financial Performance with respect to Operational Performance 

The sales turnover is Rs. 9246 million as against Rs. 7309 million in the previous year, registering a growth of 27%. Exports are Rs. 685 million as against Rs. 1005 million in the previous year. 

Profit before tax is Rs. 1786 million as against Rs. 538 million in the previous year. Current year profit includes extraordinary income of Rs. 499 million on account of profit on sale of land. Profit after tax is Rs. 1724 million as against Rs. 507 million in the previous year. The tax provision is low on account of income tax benefits applicable for infrastructure projects and write back of provision in respect of earlier years amounting to Rs. 93 million. Earning per share in the current year is Rs. 15.42 as against Rs. 4.72 in the previous year, after taking into account the sub-division of shares and 2:1 Bonus issue. 

Depreciation and Amortisation has reduced to Rs. 97 million from Rs. 100 million, while Interest has increased to Rs. 55 million from Rs. 48 million. Though borrowed funds have sharply declined to Rs. 257 million from Rs. 656 million, interest has increased on account of interest bearing advances. 

Human Resources and Industrial Relations

Laying immense thrust on its human assets, the company has been taking initiatives towards competence development of its people at all levels in line with the planned growth. The company is institutionalizing the knowledge management system by creating the ambience for a learning organization. Focused attention is given to need based training at all locations. 

Various new initiatives to facilitate the organizational efficiency were introduced. Amongst these was the deployment of a communication policy to establish a structured communication system across the organization. In order to ensure proper staff control and effectively utilize manpower, an exercise of organizational reshaping was initiated and placed in order to fulfill the requirements of their business plan. 

Steps are being taken to address the issue of attracting and retaining of talent through a proper system of recognition and reward. A robust performance management system was established in the year to facilitate individual and learn development and a culture of pay for performance. An employee satisfaction survey was carried out and major initiatives were taken like implementation of Maynard Operation Sequence Technique (MOST), e-Manufacturing, 5'S', Work Process Review and Business Excellence Model. 

Extensive training programmes were conducted on attitudinal change for the workmen. The employee relations at all the locations have been maintained peaceful and harmonious. The total number of employees are : 2186. 

Fixed Assets :

• Lands Free/ Lease Hold
• Buildings
• Railway Siding
• Plant and Machinery
• Furniture & Fittings
• Vehicles & Aircraft

It is in trade terms with: -

v Public Health Engineering Departments, Haryana

v Karnataka Urban & Water Supply Drainage Board

v Mahanadi Coalfields Limited

v L & T Limited

v ETA Engineering Limited]

v National Thermal Power Corporation

v Bechtel International Inc, USA

v Surat Municipal Corporation

v Andhra Pradesh Irrigation Department

v Karnataka Krishna Jal Bhagya Nigam

v Andhra Pradesh Power Project

v Kalsons Powertech

v Power Himalayas Limited

v Auto Steel & Rubber Industry Private Limited

v Cougar Paints Private Limited

v Kankoo Paints Private Limited

v Rathi Transpower Private Limited

v Palus Engineering Industries Private Limited

v Saveeta Engineering Company Private Limited

v The Vikas Industrial Co-operative Organisation Limited

v Khare Agromech Industries Private Limited

v Mahila Udyog Limited

v Barvepco Cast Alloys Private Limited

v Varun Engineering Private Limited

v Pradhan Engineering Enterprises Private Limited

v Vakasa Electricals Limited

v Dynamic Pumps Private Limited

v M. M. Core Suppliers

v Fluro Tech Industries

v Srinivasa Enterprises

v Bharat Industries

v Hi-Tech Agro Industries

v SPS Engineering Corporation

v Tata Electric Company Limited

v Tanir Bavi Power Project

v Gujarat Electricity Board

v Tamilnadu Electricity Board

v Meta Strips Limited

The company imports Pump Components, Machine Tool Accessories, Engines, Metals, etc.

The company has been accredited with ISO 9001 certification.

The company bagged the All India Trophy for largest exporters of pumps by the Engineering Export Promotion Council for export performance with continuous excellence.

AS PER WEBSITE

They are a 600 Million US Dollars engineering conglomerate driving critical industries. They are century old pioneers in their areas of specialization like power, construction and mining, agriculture, industry and transport, oil and gas and environment protection with a range of world-class industrial products and turnkey services.

They are made up of 8 major group companies, each led by the best engineering and managerial talent in India. In addition to engineering, they have interests in civic utility systems and in Information Technology and communication.

Their multi-unit, multi-product, multi-location conglomerate is built on the plinths of Experience, Expertise, Quality, Innovation and Values in the business. Their best play is successful work and creation of a new industrial order where they can provide tailor made solutions to the customers.

At Kirloskar, listening to the customer and his needs is a tradition as old as the group itself. For it is they who drive us further, make us reach higher, and engineer better solutions. In the customer's often unspoken wish for better implements lies the seed for a new invention, a path-breaking industrial concept.

They are the Kirloskar Group of Companies.

Projects

Kirloskar clearly recognises the customers' expectations of complete solutions to their needs, and strives hard to meet these expectations. Be it design and manufacture of engines to meet precise requirements, or fluid handling solutions, or refrigeration needs, or stand-by and prime power needs. They do their best to provide complete solutions.

The Kirloskar Group anticipated the change in customer expectations from products to complete solutions long before it occurred. It evolved as a group, offering total solutions that range from concept to commissioning, from a group of companies supplying multiple products. Integrating systems design and engineering with the quality products, setting the trend for high quality and customised solutions at competitive prices are the lead norms at Kirloskar.

Their capabilities spread across a range of core industries like steel, cement, power generation, chemicals, fertilizers, food processing and others. Their expertise is increasingly sought at home and overseas by nations like Algeria, Egypt, Guatemala, Honduras, Iran, Iraq, Kenya, Lao, Morocco, Malaysia, Panama, United Arab Emirates, Tanzania, Saudi Arabia, Vietnam and Zambia.

The Kirloskar Group's complete solution services are at the disposal, no matter where you are or what the project size is.

They are just a call away. Kirloskar products are recognised and appreciated the world over. The
multiplying customer base in the foreign lands has proved that they have been successful in their
endeavours. They walk that extra mile just for you

Press clippings

Kirloskar Bros bags contract from AP - 1/29/2004 6:53:01 PM

 Kirloskar Brothers Limited (KBL), the largest manufacturer and exporter of pumps in the country is to execute the prestigious Rs. 844 crore Devadula project in a joint venture for the purpose of supplying drinking water and irrigating the parched Telangana region in Andhra Pradesh. This project is expected to bring relief to over millions of people across over 500 villages within a period of one and a half years. The Devadula project will utilize the waters of Godavari to irrigate over 2,00,000 hectares of arid lands in Telangana region.

The Devadula project would be one of the most remarkable examples of how water can be made efficiently and easily accessible through technical innovation involving metallic volute pump technology, to areas where drinking water is a luxury. KBL, the leader in providing fluid handling solutions will be responsible for the design, manufacture, and erection and commissioning of pumping stations with allied electro-mechanical systems for a value worth Rs.1240.000 Millions.

In keeping with the Kirloskar corporate philosophy of 'Enriching Lives', KBL hopes to flood the lives of millions of people with joy and usher in the Green Revolution in the region.

Speaking on this occasion, Mr. Sanjay Kirloskar, the Chairman and Managing Director, Kirloskar Brothers Limited said, "KBL has all along been engineering joy in the lives of people by making contributions to infrastructure development in India as well as in many countries around the world. This is one of many to come and will, no doubt give us a satisfying experience once more, by bringing prosperity to millions of people in the Telangana Region".

In the first phase, the KBL designed pumping system will lift water at the rate of 10,000 liters per second from Godavari River near Gangaram. Each pump will be driven by an electric motor of 8500 kW maximum capacity, the largest ever used for pumping in India. The water will be transported in steel pipes of 2.5-meter diameter through a distance of 135 kms across a difficult terrain, with a total pumping head 400 meters and delivered at a location near Ghanpur railway station. The water will be then distributed for purpose of irrigation and drinking.

The innovative scheme offered by KBL will consume only 52 Mw against 67 Mw envisaged by international consultants, thus saving 15 Mw power and Rs.600.000 Millions in capital cost apart from huge saving in running costs.

The Tadipudi Lift Irrigation Scheme and Purushothapatnam Lift Irrigation Scheme projects exclusively undertaken by KBL for a value of Rs.820.000 Millions to irrigate more than 1,50,000 hectares of agriculture land in West Godhavari and East Godhavari districts of Andhra Pradesh, will involve large Kirloskar Vertical Pumps and pipelines measuring up to 56 kms length in total.

KBL has been continuously focusing its attention on the infrastructure segment and half of its current sales turnover is achieved through undertaking projects of this kind.

K-Group participates in Largest Defexpo Yet

- January, 2006

KOEL's Large Engines Business Group along with its collaborator SEMT Pielstick (France), KOEL-MEBG and Kirloskar Pneumatic participated in Defence Expo 2006, organised by the Confederation of Indian Industry (CII)and the Ministry of Defence. More than400 Indian and international exhibitorshad stalls at the show held at Delhi'sPragati Maidan, Jan. 31- Feb. 03. Held every alternate year, the Expo isan occasion for discussing the latest trendsand technology in defence productionand for showcasing state-of-the-art prod-ucts for the defence services.Inaugurating Defexpo 2006, Union Defence Minister Pranab Mukherjee saidthe fact that 31 countries were taking partthis year as compared to 19 in 2004 wasindicative of the rising stature of the Expo. It was also, he pointed out, an example of the synergy between the government andthe industry. For the Defence Ministry, the emphasis was on quality and competi-tive products, regardless of whether the pro-ducer was a private player or a public sec-tor undertaking. Shri Atul Kirloskar, Chairman, CII National Committee on Defence, in hisvote of thanks, said the changed environ-ment in the Defence sector was evidentfrom the fact that 189 Indian private sector companies were taking part this year. KOEL, along with other K-Group companies, has been participating in Defexporight from the first exhibition in 1999. There sponse to the Kirloskar stall was over-whelming. Defence Minister Shri Pranab Mukherjee and Chief of Naval Staff Ad-miral Arun Prakash were among the dig-nitaries who visited the stall, as also several foreign delegates and officials of Indian Navy and Indian Coast Guard. As Chair-man of the Defence Committee, Shri Atul Kirloskar was present throughout the Defexpo at various functions and forums

KOEL Plays Key Role in Presidential Fleet Review

-February, 2006

Year 2006, for the first time, the 9th Presidential Fleet Review was held at the Eastern Naval Command, Vizag, all previous ones being sited at the Western Naval Command, Mumbai. Since 1953, the President of India, as the Supreme Commander of the Defence Services, personally reviews the Naval Fleet once during his tenure. KOEL LEBG’s Associate Vice-President, Shri M.R. Chandrachud provides a first-hand account of the glittering review event – in which 14 ships propelled by Kirloskar-Pielstick engines played a stellar role – and a memorable meet with the First Citizen of India, His Excellency Dr. A.P.J. Abdul Kalam.

NOT only the Navy, but the entire city of Vizag was upbeat and decorated for the mega-event. A grand reception, a concert by the Naval Band, Presidential Banquet, operational demonstration of Navy’s prowess, Fly Past by the Navy’s air wing, Presentation of Colours to the Eastern Fleet filled up the three days. However, at the core of the program was the Ceremonial Review of the Navy’s warships and some Coast Guard vessels. Fifty-seven ships participated in the Review, including nine submarines. Of the 42 surface ships, 21 are propelled by turbines. Fourteen ships propelled by Kirloskar-Pielstick engines made up the majority of the 21 surface ships powered by diesel engines.

Preparations for this review were underway for over a year, and KOEL’s Product Support rendered dedicated and speedy service throughout. Off the coast, in the Bay of Bengal, the ships were anchored in four rows (see plan); four ships in one line, with the President himself on the first ship ‘INS Sukanya’, glided between the rows. Incidentally, all these four ships are powered by Kirloskar- Pielstick engines. As the President’s ship sailed past each warship, the crew, lined up on the deck in dazzling whites and holding their hats in hand, shouted ‘Jai’ three times as per tradition. This was a very moving part of the ceremony. Ministers, Chiefs of the three Services, foreign delegates, and several dignitaries were present at all the glittering functions, and security was at its highest level.

I was fortunate to be among the invitees, representing KOEL. For several years, I have dreamt of meeting their great scientist-President Dr. APJ Abdul Kalam personally. And my dream came true! I was introduced to the President at the evening reception. “So you are from Kirloskars,” the First Citizen of India said in such a simple and affectionate tone, I was suddenly overcome by humility. “Yes,” I said, “I am a mechanical engineer.” While their host, C- in-C of the Eastern Naval Command Vice-Admiral Sureesh Mehta, informed him that KOEL supplied diesel engines for their ships, smilingly the President advised, “Start working on Bio- Fuel engines.” His advice springs, as always, from the vision he has created for the nation. To the Navy he suggested, “I am impressed with the three-dimensional presence of the Navy, on the surface of the sea, above it, and below. Now the Navy should extend to a fourth dimension – Space. You must have the own satellites.”

KBL to supply Pumps to Angola

February, 2005

Kirloskar Brothers Limited, India’s largest manufacturer and exporter of pumps has received an order worth US$ 5.54 million (Rs. 240. 000 Millions) from Ministry of Agriculture, Government of Angola. This order involves supply and commissioning of variety of diesel engine and electric motor driven pumpsets for irrigation purpose.

Angola a country in Africa, enjoying peace after decades of strife, has plans of investing in agriculture on a large scale to bring the economy back on track. Agriculture suffered during the civil war in Angola, because of landmines spread across the country.

Under this contract, KBL will supply, erect and commission nearly 300 pumpsets of different capacities to irrigate the fields. KBL will also set up an office in Luanda, the capital city of Angola to render service back up and train the Angolan personnel in operation and maintenance of the pumping systems.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.42.74
UK Pound	1	Rs.84.90
Euro	1	Rs.57.79

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	8
PAID-UP CAPITAL	1~10	8
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	8
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	8
--CREDIT LINES	1~10	8
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		72

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions