MIRA INFORM REPORT

Report Date :

27.05.2008

IDENTIFICATION DETAILS

Name :	KIRLOSKAR BROTHERS LIMITED
Registered Office :	Udyog Bhavan, Tilak Road, Pune – 411 002, Maharashtra
Country :	India
Financials (as on) :	31.03.2007
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 25000000
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 / 24440822
E-Mail :	kblin@kbl.co.in
Website :	1. http://www.kirloskars.com 2. http://www.kbl.co.in
Factory :	Kirloskarvadi , Dewas, Shirval, Kondhapuri, - 416 308, Dist. Sangli (India) Tel No. 91-2346-222301 – 05 Opposite Railway Station, Ujjain Road, Dewas - 455 001, India Tel No. 91-7272-228582 – 87 Gat No. 252/2 + 254/2, Kondhapuri Tal : Shirur, Dist. Pune - 412 208, India Tel No. 91-2137-270115 Shirval 4. Gat No. 117, Shindevadi Tal. Khandala, Dist. Satara-412 801, India Tel No. 91-2169-244360 / 244370 Printing Press, Kirloskar Kisan Compound, 13A, Karve Road, Kothrud, Pune - 411038, Maharashtra, India Tel. No. 91-20-5412471-4
Branches :	Located at: - New India Centre, 17-A Cooperage Road, Colaba, Mumbai – 400 039, Maharashtra , India Tel. No. 91-22-22020828 Fax No. 91-22-22026267 Jeevan Tara Building, 5 Sansad Marg, New Delhi – 110 001, India 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
Experience :	27 years
Date of Appointment :	02/05/1983
Name :	Gautam Kulkarni
Designation :	Vice Chairman
Name :	Vikram Kirloskar
Designation :	Executive Director
Age :	46 years
Qualification :	Bachelor of Science (Mech.) MIT, USA
Experience :	23 years
Date of Appointment :	06/06/2001
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)
Experience :	33 years
Date of Appointment :	15/05/1989
Name :	G. Ramaiya (Upto 20.04.2005)
Designation :	Whole Time Director
Age :	56 years
Qualification :	B. E. (Mech)
Experience :	35 years
Date of Appointment :	06/04/2000
Name :	K S. Jawadekar (from 19.02.2005)
Designation :	Director
Name :	J. R. Sapre (from 29.04-2005)
Designation :	Whole Time Director
Age :	62 years
Qualification :	Bachelor of Science
Experience :	41 years
Date of Appointment :	01.04.2002
Name :	Mr. B S. Jawadekar
Designation :	Director
Name :	Mr. A. N. Alawani
Designation :	Director
Name :	Mrs. Lalita D Gupte
Designation :	Director
Name :	Mr. P S Jawadekar
Designation :	Director
Name :	Mr. Anant R Sathe
Designation :	Director
Age :	54 years
Qualification :	CA, LLB
Experience :	31 years
Date of Appointment :	01.11.2003
Name :	Mr. Sanjeev S Date
Designation :	Director
Age :	57 years
Qualification :	BE (Mechanical), DIIT (Industrial Design), BE (Electrical )
Experience :	37 years
Date of Appointment :	20.07.1970
Name :	Mr. Avinash W Purandare
Designation :	Director
Age :	47 years
Qualification :	BE Electrical
Experience :	25 years
Date of Appointment :	01.03.2005
Name :	Mr. Lakhpat Singh
Designation :	Director
Age :	55 years
Qualification :	BE Mechanical
Experience :	32 years
Date of Appointment :	15.11.1975

KEY EXECUTIVES

Name :	G. P Kulkarni
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders (as on 31.03.2008)	No. of Shares	Percentage of Holding
Shareholding of promoter and promoter Group
Individuals / Hindu Undivided Family	1639759	1.55
Bodies corporate	63974820	60.49
Public Shareholding
Institutions
Mutual Funds / UTI	7072009	6.69
Financial Institutions / Banks	154773	0.15
Insurance Companies	5424836	5.13
Foreign institutional Investors	2679529	2.53
Non Institutions
Bodies Corporate	4263252	4.03
Individual Holding nominal share capital
upto Rs. 0.100 million	15942133	15.07
In Excess of Rs. 0.100 million	4374663	4.14
Any other – NRI	209514	0.20
Clearing Members	29067	0.03
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 (as on 31.03.2006):-

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 Limited

Facilities :

SECURED LOANS	31.03.2007 (Rs. in millions)
Loans and advances from banks
Cash/Export Credit facilities [Secured by hypothecation of tangible movable assets and book debts of the company]	904.391
Other loans and advances
From Exim bank
I) Foreign currency loan	31.906
II) Rupee loan [Secured by way of hypothecation of movable fixed assets and mortgage of immovable properties of the company ( both present and future).	416.666
For Rupee loan, there is an additional security by way of pledge of shares in SPP Pumps Ltd., UK.]
Total	1352.964
UNSECURED LOANS
From others-interest free loan under Sales Tax Deferral Scheme	55.462
Total	55.462

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 Capital :

No. of Shares	Type	Value	Amount
105907030	Equity shares	Rs. 2/- each	Rs.211.814 millions

Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
105764355	Equity shares	Rs. 2/- each	Rs.211.528 millions

Out of the above

( i ) 165000 (165000) equity shares of Rs.2/-(Rs.2/-) each were allotted as fully paid up pursuant to contract for

consideration other than cash.

( ii ) 88499975 (88499975) shares of Rs.2/- (Rs.2/-) each were allotted as fully paid up bonus shares by capitalization of General Reserve and Share Premium

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2007	31.03.2006	31.03.2005
SHAREHOLDERS FUNDS
1] Share Capital		211.528	211.528	70.509
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		5808.726	2932.481	1832.031
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		6020.254	3144.009	1902.540
LOAN FUNDS
1] Secured Loans		1352.964	211.864	568.117
2] Unsecured Loans		55.462	44.885	88.335
TOTAL BORROWING		1408.426	256.749	656.452
DEFERRED TAX LIABILITIES		61.953	0.000	1.644
TOTAL		7490.633	3400.758	2560.636
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1593.564	948.602	518.737
Intangible Assets		17.236	9.078	17.035
Capital work-in-progress		0.000	0.000	11.086
INVESTMENT		3376.981	1014.380	828.267
DEFERREX TAX ASSETS		0.000	4.964	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	870.812	657.354
	Gross amount due from customers for project related contract work	391.668	225.614	484.685
	Sundry Debtors	5137.534	3702.388	336.575
	Cash & Bank Balances	494.807	502.544	2690.606
	Other Current Assets	274.606	140.131	582.754
	Loans & Advances	1626.085	1604.006	92.861
Total Current Assets		8795.512	6832.037	4187.481
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	5118.536	4517.428	3297.755
	Gross amount due to customers for project related contract work	777.686	522.579	162.033
	Provisions	396.438	368.296	300.190
Total Current Liabilities		6292.660	5408.303	3759.978
Net Current Assets		2502.852	1423.734	1185.511
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		7490.633	3400.758	2560.636

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		13399.512	9246.318	7441.392
Other Income		2408.719	749.534	0.000
Total Income		15808.231	9995.852	7441.392
Profit/(Loss) Before Tax		3750.135	1786.569	537.930
Provision for Taxation		385.135	62.708	30.601
Profit/(Loss) After Tax		3364.917	1723.861	507.328
Export Value		2268.583	688.364	1005.050
Import Value		986.144	606.708	261.584
Expenditures :
	Raw Material Consumed	9290.454	6092.541
	Salaries, Wages, Bonus, etc.	621.978	596.203
	Interest	83.734	54.775	6903.462
	Depreciation & Amortization	121.180	96.678
	Other Expenditure	1940.750	1369.086
Total Expenditure		12058.096	8209.283	6903.462

QUARTERLY RESULTS

PARTICULARS	30.06.2007	30.09.2007	31.12.2007	31.03.2008
Type	1^st Quarter	2 Quarter	3 Quarter	4 Quarter
Sales Turnover	3155.200	3181.200	3225.000	5690.100
Other Income	59.100	199.600	46.900	123.900
Total Income	3214.300	3380.800	3271.900	5814.000
Total Expenditure	2795.900	2955.200	3110.700	4967.800
Operating Profit	418.400	425.600	161.200	846.200
Interest	31.200	36.600	53.700	47.400
Gross Profit	387.200	389.000	107.500	798.800
Depreciation	40.500	42.900	43.100	55.600
Tax	85.200	76.100	16.700	216.600
Reported PAT	257.100	270.000	47.700	526.600

KEY RATIOS

Year	31.03.2007	31.03.2006	31.03.2005
Debt-Equity Ratio	0.18	0.18	0.47
Long Term Debt-Equity Ratio	0.08	0.10	0.23
Current Ratio	1.23	1.23	1.19
TURNOVER RATIOS
Fixed Assets	6.56	5.98	5.32
Inventory	18.11	16.75	16.76
Debtors	3.13	2.99	3.14
Interest Cover Ratio	12.00	9.77	5.59
Operating Profit Margin(%)	15.97	16.03	11.11
Profit Before Interest And Tax Margin(%)	15.10	15.02	9.79
Cash Profit Margin(%)	13.23	14.25	8.84
Adjusted Net Profit Margin(%)	12.35	13.24	7.53
Return On Capital Employed(%)	38.57	48.21	28.52
Return On Net Worth(%)	37.29	50.19	32.28

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

SUBSIDIARY COMPANIES: 

The company has received approval from Central Government under section 212(8) of the Companies Act, 1956 for not attaching the annual reports of subsidiary companies. The company will send copy of annual reports of subsidiary companies to shareholders upon request. The annual accounts of subsidiary companies are kept open for inspection at the registered office of the company. 

During the year, 'Kirloskar Copeland Limited' (KCL) ceased to be the subsidiary, as the company has sold its entire 51% shares held in KCL to Copeland Corporation, USA. This disinvestment was made with a view to focus on core business of pumps and pumping systems. 

The company also acquired 100% shares of Chennai based Aban Constructions Private Limited (ACPL) during the year. ACPL is mainly into the business of oil and gas cross country pipe lines and civil construction projects such as tunnels, bridges, roads, water and sewerage and other industrial plants.

The business of ACPL is complimentary to that of the company and there are significant synergy benefits between both the companies. 

Management discussion and analysis 

Economy: 
The year 2006-07 has been characterized by robust growth buoyed by the strong performance in the industry and services sector, despite weak agricultural growth. The deficit at 3.7% of Gross Domestic Product (GDP) improved upon the budgeted target of 3.8%. One of the reasons why the fiscal numbers were good as compared with budget estimates, is the consistent growth. Estimates made by the Central Statistical Organisation had put the growth in Gross Domestic Product at 9.2% in 2006-07 higher than what the Government had anticipated. The momentum of growth in India picked up in 2003-04 and, since then, has remained on course. The economy registered a compounded average growth rate of 8.5% between 2003-04 and 2006-07. 

A more heartening feature of this growth momentum has been the revival of the manufacturing sector. While the growth scenario surpassed expectations, so did the inflationary scenario -resulting in a series of monetary tightening measures adopted by the Central Bank. The rate of inflation based on the Wholesale Price Index, scaled up to a high of 6.7% versus the Reserve Bank of India's target range of 5 to 5.5% for the year. 

Overall economic buoyancy and bullish domestic stock markets boosted investor sentiments, thereby attracting significant in-flows of foreign capital into the economy. However, major intervention by the Reserve Bank of India restricted significant gains of the rupee, thus keeping the export competitiveness of the rupee in check. 

Revival of industrial growth, streamlining of tax rates and expanding base of service tax, led to improved buoyancy since 2003-04. Considering that their tax structure is heavily biased towards industry, industrial activity remains the key driver of tax performance. 

Outlook for the current year 2007-08: 

Given the growth momentum and prevailing buoyancy in both the industrial and services sector, we expect the pace to continue during the next fiscal, albeit with some moderation. The monetary tightening over the last two years is expected to affect corporate bottom lines, with moderation in overall demand. They expect the overall Gross Domestic Product to grow in the range of 7.9 to 8.4% in 2007-08. 

Assuming a normal monsoon, the Gross Domestic Product growth in agriculture can be expected to continue in alignment with the long term average growth of 3% per annum. If the buoyancy in services remains unchanged, about 9.5% growth seems feasible, while industrial growth will be expected to deliver about 8.4%. 

Even though the recent dip in global crude oil prices and the downward revision in the domestic prices of petrol and diesel have limited the pressures on the Wholesale Price Index inflation for the moment, continued effort from Organisation of the Petroleum Exporting Countries is likely to keep the pressure up to push it back, thus not providing a sustained comfort for headline Wholesale Price Index inflation. They expect the average inflation for the year 2007-08 to remain in the 5-5.5% range. 

A significant differential in interest rate with respect to international markets, together with an upbeat sentiment, may attract significant capital inflows, thereby adding liquidity to the market. However, this influx could offset the RBI's objective of monetary tightening. To ensure retention of export competitiveness, any significant appreciation in the currency is expected to be monitored carefully by the RBI. They also expect the Rupee to trade at 40-42 against the Dollar by the end of this fiscal.

Growth drivers: 

An analysis of the components of aggregate demand in recent years indicates, that it has been driven predominantly by a sharp rise in domestic consumption as well as private and public investments. 

A) Domestic consumption: 

The main drivers of domestic consumption in recent years have been – 

* A burgeoning middle class estimated at 250 million. 

* Significantly higher wages, especially in IT and IT-enabled services, financial services and back-office services. 

* Increase in the supply of consumer goods and services, with more players entering the fray. 

* Macro - economic policies such as lowered tax and interest rates, increased disposable income and decreased cost of borrowing encouraged consumption. 

* The increase in private consumption has been the most important contributor to aggregate demand. 

B) Government consumption: 

Recent increases in Government consumption have not kept pace with corresponding increases in domestic consumption and investment. The most encouraging feature of Government consumption is the increasing fiscal responsibility that it has exhibited. 

C) Investment: 

The trend of increasing investment in the economy, both public and private, continues unabated. Gross Domestic Capital Formation at current market prices was 33% of Gross Domestic Product, as compared to 31.5% for the previous year. 

Private investment is influenced primarily by: 

* Cost of borrowing, as determined primarily by market rate of interest. 

* Expectations of future profit. 

Private sector investment grew by 22% over the previous year of which, a significant portion about 8.1% of Gross Domestic Product, has come from retained earnings. Increasing investment and the efficiency with which it is being used augurs well for the economy. 

Public investment in the economy is also increasing, though at a slower pace than that of the private sector. Similarly lagging behind is the power sector, which aspires to take major leaps in the XIth plan. 

Pump industry scenario: 

The global pump market, estimated by market research agencies of international repute stands approximately over Rs.1.34 trillion (US $30 billion) today. Growing at about 3 to 4% per annum, it is expected to reach US $36 billion by 2010. Of the entire international demand, 65% comprises centrifugal pumps. Subject operates in the centrifugal pump market only. The growth rate of markets in India, China and developing countries is higher than the mature markets in developed world like North America, Europe and Japan. 

Internationally, water and sewage sectors comprise about 52% of the pump market demand, while 13% comes from oil and gas sector. The chemical and process sector demand is estimated at 26% and about 9% from power sector. 

The estimated size of the Indian pump market is over Rs.32000 million, which continues to grow at a compounded average growth rate of 12-15% in various segments. KBL's strategy to cater to this huge market potential is to provide innovative, reliable and cost effective total pumping solutions.

They are determined to not just retain their leadership, but increase their market share and profitability by focusing on product differentiation and provide services that satisfies their customers, global as well as domestic, in the coming years. 

From the sales perspective, KBL's net sales have now reached Rs.13,400 million which is about 1% of the global pump market turnover. KBL is ranked 15th in the global ranking of pump industry, (including the turnover of SPP Pumps Ltd. and Kirloskar Ebara Pumps Ltd.). Having reached this coveted slot already, they have now set theirselves a new target to emerge as one of the top five pump companies in the world by 2015. 

Strategy: 
The global pump market can be divided into 4 main segments - domestic, agricultural, industry, utilities (power, water supply, sewage, irrigation and infrastructure). Infrastructure pump projects can be defined as mega water projects with three pronged applications i.e. irrigation, water supply, and power generation with pumping related projects valued at over Rs.1000 million. 

Market characterization of each segment is distinctly different from one another. Agricultural and domestic pump market is, for instance, mostly high volume, cost driven, retail based and perceived as a 'consumer durables' market. Customers in this market are reached almost always by their extensive dealer network.

At the other extreme lies the multi billion rupee infrastructure pump projects market. For example, the world's largest pumping scheme on Saurashtra branch canal, originating from Sardar Sarovar Dam on Narmada and mega irrigation projects in Andhra Pradesh. Years of work are required, in tandem with Government authorities to conceptualize and engineer these projects, and implement them successfully. 

Midway lie the markets for small / medium pump projects for water supply, power and irrigation; and for industrial pumps which is further divided into water, waste-water and process pumps. This segment is served by various niche products as well as value added packaged pumping systems. 

The industrial pump market at the lower end provides standard cast iron pumps for water, whereas at the higher end it provides for energy efficient, lowest life cycle cost pumps, packaged pumping systems, various special material / design pumps and pumping systems for chemicals as well as waste water. 

Naturally, marketing strategies for each of these segments are unique. KBL deploys segment specific strategies to win over customers. 

Another major shift in market is coming from water related projects to water management as a business. Manufacturers are expected to supply and manage water on a Build, Own, Operate and Transfer (BOOT) / Build, Operate and Transfer (BOT) basis and meet expenses through water tariffs. Having sensed a market need, they plan to enter this segment and are currently in the preparatory phase for the deployment of water management strategies. 

In 2006, SPP Pumps Limited, a KBL subsidiary in UK, continued its up swing registering a sale of Rs.2542 million,

growth of 17% with respect to previous year. Profitability too improved with respect to 2005. 

Aban Constructions Private Limited, a civil construction and pipeline company, was acquired considering the tremendous growth in infrastructure as also to strengthen the civil and piping business wing of KBL further.

Their sales turnover for 2006-07 is Rs.234.69 million. 

Performance of joint venture companies: 

Kirloskar Copeland Limited was sold to focus even more on their core business of hydraulic machines and systems, and water business. 

Kirloskar Ebara Pumps Limited on the other hand continues to make steady progress. Their product range comprises API process pumps for refineries and petrochemicals, boiler feedpumps and EUiot steam turbines. Their sales turnover for 2006-07 is Rs.629 million. 

Anti-Corrosion products business group was hived off last year into a joint venture company (Kirloskar Corrocoat Private Limited) with the technology licensed from Corrocoat Limited -UK. Their sales turnover for 2006-07 is Rs.150.61 million. 

Valves business group; 

The Valves Business Group, with operations at Kondhapuri, has been turned around and is in the process of formulating long term strategies to enhance capabilities and business. The production doubled with respect to previous year with no addition in the workforce. The wage settlement has been satisfactorily signed. 

The group has won many major orders braving stiff price competition. They are also planning to step up the awareness campaign regarding The company valves amongst their prospective customers. 

IVRCL, Pratibha Industries, Kaveri Infrastructure, CESPO, Lanco Infratech Limited, Patel Engineering-Mumbai (for Veravalli Tunnel Job), L and T Chennai (for Delhi Jal Board's water supply project), JMD Engineering-Mumbai (for A/C and Refrigeration project), Simplex Concrete Piles India Limited are a few of their notable customers. 

New development of sluice valves, a few models of butterfly valves and a turbine inlet valve has been completed in record time. Re-approval of The company Valves for steel sector was also done at MECON. 

International papers presented: 

1. Numerical Experiments on solid handling pumps presented at American Society of Mechanical Engineers, Fluids Engineering Division Summer Meeting 2006 at Miami, USA 

2. Numerical Simulation on a pump operating in a turbine mode at 23' International Pump Users Symposium March 2007, Houston, Texas, USA

Corporate international division: 

International marketing and projects execution was focused by this group successfully this year with an expansion of reach, qualifications and business. Chemiline - Singapore, Rand Water -South Africa, Engico - Egypt, Enelven - Termozulia power project - Venezuela through MAN Ferrostaal of Germany and National Water Commission, Jamaica are a few examples. 

Their wide spread spectrum of export sales features major contribution from Africa, thanks to their 'Focus Africa' strategy. Their largest export order, so far, worth US dollars 27 million from Senegal has been successfully executed. 

Fixed Assets :

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

It is in trade terms with: -

v Public Health Engineering Departments, Haryana

v Karnataka Urban and Water Supply Drainage Board

v Mahanadi Coalfields Limited

v L and 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 and 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.

CONTINGENT LIABILITIES:-

Contingent Liabilities Not Provided For:-	31.03.2007 (Rs. in millions)
Guarantee
By the company to ICICI Bank Limited on behalf of SPP Pumps limited, UK	299.075
By the Company to Barclays Bank Limited on behalf of SPP Pumps Limited, UK	85.450
by the company to Indian Overseas Bank Limited on behalf of Aban Constructions Private Limited, Chennai	21.000
Central Excise (mAtter Subjudice)	3.542
Sales Tax (Matter Subjudice)	66.068
Income Tax (Matter Subjudice)	----
Labour Matters (Matter Subjudice)	26.870
Other Legal Cases (Matter Subjudice)	27.074
Letter of Credit Outstanding	141.981

Construction Contracts:	31.03.2007 (Rs. in millions)
Contract revenue recognized as revenue for the year ended 31.03.2007	5703.736
The aggregate amount of contract costs incurred recognized profits less recognized losses upto 31.03.2007	15855.307
Amount of advances received as no on 31.03.2007 for contracts in progress	445.201
Amount of retentions as on 31.03.2007 for contracts in progress.	1787.889

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 The Company, 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 them 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

The company 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 the company.

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.

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. 8440.000 millions 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 200000 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 150000 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 and the 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 evident from 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.

The first stage of World’s second highest lift irrigation scheme successfully commissioned

As a part of the State Government Jalayagnam program, the first stage of Devadula Project in Warangal district is successful. The pumps have started lifting water from the Godavari River.

KBL engineers were working from last month to commission this scheme, and the mission was successful on 6th February 2008, which was graced by the presence of irrigation minister Mr. Ponnala Laxmaiah. Now the water is flowing through the pipes from Gangaram reservoir to Bhimganapur reservoir.

The first stage of Devadula project consists of motors being installed with a capacity of 8.5 MW for raising water through a lift of 130 m which is said to be the highest in the country. This is the first time in the country where such large capacities of motors are installed for irrigation pumping scheme. Warangal district has got special recognition all over the country because of this project which is the largest Lift Irrigation Project in India.

This project (which happens to be pumping scheme with the 2nd highest lift in the world) diverts about 30 billion cubic meters (132 trillion gallons) of water of Godavari River, which would have gone waste into the Bay of Bengal. There is no dam here, and water is tapped directly from the river through a jack-well. This scheme is expected to provide drinking water to millions and irrigation to 656694 acres of land in Warangal, Karimnagar, Nalgonda and Medak districts. These districts are perennially drought prone with very low economic development and high poverty here. The Godavari project will bring economic development to this region and help the government to address socio economic problems.

Due to typical topography of this region Godavari River water will be required to be lifted almost by 540 meters and a distance of close to 200 km. The pumping has been planned to be done through stages and utilizing natural water reservoirs en-route. In this way the diversion of the river water with application of the indigenous technology will solve the water problem of this region.

KBL successfully executes the order from Ministry of Water Resources and Meteorology (MOWRAM), Kingdom of Cambodia.

MINISTRY OF WATER RESOURCES & METEOROLOGY (MOWRAM) KINGDOM of CAMBODIA AND KIRLOSKAR BROTHERS LTD (KBL) PUNE-INDIA

For Design, Manufacture, Supply, Installation and Commissioning of 180 Pump sets with accessories valued at US$ 5,200,000.20 CIF (Rs. 210 M)

1. Contract financed by Export Import Bank of India- Mumbai against a line of credit.

2. Contract consisting of 180 sets of Pumps (MF25-30-Mruga), Diesel Engine (HA694-65HP / 1500 RPM), M.S. Base plate, Trolley, M.S. Suction Pipe (5 M), M.S. Delivery Pipe (15 M), 90 deg Bend and Foot Valve.

3. Contract Signed in New Delhi on Dec 11’ 2007 with the Minister of Water Resources and Meteorology-Phnom Penh-Cambodia.

4. Export Import Bank of India approved the contract on February 14’ 2008.

5. All 180 Pump sets and accessories shipped out by March 18’ 2008.

6. Contract executed within 35 days!!

7. Photograph shows ‘’Contract signing ceremony’’ in Delhi on Dec 11’ 2007. LH DABI signed the contract with HE Lim Kean Hor- Minister of Water Resources and Meteorology-Phnom Penh-Cambodia.

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.42.89
UK Pound	1	Rs.84.84
Euro	1	Rs.67.61

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.	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